Economic Analysis


Population 183 million
GDP per capita 2,763 US$
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major macro economic indicators

  2014 2015  2016 (f) 2017 (f)
GDP growth (%) 6.3 2.7 -1.5 0.8
Inflation (yearly average) (%) 8.0 9.0 15.0 17.0
Budget balance (% GDP) -1.8 -3.7 -4.4 -5.0
Current account balance (% GDP) 0.2 -3.1 -5.2 -3.8
Public debt (% GDP) 12.4 14.8 21.0 26.0


(e) Estimate (f) Forecast


  • Leading African power in GDP terms and the most populous country in Africa
  • Large oil and gas reserves and major agricultural potential
  • Low public and external debt levels


  • Heavy reliance on oil revenues (90% of exports, 75% of tax receipts)
  • Insufficient energy production/distribution capacities
  • Ethnic and religious tensions
  • Insecurity and corruption place a strain on the business climate


After the 2016 recession, growth is predicted to be very weak in 2017

Oil production, heavily affected in 2016 by the sabotage of petroleum infrastructure by rebel movements in the Niger Delta, could rise in 2017 if the security situation in the region stabilises. A slight rise in oil prices, combined with increased production, should therefore enable the balance of trade to make a positive contribution to growth. Construction activity, traditionally strong in Nigeria, could also pick up slightly in 2017, subject to the implementation of public investment programmes, which were delayed in 2016. However, manufacturing activity is expected to continue to suffer from erratic power supplies and foreign exchange controls that are limiting imports of several categories of goods.

Private investment might be deterred by weak domestic demand and continuing relatively high interest rates (14% since July 2016), given the persistence of inflationary pressures. Household consumption is expected still to be hampered by price rises, driven by the cost of imported goods (oil and foodstuffs) and accentuated by a probable fresh devaluation of the naira.

The budget deficit is expected to worsen and the current account balance to improve slightly

The 2017 draft budget anticipates a 13% rise in spending, directed towards investment. The budget is based on a conservative assumption for the oil price (42.5 USD/bl) but a production level close to that of 2015 (2.2 million bl/day), contingent on a halt in attacks on installations in the Niger Delta. The government is counting on a rise in revenues from the non-oil sector, which are expected to account for 2/3 of federal budget revenues, thanks in particular to a better recovery rate. However, this target looks ambitious in the context of weak economic activity. The budget deficit is predicted to worsen in 2017, although the deterioration in the public finances could be mitigated by any devaluation, enabling an increase in the exchange value in naira of dollar-denominated oil revenues.

The current account slipped into the red in 2015; this deficit rose in 2016, but could fall in 2017. Oil exports (90% of the total) are expected to rise due to the combined effect of volume and price rises. Imports are not expected to increase strongly given sluggish domestic demand and persistent difficulties in accessing foreign currencies. However, they may rise in value if the national currency is devalued.

Downward pressures on the naira forced the central bank (CBN) to end the pegging of its currency to the dollar in June 2016, prompting an immediate 30% fall in value. The CBN retains the option to intervene in the markets and has kept in place the currency controls which were imposed in mid-2015 on around forty products, but have not prevented the continuing depreciation (nearly a further 30% against the dollar as at end-November 2016). Despite an expected rise in export revenues, the weakness of foreign capital inflows will likely continue to hold down the value of the naira. The CBN might be forced to order a fresh devaluation in 2017, to preserve its ever dwindling reserves (32 bn USD in early 2015 but less than 24 bn USD in October 2016, or around 4 months of imports).

The fall in the oil price and the effects of the depreciation have had a major impact on the banks, as shown by the rise in non-performing loans (nearly 12% in mid-2016 compared with 5% at end-2015). Some banks may be forced to close if they are not recapitalised.


Tense security situation and risks of social unrest

The victory of Muhammadu Buhari and his All Progressives Congress (APC) party in the 2015 elections saw a handover of power after the domination of the People’s Democratic Party (PDP) since 1999. The new president has made the fight against corruption one of his priorities. Expectations within the population are huge with regard to the new President, particularly in this area. Overly slow implementation of reforms, but also a lack of economic progress, might fuel discontent in a population facing steep rises in prices and unemployment. Protests against the central bank were held in November 2016, demonstrating rising tensions which are potential sources of social unrest.

The security situation remains very fragile in the north-east of the country, which is prey to attacks from the radical Islamist Boko Haram movement. In the Niger Delta oil production region, oil installations are under attack from rebels fighting for resources to be shared more fairly.

Nigeria is making no real progress in terms of governance according to the World Bank's indicators, in particular concerning anti-corruption (186th out of 209 countries in 2015).


Last update: September 2017

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