2017 Index of Economic Freedom

Nigeria

overall score57.1
world rank115
Rule of Law

Property Rights35.3

Government Integrity12.2

Judicial Effectiveness33.2

Government Size

Government Spending95.2

Tax Burden85.2

Fiscal Health87.2

Regulatory Efficiency

Business Freedom48.9

Labor Freedom73.9

Monetary Freedom71.3

Open Markets

Trade Freedom62.3

Investment Freedom40.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 178.7 million
  • GDP (PPP):
    • $1.1 trillion
    • 2.7% growth
    • 4.7% 5-year compound annual growth
    • $6,108 per capita
  • Unemployment:
    • 5.8%
  • Inflation (CPI):
    • 9.0%
  • FDI Inflow:
    • $3.1 billion
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Nigeria, Africa’s most populous nation, has sought to improve its macroeconomic stability and develop its poor infrastructure, but severe economic policy distortions and a lack of transparency in the economic system continue to impair progress. The government also has struggled to end ongoing security threats in some parts of the country that have exacerbated poverty and unemployment.

The government’s overreliance on oil, which accounts for over 90 percent of export earnings, has exposed the economy to major risks amid declining oil prices. Despite attempts to diversify Nigeria’s industries, overall progress has been only marginal. State-imposed bans on imports have hurt consumers and businesses, and the judicial system remains vulnerable to corruption.

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Background

In May 2015, in Nigeria’s first peaceful transfer of power among parties since independence, former military ruler Muhammadu Buhari defeated incumbent President Goodluck Jonathan. Critical challenges include an Islamist insurgency and budgetary shortfalls caused by plunging oil prices. Before the May election, Nigeria, Chad, Niger, and Cameroon pushed the terrorist group Boko Haram out of its major strongholds. However, Boko Haram attacks have continued, primarily in northeast Nigeria, and militants in the oil-rich Niger Delta region have revived a campaign of attacks against the oil sector. In 2014, Nigeria surpassed South Africa as Africa’s largest economy.

Rule of LawView Methodology

Property Rights 35.3 Create a Graph using this measurement

Government Integrity 12.2 Create a Graph using this measurement

Judicial Effectiveness 33.2 Create a Graph using this measurement

Protection of property rights is weak, although the World Bank’s 2016 Doing Business survey reported that fees for property transfers had been reduced. The judiciary has some independence but is hobbled by political interference, corruption, and a lack of funding. Corruption is rarely investigated or prosecuted, and impunity remains widespread at all levels of government. Protectionism driven by currency devaluation has led to increased smuggling.

Government SizeView Methodology

The top individual income tax rate is 24 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 2.8 percent of total domestic income. Government spending has amounted to 12.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.8 percent of GDP. Public debt is equivalent to 11.5 percent of GDP.

Regulatory EfficiencyView Methodology

Despite recent reforms, the structural changes that are needed to develop a more vibrant private sector have not emerged, and the oil sector still dominates overall economic activity. In the absence of dynamic nonenergy growth, a more vibrant labor market has not emerged. To tackle chronic shortages, the government cut gasoline subsidies in May 2016 by 67 percent. Nigeria regulates prices on electricity.

Open MarketsView Methodology

Trade is moderately important to Nigeria’s economy; the value of exports and imports taken together equals 31 percent of GDP. The average applied tariff rate is 11.3 percent. In general, foreign and domestic investors are treated equally, but the judicial and regulatory systems impede foreign investment. The banks are highly exposed to the energy sector, and nonperforming loans have been increasing rapidly.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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