The risks of operating in Nigeria, Africa’s second biggest economy and top oil producer, are huge, but so are the rewards, say people who do business there.
Here is a glance at Nigeria’s economy:
KEY ECONOMIC FACTS:
* Oil exports account for over 95 percent of Nigeria’s foreign exchange revenues and about 85 percent of government revenues, though they are only 15 percent of GDP.
* Agriculture is 45 pct of GDP. Much of it, apart from cocoa, is domestically consumed. Despite its importance, the sector is in poor state. A lot of land is left fallow, and subsistence farmers have little access to fertiliser or pesticides.
* Besides the oil and gas sector, Nigeria is also the world’s 4th largest cocoa exporter, producing roughly 7 percent of world output of about 4 million tonnes.
* The manufacturing sector is hampered by electricity shortages. Economists say growth, forecast at 6-7 pct this year, would be in double digits if it could sort out its power sector. Government’s privatisation plans have been stalled.
* Its biggest company, Dangote Cement, controlled by Africa’s richest man, Aliko Dangote, is one of the world’s largest cement players. It now has capacity of around 28 million tonnes a year and is worth more than $11 billion, making up a third of Nigeria’s stock exchange.
* As Africa’s most populous country, Nigeria is a significant market for consumer firms like Unilever, Nestle, Guinness and PZ Cussons.
KEY NUMBERS ON THE ECONOMY:
* Population: 158.4 million
* GDP: IMF currently esimates Nigerian GDP at $270 billion
* Growth forecast for 2012: Nigerian Finance Minister Ngozi Okonjo-Iweala last month revised down the country’s growth forecasts to 6-7 percent.
* Stock market capitalisation: 6.6 trillion Nigerian naira ($41.9 billion).
* Year-on-year inflation rose to 12.9 percent in April, from 12.1 the previous month.
FINANCE AND POLICY
* Nigeria plans to rebase its GDP calculations by August, which would give it an economy of $375 billion, almost the size of South Africa’s, and boost financial markets, as portfolio investors show greater interest.
* Nigeria has Africa’s second biggest stock market and has sizeable treasury bill and bond markets.
* Money flows and liquidity in the banking system are largely driven by oil money flowing into the three tiers of Nigeria’s government each month.
* The local currency, the naira, is free floating but loosely managed by the central bank within a target band of 155-160 to the dollar.
* Central bank governor Lamido Sanusi is seen as a hawk on inflation, keeping interest rates tight, while Finance Minister Okonjo-Iweala is trying to improve fiscal discipline in a government with a tendency to overspend its oil windfall.
* The government launched a sovereign wealth fund this week to better save oil revenues for the future.
* The government spent 1.44 trillion Nigerian naira ($8.8 billion) in the first half of 2012, of which 1.036 trillion was on recurrent expenditure, the largest component a fuel subsidy.
* President Goodluck Jonathan tried to abolish the subsidy in January but had to partly reinstate it, facing huge strikes.
* Nigeria has a proven crude oil reserve base of up to 40 billion barrels and current production capacity of about 2.5 million bpd. Much of it is exported, mostly to the United States, Europe and Asia. Its sweet, light crude is sought after because it is easy to refine into gasoline.
* Despite being Africa’s top crude producer, defunct refineries mean Nigeria imports more than 80 percent of its refined gasoline needs, paying a subsidy on imported gasoline to keep domestic retail prices low.
* Nigeria’s Petroleum Industry Bill (PIB) - to address a wide range of matters relating to fiscal terms on projects and the state oil company, is now set to pass before year-end.
* The oil industry is primarily located in the Niger Delta. Local groups often attack the oil infrastructure, forcing companies to declare force majeure on oil shipments. Oil theft leads to often severe pipeline damage causing pollution.
* Nigeria’s natural gas reserves are estimated at about 200 trillion standard cubic feet, the seventh-largest in the world. Gas production is minimal with much of it flared into the sky or used in the oil production process. Nigeria has ambitious plans to increase supply to 13 billion cubic feet per day (cfd) by 2015, more than double current levels.
* With nearly 160 million people, Nigeria is Africa’s most populous nation. One in five sub-Saharan Africans is Nigerian.
* Despite their oil wealth, 70 percent of Nigerians live in poverty. According to the latest Human Development Index (HDI) from 2011, life expectancy at birth is 51.9 years, only six years more than three decades ago. The sub-Saharan average is 54.4 years.
* Nigeria has the lowest HDI ranking among members of the Organization of the Petroleum Exporting Countries (OPEC). Iraq is ranked 132, with an average life expectancy of 69.0 years.
Sources Reuters/World Bank/www.trust.org/amnesty.org/http://afripol.org/All
Africa.com/UN statistics/Transparency International/Platts
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