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Last Published: 8/13/2019

Nigeria has the largest market in Africa with a population of approximately 200 million people.  In March 2016, PwC published a report, “Nigeria: Looking beyond Oil,” that raises the Nigerian economy to the top 10 in the world in 2050 with a projected GDP of $6.4 trillion. 
Examples of such extrapolations are numerous and wide-ranging.  A 2018 World Bank report on Business Reforms in Nigeria noted improvements in starting a business, dealing with construction permits, registering property, getting credit and paying taxes

Consequently, Nigeria’s status on the Ease of Doing Business index has started to show signs of improvement. Nigeria’s potential has remained largely untapped as the country’s previous growth was fueled by consumption and high oil prices. Because Nigeria is heavily dependent on oil which accounts for about 90% of export earnings and over 70% of total government revenues, Nigeria’s commercial activities were adversely affected by declining oil prices with its economy contracting by 0.67% and 2.06% in the first and second quarters of 2016 respectively. Successive quarterly contractions in 2016 and an annual growth rate of -1.6%, the first full year contraction since 1991, meant Nigeria officially entered a recession in 2016 which lasted till Q2 of 2017. The slowdown in economic activity was compounded by inadequate supply of foreign exchange, worsening inflation (peaking at 18.72% in January 2017 from 9.62% in January 2016) and inability to access foreign exchange at the official window for certain items which form inputs into the agriculture and manufacturing sectors. 

By the third quarter (Q3) of 2017, Nigeria officially exited the recession and commenced implementation of the government’s Economic Recovery and Growth Plan (ERGP) which focuses on diversifying the country’s economy. The ERGP articulates the Government of Nigeria’s vision for the country and lays the foundation for long term growth with an underlying philosophy to optimize local content and empower local business using driving factors such as increase in agricultural output, increase in the country’s oil production, recent gains in manufacturing, telecommunications, and real estate, and the expansionary budget of the Nigerian government. Currently, Headline Inflation is on the rise as the one-year figures for June 2018 (11.23%) to June 2019 (11.40%) indicates. Analysts have predicted that the figure will rise to about 11.42% in July 2019. The country continues to experience some development challenges such as non-inclusive growth, poverty, poor maternal and infant mortality indices, an underachieving education sector, and poor distribution of wealth amongst its citizens.

Nigeria has an abundance of labor at rates well below high-income and some middle-income countries. Nigeria also has an abundance of natural resources including oil, other commercial minerals, and precious stones. However, major impediments to development and trade include inadequate power supply, deficient transportation infrastructure, a slow and ineffective judicial system, and widespread corruption especially in the public sector. 

The United States is the second largest foreign investor in Nigeria with total capital imported in 2017 at $1.3 billion. In 2018, the U.S. was Nigeria’s fourth largest import partner with 11.5% of the entire volume of imports by the top fifteen import trade partners of Nigeria emanating from the U.S. Furthermore, data collected from the National Bureau of Statistics shows that the U.S. supplied 8.8% of imports to Nigeria within the first quarter of 2019.

Nigerian imports from the U.S. include wheat, vehicles, spare parts and machinery, refined petroleum products, military hardware. Nigeria exports to the U.S. in 2018 consisted of oil, cocoa, rubber, antiques, and food wastes, and accounted for 8.02% of its top 15 export destination volume making the U.S. Nigeria’s 6th largest export destination. The U.S. and Nigeria have a bilateral Trade and Investment Framework Agreement (TIFA) and Nigeria is eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA). By the first half of 2019, an estimated $400 million has been spent on development assistance from the U.S. through its Agency for International Development to Nigeria.

Nigeria plays an important leadership role in both West Africa and on the African continent.  The headquarters of the Economic Community of West African States (ECOWAS) is in Abuja.  Nigeria, which represents roughly 70% of the 15-country ECOWAS GDP and over half of the ECOWAS region’s population, plays an outsized role in ECOWAS.  It was Nigeria, for instance, that was largely responsible for the decades-long delays in developing the ECOWAS Common External Tariff (CET) and for the protections and flexibilities that remain a part of that tariff system.  In 2017, U.S. exports to ECOWAS totaled $4.8 billion, up 15% from 2016, with Nigeria being the top U.S. export market as a total $2.2 billion worth of business was conducted. The top export categories are vehicles and spare parts, mineral fuels, machinery, cereals and plastics. Imports to the U.S. from ECOWAS totaled $9.3 billion in 2017, up 58.6% from 2016. Nigeria remained top in this category, supplying about $7.1 billion worth of goods to the U.S.   

Nigeria can be a lucrative market for companies that can learn to navigate a complex and evolving business environment.  Established multinationals that have mastered operating in this chaotic regulatory environment make substantial profits despite the country’s low-income levels and logistical difficulties.  The Nigerian Government continues to promote Nigeria as a rewarding target for Foreign Direct Investment (FDI).  Foreign capital flows into all major sectors of the economy with the United Kingdom, United States, Canada, France, and China being the main sources.  China has re-emerged as a major development, trade, and investment partner of the Nigerian government especially considering Western skittishness in investing in Nigeria due to the recession and restrictive government controls in foreign exchange and international trade. China is Nigeria’s largest contractor and partner in infrastructure projects with total volume of projects estimated at $77 billion. These projects cut across infrastructure sectors – road, rail, power, construction – and are largely implemented by Chinese state-owned enterprises and financed by the Export-Import Bank of China.

To pull Nigeria out of recession, the government released an Economic Recovery and Growth Plan (ERGP) in March 2017 which, amongst other objectives, prioritizes the diversification of the Nigerian economy. The Government’s sectoral focus – and by extension, areas ripe for investment – are as follows:


  • Agriculture and food security: Invest in the sector to achieve national self-sufficiency in tomato paste, rice, and wheat, and become a net exporter of rice, cashew nuts, groundnuts, cassava, and vegetable oil by 2020. Grow the sector by about 7% and prime agriculture as a job creator and a foreign exchange earner.
  • Energy (power and petroleum products): Ensure energy sufficiency in petroleum products and become a net exporter by 2020. Optimize at least 10 GW of operational power capacity by 2020. Increase local oil production to 2.5 mbpd by 2020, expand oil sector infrastructure, and boost local refining.
  • Transportation infrastructure: Partner with the private sector to strengthen transport infrastructure to aid the achievement of ERGP targets and build a competitive global economy
  • Industrialization: Drive industrialization with emphasis on Small and Medium Scale Enterprises focusing on priority sectors such as agriculture, Fast Moving Consumer Goods, and manufacturing.

Interventions in these sectors will be undertaken against the backdrop of macroeconomic targets of low inflation, market reflective exchange rates, sustainable fiscal balances, diversified fiscal revenue base through improved tax and customs administration, and sub-national fiscal coordination amongst others.

A copy of the ERGP is available at:  Nigeria's Economic Recovery and Growth Plan.


Oil and Gas

Nigeria is the largest oil producer in Africa, holds the largest natural gas reserves on the continent, and is among the world's top five exporters of liquefied natural gas (LNG).  In 2018, the petroleum sector contributed 8.60% to Nigeria’s GDP but accounted for approximately 90% of Federal Government income. In the first quarter of 2019, the oil sector contributed 9.14% to the country’s GDP as reported by the National Bureau of Statistics.

Billions of dollars in arrears are currently owed to its joint venture partners. As at March 2019, the Government of Nigeria had paid about $1.5 billion of the $5.1 billion cash call arrears to date. However, this low rate of cash call payments combined with lax contract enforcement, a lack of regulatory clarity, and high and costly operational risks has constrained growth and investment in this sector.  The regulatory environment for international oil companies in Nigeria is further affected by the Nigerian Oil and Gas Industry Content Development Act of 2010.  Under the Act, Nigerian independent operators are given first consideration in the award of oil projects in Nigeria.  In addition, multinational companies working through Nigerian subsidiaries must demonstrate that a minimum of 50% of the equipment used is owned by Nigerian subsidiaries.

Nigeria has some of the largest natural gas deposits in the world with 180 trillion cubic feet of proven reserves, but the country has been unable to mobilize that gas for the domestic market.   Political interference, failure to legislate on key issues, and an inconsistent approach to regulating the price of gas collectively deterred the necessary investment to capture and deliver gas to domestic markets.

In April 2016, the Nigerian National Petroleum Corporation (NNPC) opened a bidding process to refurbish its refineries.  A consortium of companies, including General Electric, were engaged in discussions with the NNPC. As of March 2019, a few agreements have been reached to revamp the Port Harcourt refinery. Other agreements are being put in place to ensure that the other three refineries are revamped. This would increase the operational capacity of the refineries from their current 60% to 90% allowing Nigeria to optimize the total installed refining capacity of 445,000 bpd it has. In addition, a privately-owned refinery with an installed capacity of 650,000 bpd is expected to begin operating in 2020.


Power Sector

The power sector neither meets the existing demand of the country’s population and businesses nor delivers uninterrupted reliable electricity. Today, 23 grid-connected generating plants are in the country with a total installed capacity of 12,500 megawatts (MW) with a daily operational average near 4,000 MW.  The government plans to improve access to electricity from 45% to about 90% by 2030 and through series of power sector reforms and policy initiatives is focused on promoting efficiency in the sector to attract private investment, increase generation, and resolve critical issues adversely impacting the sector.

The Nigerian electricity industry from power generation to distribution is mostly privatized.  The power sector is not generating enough cash from consumers to cover the cost of generating and delivering power, leaving generation, transmission, and distribution companies with operating deficits.  Additionally, lack of affordable long-term financing is hampering investment in infrastructure upgrades.  

Despite challenges, there have been measured improvements in the industry.  The Azura-Edo 461MW independent power project became operational in May 2018 and currently delivers up to 10 percent of the country’s on-grid power. Power production is still suboptimal as data for May and June 2019 show that about 3,754 MW/h and 3,697/h MW were produced in the two months respectively.



Nigeria's publicly-owned and operated transportation infrastructure is a major constraint to economic development.  The principal ports are in Lagos (Apapa and Tin Can Island), Port Harcourt, and Calabar.  While the Government of Nigeria has opened the ports sector for participation by the private sector, to ensure effective management and operation through concession agreements, the government still manages the rail and roads sectors.  A sound legal framework and reforms are needed to allow Public and Private Partnerships (PPPs) to move forward in the rail and roads sector.  Of the 50,000 kilometers of roads, only slightly more than 10,000 kilometers are paved, and many of these paved roads are in poor condition.  Only five of Nigeria's twenty-two airports—Lagos, Kano, Port Harcourt, Enugu, and Abuja—currently receive international commercial flights. Haj flights fly out of Yola to Saudi Arabia, but these are charter flights.  Lagos is working towards establishing itself as a regional hub.  

Nigeria’s railway currently has eight lines that are slightly more than 2,000 miles long collectively.  These railways require major rehabilitation, modernization, and expansion.  In 2010, the Government of Nigeria launched a 25-year strategic plan to revive the country’s railway system and commissioned various railway projects through concession agreements with state-owned Chinese companies.  Many of these projects have never reached financial close due to underlying corruption issues in the procurement process and public-sector infrastructure funding shortages.  The Lagos-Abuja line, the Kaduna-Abuja passenger line and the Kaduna-Abuja line are the only three operational lines currently. An American company supplied 25 locomotives for the Lagos-Abuja line.  In April 2018, the Government of Nigeria and General Electric (GE) signed a $45 million interim rail concession (while negotiating a $2 billion concession to supply and operate locomotives) to refurbish the Lagos to Kano rail line. The interim concession may grow to include the Port Harcourt to Maiduguri line.  Nigeria has plans to participate in the AfricaRail project by upgrading the gauge of the rail lines consistent with neighboring rail systems.  AfricaRail is a project to rehabilitate and construct twelve hundred new miles of railway linking Cote d’Ivoire, Burkina Faso, Niger, Benin, Togo, and Nigeria at an estimated cost of $2 billion. 



Nigeria’s services output ranks as the 63rd largest worldwide and fifth largest in Africa.  The potential of the Nigerian financial services sector remains enormous, and foreign banks are becoming increasingly attracted to the market.  However, most of Nigeria's population has only limited access to financial services – a problem compounded by high levels of bureaucracy required to complete even simple transactions.  The Nigerian Government aims to push ahead with reforms of the insurance and pension industries.

Consumer Products

Nigeria is an increasingly important market and manufacturing center for the African consumer product sector.  Nigeria is currently home to a growing middle class now estimated to be about 50 million, and it is a clear leader in the regional economic grouping ECOWAS and regionalization efforts.  There is a wide range of fast-moving U.S. products in the Nigerian market from both large and small companies. 

The promise of this market has supported several U.S. companies’ manufacturing plants in Nigeria.  Major challenges to companies in the consumer products sector in Nigeria include protectionist policies and lack of adequate intellectual property rights protection.


Information and Communications’ Technology (ICT)

Nigeria is Africa’s largest ICT market, accounting for 29% of internet usage in Africa.  In June 2018, the Nigerian Communications Commission reported that Nigeria had more than 160 million active mobile telecoms subscribers of GSM and CDMA.  Mobile GSM subscribers account for 98.37% of the total number of telecom subscribers.  Fiber optic expansion is currently taking place in Lagos and Abuja; however, expansion in rural areas continues to be hampered as telecom providers await pending legislation on “right of way” protection for telecom infrastructure.

There are four main GSM networks in Nigeria:  Airtel, MTN, Globacom, and 9mobile while a new entrant - NTEL is operating a 4G LTE only network.  Code division multiple access (CDMA) was operated by two companies - Visafone and Multilinks but Visafone has since transferred its subscribers to MTN thereby making the GSM platform Nigeria’s main mobile telecommunications channel.



Nigeria’s agricultural sector employs nearly 70% of the population and contributes nearly 22% of GDP.  Nigeria possesses an abundance of arable land and a favorable climate to produce nuts, fruits and grains.  Most of farming in Nigeria is subsistence based, utilizing manual labor and relatively little agricultural machinery. 

Nigeria continues to maintain import restrictions (high duties, levies, quotas and import bans) on several agricultural products, including poultry, beef and pork products, chicken, rice, amongst others on the government’s banned items list. Absent any organized and concerted public and/or private sector efforts to modernize the sector and access regional and global commodity markets, growth opportunities for U.S. products serving Nigeria’s agribusiness sector are relatively few at present.  Land ownership, transport, and lack of infrastructure issues are major barriers to entry for starting an agro-farming business in Nigeria.  Many multi-national companies have instead engaged in agro-processing business, which are in large demand.  The Government of Nigeria’s foreign exchange restrictions on major agricultural items, however, create challenges for importing the needed raw items to process.



The Nigerian healthcare system has few modern facilities.  As a result, the country loses millions every year to medical tourism with Nigerians travelling abroad for medical procedures.  Prospects exist for investment in hospitals and clinics with treatment capabilities and cutting-edge medical technologies.

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