﻿WHY IS NIGERIA SO RICH?
Nigeria, a multinational state whose mixed economy is the largest
in Africa, 25th-largest in the world by nominal GDP and 25th-largest by PPP
is a lower-middle-income economy. It has abundant supply of natural resources,
well developed financial, legal, communication, transport sectors and Nigeria’s stock exchange.
For the success story of Nigeria to be truly understood, it is important to have a brief
understanding of where the modern Nigeria we see today came from. Modern state Nigeria originated
from British colonialization in the 19th century. The British set up administrative and legal
structures while they practiced indirect rule through traditional chiefdoms in the
Nigeria region. Nigeria then became a formally independent federation on October 1st 1960.
Though the country ranks very low in the human development index and remains one of the most
corrupt nations in the world, Nigeria is a member of many international organizations including the
United Nations, the Common wealth of Nations, NAM, the Economic Community of West African States, and
OPEC. It is a founding member of African Union and a member of the informal MINT group of countries.
However, the country keeps experiencing positive growth and in present days, Nigeria is a regional
power in Africa, a middle power in international affairs and an emerging global power.
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Abuja, Nigeria’s administrative and political capital is located at the center. It is not
just the fastest growing city in Africa but also one of the fastest growing in the world.
Being a key capital on the African continent due to Nigeria’s geo-political influence in regional
affairs, Abuja’s economy is mainly driven by real estate. Lagos, another economic center
in Nigeria and most populous city in Africa is a major African financial center. It was
the national capital of Nigeria until December 1991 and is known to be the cultural, financial
and entertainment capital of Africa. As top influencer of commerce, entertainment, technology,
education, politics, art and fashion in Nigeria, Lagos has the fourth highest GDP in Africa
Nigeria is inhabited by more than 250 ethnic groups speaking 500 different languages and being
identified with a wide variety of cultures. There are three largest ethnic groups in Nigeria which
are the Hausa in the North, Yoruba in the West and Igbo in the East together comprising over 60%
of the total population of Nigeria. At national level, English was chosen as official language
With a constitution that ensures freedom of religion, Nigeria is home to some of the
world’s largest Muslim and Christian populations, simultaneously. It is roughly divided in half
between Muslims who live mostly in the North and Christians who live mostly in the south. Nigeria
has in the minority indigenous religions such as those native to the Igbo and Yoruba ethnicity.
Apparently, we are not here to talk about religion or ethnicity but rather, discover
Nigeria’s economic success story. Is Nigeria rich by chance or by merit? Let’s find out.
Economic development in Nigeria had been hindered by years of military rule, corruption
and mismanagement. In the 1970s during the oil boom, Nigeria had a significant accumulated
foreign debt, which was used to finance major infrastructural investments. The country struggled
to keep up with its loan payments even with the fall of oil prices during the 1980s oil glut.
After negotiations by the Nigerian authorities in October 2005,
Nigeria and its Paris Club creditors reached an agreement under which Nigeria repurchased its
debt at a discount of approximately 60%. Part of its oil profits were used to pay the residual 40%
which freed up at least $1.15 billion annually for poverty reduction programs.
In April 2006, Nigeria became the first African country to completely pay off its debt owed by
the Paris Club. Due to the restoration of democracy and subsequent economic reforms,
Nigeria was put back on track to achieve its full economic potential.
The second largest source of foreign exchange in Nigeria with petroleum being the first are
remittances sent home by Nigerians living abroad Nigeria has abundance in arable land
but a shortage in farmland in the most densely settled areas
of the southeastern states. Cultural traditions such as prohibition against selling family land
have restricted access to farmland in some localities with abundant land for cultivation.
Desertification in the Far North has severely limited the land area available for cultivation.
Still, about 30% of Nigerians make a living from agricultural production most of which
are subsistence farmers who produce only a little surplus for sale. Since the 1982 step taken by the
government to halt the decline in industrial crop production, many farmers have been motivated to
cultivate tree crops and plantations of oil, palm and cocoa have been established by the
federal and state governments. Some Nigerian farmers raise pigs, sheep and goats while the
Fulanis still hold on to their cattle raring. Forestry was a major contributor to the foreign
exchange earnings of Nigeria which assisted in various developmental projects in the country,
thereby playing a very important role in the economy of the nation. In densely settled
areas such as the Niger Delta, there is extensive forest destruction where overgrazing, bush fires,
and the great demand for fuel wood prevent normal regeneration of plants on fallow land.
There are many large plantations of exotic species such as gmelina and teak,
established by the government to provide electric and telegraph poles and fuel wood.
Nigeria’s forest ecosystem contains many valuable plant species which are of considerable value in
providing food, shelter, drugs and fibers. Suggestions have been made that; there may
be over 6000 non-timber forest products. Despite the fact that, only 10% of Nigeria’s 99.3million
hectares of land is estimated as forest, positive decisions are currently being made to ensure
the sustainable management of the forest. Following the loss of thousands of head of
livestock during the recurring drought in the Sahel, fishing has assumed greater importance
as a food source in Nigeria. More than half of the fish demand is supplied by the domestic catch
while lake Chad and the southern coastal waters are the main sources of fish.
Large quantities are also caught every year in poles in seasonal rivers of the northern states.
Petroleum plays a great role in the Nigerian economy, accounting for 80% of government earnings
and 40% of GDP. Nigeria is the 8th largest exporter, has the 10th largest proven reserves
and is the 12th largest producer of petroleum in the world. Agitation for better resource control
in the Niger Delta, its main oil producing region has however, led to disruptions in oil production
and prevents the country from exporting 100% capacity. According to the department of petroleum
resources, Nigeria has a total of over 159 oil fields and 1481 wells in operation. Most of
Nigeria’s oil fields are small and scattered and as of 1990, these small fields accounted for 62.1%
of all Nigerian production. This contrasts with the sixteen largest fields which produced 37.9%
of Nigeria’s petroleum at the time. Nigeria also has in addition to its petroleum resources,
a wide array of unexploited mineral resources which include natural gas, bauxite, coal,
limestone, lead and zinc. Despite huge deposits of these natural resources, we can say the mining
industry in Nigeria is still in its infancy. With a mix of local and international banks,
asset management companies, brokerage houses, insurance companies and brokers,
private equity funds and investment banks Nigeria has a highly developed financial sector.
Its ICT sector has experienced a lot of growth, representing 10% of the nation’s GDP since
2018 as compared to 1% in 2001. Nigeria has one of the fastest growing telecommunication markets
in the world with major operating market operators like MTN, 9mobile, Airtel
and Globacom basing their largest and most profitable centers in the country. More so,
Lagos is regarded as one of the largest technology hubs in Africa with its thriving tech ecosystem.
Also, several startups like Piggyvest, Interswitch and Paystack are leveraging technology to solve
issues across different sectors. Nigeria has an ample amount of ethnic groups but
also includes rainforests, savannah, waterfalls and other natural attractions and because of this,
tourism in the country centers largely on events. Abuja is home for several parks and green areas
like the Millennium Park which is the largest and was officially opened in 2003. Lagos is gradually
taking steps like the Eyo carnival to becoming a global city and has become an important location
for African and black cultural identity. Many festivals are held in Lagos which provide which
provide entertainment of dance and song which add excitement and attract tourists to the city. It is
impossible to not mention the Lagos sandy beaches by the Atlantic Ocean and its many private beach
resort including the Inagbe Grand Beach resort and several others in the outskirts. Also, we cannot
afford to take no notice of the variety of hotels Lagos has, ranging from three-star to five-star
with a mixture of local hotels and franchises of multinational chains such as the Intercontinental
hotel and many more. With all these, the Nigerian Tourism Development Corporation has been working
with the government for upgrades which would become important sources of more revenue.
Furthermore, Nigeria has a manufacturing industry that includes, leather, textile (centered in Kano,
Abeokuta, Onitsha and Lagos), plastics, processed food and the most recent indigenous
auto manufacturing company (Innoson Vehicle Manufacturing). Most factories are located in
Ogun, considered as Nigeria’s industrial hub while more companies are moving there followed by Lagos.
The country has a few electronic manufacturers like Zinox and in 2013; Nigeria introduced a
policy regarding import duty on vehicles to encourage local manufacturing companies in the
country. The city of Aba in the south Eastern part of the country is also well known for
handicrafts and shoes, known as “Aba made. Most of the energy consumed in the country
comes from traditional biomass and waste which accounts for 83% of total primary production.
The remaining 17% of the energy consumed, comes from fossil fuels and hydropower.
Since independence, Nigeria has tried to develop a domestic nuclear industry for energy
and since 2004; Nigeria has had a Chinese-origin research reactor at Ahmadu Bello University. Also,
the country has sought the support of the International Atomic Agency
to develop plans for up to 4000 MWe for nuclear capacity by 2027 according to the
national program for the deployment of nuclear power for generation of electricity. In 2017,
Nigeria signed the UN treaty on the prohibition of nuclear weapons
and in the same year, agreements were signed for the construction of the Itu nuclear power plant.
The railways in Nigeria have undergone massive revamping with projects such as the Lagos Kano
standard gauge railway being completed connecting northern cities of Kano, Kaduna, Abuja, Ibadan and
Lagos. Also, more than 60,068km out of the 194,394km are paved and more are being paved
at the moment. There are 54 airports in Nigeria; with the principal airports being the Murtala
Muhammed International airport in Lagos and Nnamdi Azikiwe International Airport in Abuja.
As an effect of how the Nigerian government is responding to internet freedom among other things
such as limitations to access the internet and violations of users right, Nigeria is ranked 26th
out of 65 countries evaluated for internet freedom in the freedom house of 2020 index. Recently,
the Nigerian government has begun expanding this infrastructure to space-based communications.
The country has a space satellite that is monitored at the Nigerian National Space Research
and Development Agency headquarters in Abuja. The government has also commissioned the overseas
production and launch of four satellites. It is no doubt that, Nigeria can be
referred to as headquarter of the Entertainment industry in Africa.
In November 2008, Nigeria’s music scene received international attention
when MTV hosted the continent’s first African music awards show in Abuja. Additionally, the
first music video played on MTV Base Africa was Tuface Idibia’s pan-African hit “African Queen”
after which came countless hits from notable Nigerian artists. The Nigerian film industry
Nollywood is now the largest producer of movies in the world. At the end of 2013, the country’s
film industry reportedly hit a record-breaking revenue of 1.72 trillion Naira and as of 2014, the
industry was worth 5.1billion US dollars making it the third valuable film industry in the world. The
movie industry contributed about 1.4% to Nigeria’s economy. Also, the Nigerian comedy industry
is the largest comedy industry in Africa and is now the third largest entertainment industry
in Nigeria with an annual estimated worth of 50 billion Naira. The Nigerian dance industry is as
well blooming and prospering worldwide. Nigerian dance is often a mixture of Afrobeat, Hip-hop
and local West African dances making dancing an excelling profession in Nigeria. Also, football is
largely considered as Nigeria’s national sports and the country’s nation team “Super Eagles”
has made the World Cup on 6 occasions and the African Nations Cup on several occasions too.
All these sectors from Agriculture to Entertainment have a coaction which
synopsizes all Nigeria’s efforts into a monument that is the modern day Nigerian Economy. To all
those Nigerians that are yet to feel the actual implications of economic upturn and so doubt
their country, here’s a take home message for you “ change has come and it’s here not only for you
but for your children and their next generations”. If you enjoyed watching this video, please do
not forget to leave a thumps up, subscribe and become a member of our growing diverse community
here on THINK RICH AFRICA. Thanks for watching and see you in another interesting video.