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- GDP (PPP):
- $413.4 billion
- 7.2% growth
- 7.0% 5-year compound annual growth
- $2,578 per capita
- Inflation (CPI):
- FDI Inflow:
Nigeria’s economic freedom score is 55.1, making its economy the 120th freest in the 2013 Index. Its score is 1.2 points lower than last year due to a substantial decline in labor freedom that outweighs gains in the control of government spending and monetary freedom. Nigeria is ranked 21st out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.
Nigeria has pursued economic reforms centered on enhancing management of public finance and improving the efficiency of business regulations. With a strong surge in oil production, the economy has expanded quickly, achieving an average annual growth rate of 7 percent over the past five years.
An increase in the minimum wage has undercut labor productivity, and the structural changes that are critical to broad-based development have not emerged. The oil sector continues to dominate the economy. Prolonging regulatory uncertainty, legislation designed to introduce sweeping changes to the oil and gas industry has not moved forward over the past four years. With the judicial system susceptible to political interference, the rule of law is weak throughout the country. Growing social unrest further threatens wider stability.
Vice President Goodluck Jonathan, inaugurated as president in May 2010 after President Umaru Yar’Adua died, was re-elected in a controversial election in April 2011. Ethnic, regional, and religious violence has taken a heavy toll, aggravated by the imposition of Islamic law in the northern states, and Islamic terrorism by Boko Haram in the predominately Muslim North has caused regional instability. Nigeria is Africa’s most populous nation, with an estimated population of over 150 million. It is also Africa’s leading oil producer, although sabotage of oil facilities and pipelines and violent attacks on foreign oil workers in the Niger Delta impede output. Oil and gas account for about 90 percent of export earnings and 80 percent of government revenue. The informal economy is extensive, and a majority of the population is engaged in agriculture.
The legal system suffers from political interference, bureaucratic delays, insufficient funding, and the lack of a document-processing system. One of the world’s least efficient property registration systems makes acquiring and maintaining rights to real property difficult. Enforcement of copyrights, patents, and trademarks is deficient. Rampant corruption, high crime, and insecurity continue to weaken the rule of law.
The top income tax rate is 24 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The overall tax burden equals 16.3 percent of total domestic income. Government spending is equivalent to 29.1 percent of total domestic output. The budget is in a slight surplus, and public debt remains below 20 percent of GDP.
The entrepreneurial environment remains burdened by time-consuming and costly regulatory procedures. The minimum capital requirement for starting a business has been eliminated, but licensing costs still average over four times the level of average annual income. The public and energy sectors employ much of the formal labor force, and an increase in the minimum wage has reduced hiring flexibility. Inflation has eased somewhat but is still high.
The trade-weighted average tariff rate is quite high at 10.6 percent, and slow customs procedures further deter dynamic growth in trade. Most sectors are open to private investment, and regulations formally treat foreign and domestic investment equally, but the investment regime lacks efficiency. Reform in the financial sector has been ongoing since 2009, but the state continues to influence the allocation of credit.