chapter 2 2 - nigeria in brief

8/3/2019 Chapter 2 2 - Nigeria in Brief

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Table of Contents

2 NIGERIA IN BRIEF

2.2.1 Geographical History of Nigeria

2.2.2 Brief on Government and Politics

2.2.3 Brief on Bilateral and Foreign Relation

2.2.4 Brief History of Nigeria Economy

2.2.5 Brief on Nigeria Key Sectors

2.2.6 Brief on Infrastructural Development in Nigeria


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2.2.1 Geographical History of Nigeria

Nigeria is a country in West Africa. Nigeria shares land borders with the Republic of Benin inthe west, Chad and Cameroon in the east, and Niger in the north. Its coast lies on the Gulf ofGuinea in the south and it borders Lake Chad to the northeast. Abuja, the capital city of the Table

2.2.1 - Map of West Africa(Source: http://unowa.unmissions.org/Default.aspx?tabid=793)

Federal Republic of Nigeria replaced the former capital city, Lagos, in December 1991, because

of its more central location, among other reasons. Noted geographical features in Nigeria include

the Adamawa highlands, Mambilla Plateau, Jos Plateau, Obudu Plateau, the Niger River, River

Benue and Niger Delta. The country's geographic coordinates are 1000N 800E. Nigeria has

been experiencing a population explosion for at least the last 50 years due to very high fertility

rates, quadrupling its population during this time. Nigeria has become the 6th most populated

country in the world with a population of 167 million people (UNFPA, world population report,

2011).
http://unowa.unmissions.org/Default.aspx?tabid=793http://unowa.unmissions.org/Default.aspx?tabid=793


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Table 2.2.2 - Map of Nigeria exhibiting its 36 states and federal capital territory (Source: http://en.wikipedia.org/wiki/Nigeria)

2.2.2 Brief on Government and Politics

Nigeria is a heterogeneous national entity and a federation comprising currently thirty-six states

(36) and one (1) Federal Capital Territory, which are further sub-divided into 774 Local

Government Areas (LGAs). Lagos is the largest city in sub-Saharan Africa, with a population of

over 8 million in its urban area alone.

A series of constitutions after World War II granted Nigeria greater autonomy; independence

came in 1960 after the British influence and control. Following nearly 16 years of military rule, a

new constitution was adopted in 1999, and a peaceful transition to civilian government was

completed.


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Table 2.2.3 - Population Density in Nigeria (Source: http://en.wikipedia.org/wiki/Nigeria)

Nigeria continues to experience longstanding ethnic and religious tensions. Nigeria is currently

experiencing its longest period of civilian rule since independence. The general elections of April

2007 marked the first civilian-to-civilian transfer of power in the country's history. In April

2011, the Independent National Electoral Commission (INEC) organized legislative,

gubernatorial, and presidential elections. President Jonathan captured 59% of the national vote,

beating his main rival, Muhammadu Buhari of the Congress for Progressive Change (CPC), who

won 32%. While imperfect, the elections were considered Nigerias most successful since its

return to multiparty democracy in 1999, and reversed a downward trajectory of successively

flawed election processes. President Jonathan was sworn in on May 29, 2011.

Nigeria federalism is modeled after the United States, with executive power exercised by the

president and with overtones of the Westminster System model in the composition and

management of the upper and lower houses of the bicameral legislature. The president presides

as both Head of State and head of the national executive and is elected by popular vote to a


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maximum of two four-year terms. The president's power is checked by the Senates and House of

Representatives, which are combined in a bicameral body called the National Assembly.

Nigeria, is composed of over 250 ethnic groups, the most populous and politically influential

group include Hausa and Fulani 29%, Yoruba 21%, Igbo (Ibo) 18%, Ijaw 10%, Kanuri 4%,

Ibibio 3.5%, Tiv and Idoma 2.5%. Nigeria has no any religious domineering, although the

Muslim totaled 50%, Christian 40%, indigenous beliefs 10%. The major languages spoken in

Nigeria are Hausa, Igbo, Yoruba, Fulfulde, Kanuri, Ibibio and English as the official language.

Table 2.2.4 - Linguistic map of Nigeria relating with Cameroon and Benin (Source: http://www.faculty.fairfield.edu/Nigeria)

2.2.3 Brief on Bilateral and Foreign Relation

After gaining independence in 1960, Nigeria made the liberation and restoration of the dignity of

Africa the centerpiece of its foreign policy and played a leading role in the fight against the

apartheid regime in South Africa. One notable exception to the African focus of Nigeria's foreign

policy was the close relationship the country enjoyed with Israel throughout the 1960s, with the

latter country sponsoring and overseeing the construction of Nigeria's parliament buildings.


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Nigeria is currently in better foreign relations due to its current state of democracy though a

fledging one. Currently, Nigeria is a member of about Fifty-Nine (59) foreign organizations

including the AfDB, AU and the UN. Nigeria is the largest contributor to ADF in cumulative

terms ahead of Japan and the United States. Also, the country is the largest shareholder in the

ADB ahead of Japan and the United States. The country is a member of the African Union and

sits on that organization's Peace and Security Council. Since 1960 Nigeria has been a member of

the UN and also joined the Commonwealth of Nations the same year; however they were briefly

suspended between 1995 and 1999.

2.2.4 Brief History of Nigeria Economy

Nigeria is classified as a mixed economy emerging market, and has already reached middle

income status according to the World Bank, with its abundant supply of natural resources, well-

developed financial, legal, communications, transport sectors and stock exchange (the Nigerian

Stock Exchange), which is the second largest in Africa

The Gross Domestic Product (GDP) in Nigeria expanded 7.7 percent in the second quarter of

2011 over the same quarter, previous year. Historically, from 2005 until 2010, Nigeria's average

quarterly GDP Growth was 6.71 percent reaching a historical high of 8.29 percent in December

of 2010 and a record low of 4.50 percent in March of 2009. Nigeria is one of the most developedeconomies in Africa. The petroleum industry provides 95% of foreign trade earnings and about

80% of budget revenues. Yet, agriculture is the main source of revenue for two-thirds of the

population. Still, more than 50% of Nigerians live in poverty with corruption and poor

infrastructure as the main obstacles for future sustainable development.

The Oil-rich Country began pursuing economic reforms in 2008 after been hobbled by political

instability, corruption, inadequate infrastructure, and poor macroeconomic management and

failure by the past leaders to diversify the economy away from its overdependence on the capital-

intensive oil sector. The restorations of democracy and subsequent economic reforms have

successfully put Nigeria back on track towards achieving its full economic potential. It is now

the second largest economy in Africa (following South Africa), and the largest economy in the

West Africa Region.


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During the oil boom of the 1970s, Nigeria accumulated a significant foreign debt to finance

major infrastructural investments. With the fall of oil prices during the 1980s oil glut Nigeria

struggled to keep up with its loan payments and eventually defaulted on its principal debt

repayments, limiting repayment to the interest portion of the loans. Arrears and penalty interest

accumulated on the unpaid principal which increased the size of the debt. However, after

negotiations by the Nigeria authorities, in October 2005 Nigeria and its Paris Club creditors

reached an agreement in which Nigeria repurchased its debt at a discount of approximately 60%.

Nigeria used part of its oil profits to pay the residual 40%, freeing up at least $1.15 billion

annually for poverty reduction programmes. Nigeria made history in April 2006 by becoming the

first African Country to completely pay off its debt (estimated $30 billion) owed to the Paris

Club.

Since 2008 the government has begun to show the political will to implement the market-

oriented reforms urged by the IMF, such as modernizing the banking system, Monetary Policy

Rate (MPR) tightening and curbing inflation by blocking excessive wage demands, and resolving

regional disputes over the distribution of earnings from the oil industry. GDP rose strongly in

2007-10 because of increased oil exports and high global crude prices in 2010. Nigeria is

projected by the Citigroup to get the highest average GDP growth in the world between 2010

2050. Nigeria is one of the two countries from Africa among 11 Global Growth Generators

countries.

2.2.5 Brief on Nigeria Key Sectors

Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and

has the 10th largest proven reserves. The country joined OPEC in 1971. Oil was first discovered

in Nigeria in 1953 in Oloibiri in the Niger Delta (PENGASSAN, 1978). Since the oil discoveries,

it has become the dominant factor in Nigerias economy. Nigeria is recognized as a country with

the most known reserves of petroleum and gas in Sub-Saharan Africa. Petroleum has long

become the most important aspect of the national economy, accounting for more than half of

GDP, about 95 percent of government revenues, and over 90 percent of exports. Since 2003,

Nigeria has embarked on an ambitious agenda of reforms aimed at enhancing governance in

public financial management (PFM), banking services, power and telecommunications


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infrastructures, and transparency and accountability in the oil sector. The reforms have led to

strong economic growth during 200307; (AfDB African Economic Outlook, Nigeria, 2011).

Despite these reforms, Nigeria remains a poor country with more than half of its population

living below the poverty line and 35 percent living in conditions of extreme poverty (National

Planning Commission 2007). Gross domestic product (GDP) per capita has remained almost

unchanged (still below US$1,200) and there are few signs of multiplier effects from the oil

industry. Public infrastructure has either declined severely or is in a state of collapse, and the

unreliability of critical public utilities such as electricity is a primary reason why most

manufacturing firms have closed (Borodo 2009).

Nigeria has one of the fastest growing telecommunications markets in the world, major emerging

market operators (like MTN, Etisalat, Zain and Globacom) basing their largest and most

profitable centers in the country. The government has recently begun expanding this

infrastructure to space based communications. Nigeria has a space satellite which is monitored at

the Nigerian National Space Research and Development Agency Headquarters in Abuja.

The country has a highly developed financial services sector, with a mix of local and

international banks, asset management companies, brokerage houses, insurance companies and

brokers, private equity funds and investment banks.

Nigeria also has a wide array of underexploited mineral resources which include natural gas,

coal, bauxite, tantalite, gold, tin, iron ore, limestone, niobium, lead and zinc. Despite huge

deposits of these natural resources, the mining industry in Nigeria is still in its infancy.

Agriculture used to be the principal foreign exchange earner of Nigeria. At one time, Nigeria was

the world's largest exporter of groundnuts, cocoa, and palm oil and a significant producer of

coconuts, citrus fruits, maize, pearl millet, cassava, yams and sugar cane. About 60% of

Nigerians work in the agricultural sector, and Nigeria has vast areas of underutilized arable land.


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Table 2.2.4-Distribution of Vegetation in Nigeria (Source: fairfield.edu/Country Study/Nigeria)

It also has a manufacturing industry which includes leather and textiles (centred Kano,

Abeokuta, Onitsha, and Lagos), car manufacturing (for the French car manufacturer Peugeot as

well as for the English truck manufacturer Bedford, now a subsidiary of General Motors), t-

shirts, plastics and processed food.

The country has recently made considerable amount of revenue from homemade Nigerian

Movies which are sold locally and internationally. These movies are popular in other African

countries and among African immigrants in Europe.

2.2.6 Brief on Infrastructural Development in Nigeria

Infrastructure has made a net contribution of around 1 percentage point to Nigerias improved

per capita growth performance in recent years, in spite of the fact that unreliable power supply

held growth back. Raising the countrys infrastructure endowment to that of the regions middle-

income countries could boost annual growth by around 4 percentage points.


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Nigeria has made important strides toward improving much of its infrastructure. Compared to

many African peers, Nigeria has relatively advanced power, road, rail, and information and

communications technology (ICT) networks that cover extensive areas of the nations territory.

In recent years, Nigeria has conducted several important infrastructure sector reforms. The ports

sector has been converted to a landlord model, and terminal concessions now attract private

investment on a scale unprecedented for Africa. The power sector is undergoing a restructuring,

paving the way for performance improvements; the sector is finally on a path toward raising

tariffs to recover a larger share of costs. Bold liberalization measures in the ICT sector have

resulted in widespread, low-cost mobile services, Africas most vibrant fixed-line sector, and

major private investments in the development of a national fiber-optic backbone. A burgeoning

domestic air transport sector has emerged, with strong private carriers that have rapidly attained

regional significance.

But worrisome challenges persist in a number of areas, and loom the largest in the power sector.

Since 2001, when the Federal Government adopted the National Electric Power Policy, the

comprehensive reform and reengineering of the electricity supply industry has been central to the

thinking of government. Inoperative generation capacity and lack of investment mean that the

country has been able to meet only about half of its power demand. This, in turn, has resulted in

an extremely unreliable supply; social costs can be conservatively estimated at 3.7 percent of

gross domestic product (GDP). Meanwhile, the sector is hemorrhaging resources: historically,

power users have been charged a fraction of the true cost of production, and the utilitys

operational efficiency is among the worst in Africa. On a promising note, recent tariff and

institutional reforms in the power sector have helped to significantly reduce hidden costs, saving

about $1.3 billion (or 1.8 percent of GDP) per year. Notwithstanding this important gain,

however, the hidden costs of Nigerias power sector remain the highest in West Africa.


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Table 2.2.5-Oil Leak in Nigeria (Source: http://www.curseoftheblackgoldbook.com/)

Less visible, but also disturbing, is the water and sanitation sectors lack of development,

compared to other services. Piped water coverage is only a fraction of the nations electrification

rate, and access has been declining steeply in recent years, even as the practice of open

defecation continues to rise. Moreover, water utilities appear no more efficient than the power

utility. Irrigation development also remains low relative to the countrys substantial potential.

Last but not least, Nigerias road networks are in relatively poor condition, testifying that assets

are not being adequately maintained. The countrys poor air transport safety record is reason for

further concern.

Table 2.2.6- A journey to collect Water (Source: Water.org) Table 2.2.6- one of the Deplorable Roads in Nigeria

(Source: http://234next.com)


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The current Government under President Goodluck Ebele Jonathan has pledged to continue the

economic reforms of his predecessor with emphasis on infrastructure improvements.

Infrastructure is the main impediment to growth and in August 2010 the President unveiled a

power sector blueprint that includes privatization of the state-run electricity generation and

distribution facilities. The government also is working toward developing stronger public-private

partnerships for roads.

Addressing Nigerias infrastructure challenges will require sustained expenditure of almost $14.2

billion per year over the next decade, or about 12 percent of GDP. (As a point of comparison,

China spent about 15 percent of GDP on just infrastructure investment in the mid-2000s.) About

$10.5 billion is needed for federal infrastructure alone, most of it for capital spending and power.

Nigeria already spends $5.9 billion per year on federal infrastructure, equivalent to about 5

percent of GDP. Existing spending patterns are heavily skewed toward investment, with little

provision for operations and maintenance. (Information on the infrastructure spending of

subnational governments was not available, and so could not be assessed.) A further $2.5 billion

a year is being lost at the federal level due to inefficiencies of various kinds, most of them

associated with the power sector. The underpricing of electricity is by far the single-largest

source of inefficiency, even though cost-recovery tariffs would be affordable for the majority of

the population. Low capital budget execution is also an issue across the infrastructure sector.

When spending needs are set against current spendingand potential efficiency gainsan

annual funding gap of $3.6 billion per year, or around 3 percent of GDP, is revealed. With its

abundant oil revenues, Nigeria is relatively well placed to raise additional public finance for

infrastructure. Given the size of the economy, more could also be done to leverage domestic

capital markets, and there is scope to build on the comparative success of public-private

partnerships. Nigeria has also attracted much interest from financiers outside the Organization

for Economic Co-operation and Development (non-OECD), notably China.

In sum, Nigerias infrastructure challenges, though substantial, are not daunting given the

strength of the national economy. While recent policy measures suggest that the government is


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taking these challenges seriously, more remains to be done. The associated growth dividend is

well worth pursuing.

Nigeria's Delta region, home of the large oil industry, experiences serious oil spills and other

environmental problems, conflict in the Niger Delta about strife which has arisen in connection

with those issues. Waste management including sewage treatment, the linked processes of

deforestation and soil degradation, and climate change or global warming is the major

environmental problems in Nigeria. Waste management presents problems in a mega city like

Lagos, Abuja and other major Nigerian cities which are linked with economic development,

population growth and the inability of municipal councils to manage the resulting rise in

industrial and domestic waste. Haphazard industrial planning, increased urbanization, poverty

and lack of competence of the municipal government are seen as the major reasons for highlevels of waste pollution in major Nigerian cities. Some of the 'solutions' have been disastrous to

the environment, resulting in untreated waste being dumped in places where it can pollute

waterways and groundwater.

The quality and availability of Nigerias transport infrastructure lags behind many of its regional

peers. This is unfortunate given the countrys natural resource wealth, which could be invested in

infrastructure. Although Nigeria is very well connected to international maritime routes (30th),

the quality of roads, railroads, and airports is suboptimal, as reflected in the low position the

country occupies on the pillar that assesses the availability and quality of infrastructure (105th

overall and 15th in the region). Transport services are equally underdeveloped, although the

overall regulatory environment is fairly open to investment and to hiring foreign labor. At the

same time, insufficient security imposes relatively high costs on business.

Infrastructure is critical to human and economic development and is the catalyst for Foreign

Direct Investment. It is what defines the global competitive environment of Nigeria and is vital

in addressing unemployment today and in the future. The lack of infrastructure explains why

Nigerias cost of production has remained extremely high while industrial productivity has

declined; it explains why she spend N1.3 trillion on food imports while and farmlands lie fallow;

it is the reason why she lose lives every day to accidents and preventable diseases.


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REFERENCES

Encyclopedia Wikipedia (March, 2011), Nigeria.http://en.wikipedia.org/wiki/Nigeria

Pinto, Brian, (May 1987) Nigeria During and After the Oil Boom: A Policy Comparisonwith Indonesia, The World Bank Economic Review, Vol. 1 No. 3, pp. 419

445.

Odueme, Stella (2011-05-09). ":RenCap projects 8% growth for Nigeria in 2011"Independentngonline.com. Retrieved 2011-05-28.

Hrbek, Ivan (1992). Africa from the seventh to the eleventh century,James Currey Publishers,p. 254. ISBN 0-852-55093-6.

IMF Survey: Nigeria Needs Sustained Reforms to Build on Success". Imf.org.Retrieved 2008-

11-21.

Lewis, Peter (2007). Growing Apart: Oil, Politics, and Economic Change in Indonesia andNigeria, University of Michigan Press. p. 168. ISBN 0-472-06980-2,Retrieved 2008-12-26.

McDonald, John F; Daniel P. McMillen (2010). Urban Economics and Real Estate: Theory andPolicy. Wiley Desktop Editions (2 ed.). John Wiley & Sons. p. 9. ISBN9780470591482.

World Bank (June 2011), Nigerias Infrastructure: A Continental Perspective Sustainable

Development Department, Policy Research Working Paper WPS5686,the World Bank, Africa Region

Foster, Vivien, and Cecilia Briceo-Garmendia, eds. 2009. Africas Infrastructure: A Time forTransformation. Paris and Washington, DC: Agence Franaise deDveloppement and World Bank.
http://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Nigeria

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