Nigeria at a glance

Capital: Abuja
Population: 138,283,240
Government Type: Federal Republic

GDP: $292.7 billion (2007 estimate)
Imports: $38.83 billion f.o.b. (2007 estimate)
Exports: $62.42 billion f.o.b. (2007 estimate)

The most populous country in Africa, Nigeria accounts for over half of West Africa’s population. Although less than 25% of Nigerians are urban dwellers, at least 24 cities have populations of more than 100,000. The variety of customs, languages, and traditions among the 250 ethnic groups gives the country a rich diversity. The dominant ethnic group in the northern two-thirds of the country is the Hausa-Fulani, most of whom are Muslim. Other major ethnic groups of the north are the Nupe, Tiv, and Kanuri. The Yoruba people are predominant in the southwest. About half of the Yorubas are Christian and half Muslim. The predominantly Catholic Igbo are the largest ethnic group in the southeast, with the Efik, Ibibio, and Ijaw comprising a substantial segment of the population in that area. Persons of different language backgrounds most commonly communicate in English, although knowledge of two or more Nigerian languages is widespread. Hausa, Yoruba, Igbo, Fulani, and Kanuri are the most widely used Nigerian languages.

Nigeria had had 16 years of military rule when a new constitution was adopted in 1999, and a peaceful transition to civilian government was completed. The government continues to face the daunting task of reforming a petroleum-based economy, whose revenues have been squandered through corruption and mismanagement, and establishing democracy as an institution. In addition, Nigeria continues to experience longstanding ethnic and religious tensions. Although both the 2003 and 2007 presidential elections were marred by significant irregularities and violence, Nigeria is currently experiencing its longest period of civilian rule since independence.

U.S. - Nigerian Relations

With the nullification of Nigeria’s June 12, 1993, presidential election, and in light of human rights abuses, the United States imposed numerous sanctions on Nigeria. After a period of increasingly strained relations, the death of General Abacha in June 1998 and his replacement by General Abubakar opened a new phase of improved  relations. The bilateral relationship has continued to improve, and cooperation on many important foreign policy goals, such as regional peacekeeping, has been excellent. An estimated one million Nigerians and Nigerian Americans live, study, and work in the United States, while over 25,000 Americans live and work in Nigeria.

The United States is helping Nigeria make efforts to develop inclusive, transparent, and effective institutions of democratic governance. U.S. assistance aims to help make elected officials accountable to constituents through free and fair elections, and also support democratic local government and decentralization and improve fiscal administration by maximizing revenue collection in credible audits. The U.S. Agency for International Development (USAID) has a program in Nigeria that supports economic growth and agricultural development by encouraging policy improvements and by providing technical assistance, training, and technologies to farmers and entrepreneurs.

Economy

Nigeria is the United States’ largest trading partner in sub-Saharan Africa, largely due to the high level of petroleum imports from Nigeria. Nigeria provides 11% of U.S. oil imports — nearly 46% of its daily oil production. Nigeria is the fifth-largest exporter of oil to the United States. Total two-way trade was valued at $35 billion in 2007, a 17% increase over 2006. Led by machinery, wheat, and motor vehicles, U.S. goods exports to Nigeria in 2007 were up 25% from 2006, and U.S. imports were up 17%. U.S. imports were predominantly oil. However, rubber products, cocoa, gum arabic, cashews, coffee, and ginger constituted over $70 million of U.S. imports from Nigeria in 2007. Nigeria is currently the 50th-largest export market for U.S. goods and the 14th-largest exporter of goods to the United States.

In April 2008, the United States and Nigeria met under the existing Trade and Investment Framework Agreement (TIFA) to advance the ongoing work program and to discuss improvements in Nigerian trade policies and market access. Among the topics discussed were cooperation in the World Trade Organization (WTO), market access, export diversification, commercial issues, trade capacity building and technical assistance, infrastructure, and investment issues.

Nigeria made progress toward establishing a market-based economy in 2006. It privatized Nigeria Telecommunications and its mobile subsidiary as well as the only government-owned petrochemical company. The government also sold its interest in eight oil service companies. Nigeria continued implementation of the Economic Community of West African States (ECOWAS) Common External Tariff. Nigeria’s implementation of non-tariff barriers has been arbitrary and uneven and continues to violate WTO prohibitions against trade bans. However, the government removed some textile items from its list of prohibited imports in 2006. Enforcement of criminal penalties against intellectual property rights (IPR) violations is weak, and firms that are successfully countering IPR piracy have generally done so through civil court cases. The government has recently created an intellectual property commission.

Nigeria is still experiencing major problems with corruption. A recent article (available online; subscription required) in the Journal of Commerce (also published by Commonwealth Business Media), on a U.S. Justice Department probe of a logistics group’s dealings in Nigeria, notes the prevalence of corruption and bribery in the country’s business practices.

More information on Nigerian intellectual property rights and the transparency of the regulatory system can be found in the Trade Data section of the Nigeria Country Profile.

Agriculture

Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, and the lack of basic infrastructure. Still, the sector accounts for over 41% of GDP and two-thirds of employment. Agriculture provides a big chunk of non-oil growth, which in 2006 reached 9%. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, or palm oil. Cocoa production, mostly from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,000 tons. An even more dramatic decline in groundnut and palm oil production also has taken place. Although Nigeria was once the biggest poultry producer in Africa, corporate poultry output has been slashed from 40 million birds annually to about 18 million. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Fisheries are poorly managed. Most critical for the country’s future, Nigeria’s land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.

Oil

The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2002 Nigeria’s per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria’s non-oil sectors, the economy continues to witness massive growth of “informal sector” economic activities, estimated by some to be as high as 75% of the total economy.

Nigeria’s proven oil reserves are estimated to be 36 billion barrels; natural gas reserves are well over 100 trillion cubic feet. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in 2006 its crude oil production averaged around two million barrels per day. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oil-producing region continue to plague Nigeria’s oil sector. Efforts are underway to reverse these troubles. In the absence of coherent government programs, the major multinational oil companies have launched their own community development programs. The Niger Delta Development Commission (NDDC) was created to help catalyze economic and social development in the region, but it is widely perceived to be ineffective and opaque. Oil accounts for 90% of Nigeria’s exports and over 80% of government revenue.

Oil field equipment will offer opportunities to U.S. suppliers. More information on this and other likely export market sectors can be found in the Best Export Opportunities section of the Nigerian Country Profile.

Foreign Investment

Although Nigeria must grapple with its decaying infrastructure and a poor regulatory environment, the country possesses many positive attributes for carefully targeted investment and will likely expand as both a regional and international market player. Profitable niche markets outside the energy sector, such as specialized telecommunication providers, have developed under the government’s reform program. There is a growing consensus that foreign investment is essential to realizing Nigeria’s vast potential. Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, establish a local presence, and choose their partners carefully.

Transportation

Congested airport facilities in Lagos often lead to long delays, and airline reservations may not be honored due to overbooking, especially on domestic flights. Domestic airline schedules are reasonably reliable, but lack of aviation fuel can cause delays or result in cancellation of flights. Travelers on international flights should arrive at the airport at least 2 hours before scheduled departure. Air accidents in recent years have increased concern  about maintenance standards on domestic airlines.

Taxi service is available in Lagos and most other urban areas, but cabs are not recommended, as they are generally old, often unreliable, and can be unsafe. If taxis are used, fares should be negotiated in advance, particularly to and from airports. Cars with drivers are also available for hire through hotels and car rental agents, and use of those services is a highly recommended alternative to taxis.

Map of Nigeria