Gradual reform
From the Obasanjo regime, government supports
"private-sector" led, "market oriented" economic
growth and has begun extensive economic reform efforts. Although the
government's anti-corruption campaign has so far been disappointing, progress
in injecting transparency and accountability into economic decision making is
notable. The dual exchange rate mechanism formally abolished in the 1999 budget
remains in place in actuality. During 2000 the government's privatization
program showed signs of life and real promise with successful turnover to the
private sector of state-owned banks, fuel distribution companies, and cement
plants. However, the privatization process has slowed somewhat as the
government confronts key parastatals such as the state telephone company NITEL and
Nigerian Airways. The successful auction of GSM telecommunications licenses in
January 2001 has encouraged investment in this vital sector. Although the government has been stymied so far
in its desire to deregulate downstream petroleum prices, state refineries,
almost paralyzed in 2000, are producing at much higher capacities. By August
2001, gasoline lines disappeared throughout much of the country. The government
still intends to pursue deregulation despite significant internal opposition, particularly
from the Nigeria Labour Congress. To
meet market demand the government incurs large losses importing gasoline to
sell at subsidized prices.
Investment
Although Nigeria must grapple with its decaying
infrastructure and a poor regulatory environment, the country possesses many
positive attributes for carefully targeted investment and will expand as both a
regional and international market player. Profitable niche markets outside the
energy sector, like specialized telecommunication providers, have developed
under the government's reform program. There is a growing Nigerian consensus
that foreign investment is essential to realizing Nigeria's vast but squandered
potential. European investments are increasing, especially since Belgian
consultancy companies such as Genco are exploring the Nigerian market.
Companies interested in long-term investment and
joint ventures, especially those that use locally available raw materials, will
find opportunities in the large national market. However, to improve prospects
for success, potential investors must educate themselves extensively on local
conditions and business practices, establish a local presence, and choose their
partners carefully. The Nigerian Government is keenly aware that sustaining
democratic principles, enhancing security for life and property, and rebuilding
and maintaining infrastructure are necessary for the country to attract foreign
investment.
The stock market capitalization of
listed companies in Nigeria was valued at $97.75 billion on 15 February 2008 by
the Nigerian Stock Exchange.
Foreign economic relations
Nigeria's foreign economic relations revolve
around its role in supplying the world economy with oil and natural gas, even
as the country seeks to diversify its exports, harmonize tariffs in line with a
potential customs union sought by the Economic Community of
West African States (ECOWAS), and encourage inflows of foreign
portfolio and direct investment. In October 2005, Nigeria implemented the ECOWAS
common external tariff, which
reduced the number of tariff bands. Prior to this revision, tariffs constituted
Nigeria's second largest source of revenue after oil exports. In 2005 Nigeria
achieved a major breakthrough when it reached an agreement with the Paris Club
to eliminate its bilateral debt through a combination of write-downs and
buybacks. Nigeria joined the Organization
of the Petroleum Exporting Countries in July 1971 and the World Trade Organization in
January 1995.
External trade
Nigeria's exports in 2006
Graphical depiction of Nigeria's
product exports in 28 color-coded categories.
In 2005, Nigeria imported about US$26 billion of
goods. In 2004 the leading sources of imports were China (9.4%), the United
States (8.4%), the United Kingdom (7.8%), the Netherlands (5.9%), France
(5.4%), Germany (4.8%), and Italy (4%). Principal imports were manufactured
goods, machinery and transport equipment, chemicals, and food and live animals.
In 2005, Nigeria exported about US$52 billion of
goods. In 2004, the leading destinations for exports were the United States
(47.4%), Brazil (10.7%), and Spain (7.1%). In 2004 oil accounted for 95% of
merchandise exports, and cocoa and rubber accounted for almost 60% of the
remainder.
In 2005, Nigeria posted a US$26 billion trade
surplus, corresponding to almost 20% of gross domestic product. In 2005,
Nigeria achieved a positive current account balance of US$9.6 billion. The Nigerian
currency is the naira
(NGN). As of mid-June 2006, the exchange
rate was about US$1=NGN128.4. In recent years, Nigeria has expanded
its trade relations with other developing countries such as India. Nigeria is
the largest African crude oil supplier to India — it annually exports 400,000
barrels per day (64,000 m3/d) to India valued at US$10 billion
annually.
India seeks expansion of oil trade with Nigeria,
as it is the second largest purchaser of Nigeria's oil which fulfills 20% to
25% of India's domestic oil demand. Indian oil companies are also involved in
oil drilling operations in Nigeria and have plans to set up refineries there.
The trade volume between Nigeria and the United
Kingdom rose by 35% from USD6.3
billion in 2010 to USD8.5
billion in 2011.[9]
Remittances
According to the International Organization
for Migration, Nigeria witnessed a dramatic increase from USD 2.3
billion in 2004 to 17.9 billion in 2007, representing 6.7% of GDP. The United
States accounts for the largest portion of official remittances, followed by
the United Kingdom, Italy, Canada, Spain and France. On the African continent,
Egypt, Equatorial Guinea, Chad, the Libyan Arab Jamahiriya and South Africa are
important source countries of remittance flows to Nigeria, while China is the
biggest remittance-sending country in Asia.
Debt
In 2008, Nigeria's external debt was an estimated
US$3.3 billion.