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- GDP (PPP):
- $1.1 trillion
- 2.7% growth
- 4.7% 5-year compound annual growth
- $6,108 per capita
- Inflation (CPI):
- FDI Inflow:
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.
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.
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.
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.
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.
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.