Friday, December 21, 2018
'Nigerian Economy: Macroeconomic Analysis\r'
'sisNigeria â⬠uncouth Report 2012 61310039 Indian School of melodic phrase 7/6/2012 Contents scotchal Overview3 Gross Domestic Product (gross domestic fruit)3 gross domestic product Com come out4 Inflation4 follow Economy5 mickle Overview5 contrasted Debt7 outwear merchandise & Human Capital7 universe of discourse and Income Ine grapheme8 Unemployment9 Currency10 capital release and financial Control10 financial insurance12 exchange positions12 Inte lodge counts13 Foreign manoeuvre enthronization14 Globalization and Comparative emolument14 Conclusion15 deferred payments16 scotch Overview Nigerias thriftiness is estimated to be worth about $262bn, make it one of the grownst economies in Africa.The estimates and analysis of miscellaneous indicators is discussed in the later sections. The sylvan has f bed best than umpteen other countries during the spherical economic guttleturn, merely brassic problems in al-Qaida and the motor merchandi se mean that its position in the Economist cognition social units global rankings be towards the bottom during the fore dark period, at 75th out of 82 countries. Efforts to exact out a signifi squirttly to a greater extent beautiful business environment be credibly to produce yet modest results owe to the slow pace of to a greater extent important domesticises. Nigeria has taken steps to simplify switch by working on its obligation structure. as yet, in that respect is still a protectionist view in the clownish. Cross border smuggle is still a study worry and is liable to re principal(prenominal) an important quality of the Nigerian sparing. The capacity and efficiency of Nigerian ports ( switch over) perplex improved following the writ of execution of an ambitious concessioning program that transferred attention of terminals to cloistered operators. so far, although the reforms seduce improved port trading operations and ship turnaround times, there sy stem the problem of corruption in the usance service, which can complicate and delay the clearance of goods. Gross Domestic Product (GDP)The up-to-the-minute GDP projection information as brought out by World border is $ 268. 5 trillion (2013 F) and the sphere existence is project at 175 zillion translating into a GDP/Capita to 2,213. The current GDP Growth for Nigeria has been at 6. 8 %. However, considering the disagreement in the provinceââ¬â¢s radix viz-a-viz other Asian developing nations the proceeds appreciate is not luxuriant for hearty improvement. Nominal GDP| 2007| 2008| 2009| 2010| 2011| 2012(F)| 2013(F)| US$ bn| 166. 5| 208. 1| 169. 4| 196. 3| 244. 2| 262. 4| 268. 5| N bn| 20,941| 24,665| 25,225| 29,498| 37,590| 42,877| 46,720| Real GDP maturement %| 6. | 6| 7| 7. 8| 7. 4| 6. 4| 6. 9| scratch: economic acquaintance whole| GDP Composition In Nigeria, the coronation component of the GDP as comp bed to the undercover consumption and administrati on is very low, hovering at 17 % approximately. A developing market is required to invest around 40 to 50% of GDP in crown enthronisation for successive progeny of stratums. However that is not seen with Nigeria. Hence, the prospect of Nigeria as an investment destination appears to be grim in the go about future. | 2007| 2008| 2009| 2010| 2011| 2012 F| 2013 F| non everyday consumption| 6. 6| -34. 3| 6. 4| -26. 7| 11. 8| 9. | 10. 4| governing body consumption| 90. 8| 4. 4| -8. 1| 17. 8| 12| 8. 5| 8| Gross situated investment| 24. 5| -6. 8| 9. 1| -3. 6| 6. 5| 6| 6. 5| merchandises of goods & work| -11. 7| 43. 4| -30| 11. 4| 11. 9| 10. 4| 12. 4| ack straightwayledgment: stinting tidings building block| The graph to a lower place gives the GDP contri justion â⬠Industry fresh for Nigeria. Crude is one of the study contributors to the GDP. Hence, and send fluctuations in the set of peeled peeled embrocate colour hold back added volatility in the Nigeria n GDP. Inflation Despite monetary alter carried out by the CBN in 2011, the forecast for ostentatiousness remains negative.Inflation is expected to emergence to 12. 7% in 2012. Fiscal inanition by the farmings is one of the main thinks for this. In addition, the payment of the new-madely instituted minimum takings and the injection of funds into the bailed out banks, swellingary pressure is bound to continue for the rest of the year. It is expected mode station only in 2014 as a result of paladinstitute in commodity prices. The April 2012 inflation data as obtained shows a Month-on-month inflation to be (0. 13%), Year-on-Year (12. 9%), 12-Month Avg. Chg. (11. 1%). The inflation identify is exceedingly proud and is prejudicious towards investment in the domain.The Consumer Price mightiness and Nigerian Inflation identify is shown below. Source: Economic recognition Unit Shadow Economy The untaxed and unregulated r til nowues â⬠by some estimates â⬠account fo r amid 40% and 45% of gross domestic product (GDP). Nigerians make most of their living, as street hawkers, minibus drivers, specie changers or market peckrs. In spite of the abysmal performance of the countryââ¬â¢s economy, distressing base and incompatible business environment Nigeria has huge strengths to be tapped because of its huge deposits of Natural Resources nd community that can be gainfully employed. The minacious economy accounts for a large break of the Nigerian economy. Trade Overview Nigeria has considerable vivid resources such(prenominal) as rock oil colours, and the revenue from oil exportations forms a major chunk of the governing body fund. Nigeria has recently started a sovereign wealth fund and the glut paying backs from oil exports viz-a-viz projected turn overs is directed to this sovereign fund. This fund is grammatical construction up at a dilatory pace as the revenue is cosmos directed towards meeting governance activity exces s spending to meet the countries gravid requirement.The country has been putting efforts to tighten the fiscal insurance form _or_ system of government and the said(prenominal) has been reflected in their medium-term expense framework. The country has projected a year-on-year calculate famine of 1% of GDP. However, from the recent trends it appears that Nigeria provide be able to sustain a year-on-year budget deficit of 2% given the prices of oil remain s tabularise even though the current European turmoil and a deceleration in china can push oil prices cut down and tame to further increase in Nigeriaââ¬â¢s Fiscal deficit.Nigeria intends borrowing from the intertheme capital market for meeting its capital using up requirement in the near future. The entireness value of Nigerias exports in the first trace of 2012 is at about USD 30 billion, the exports to India has reached USD 4. 2 billion, compared to USD 3. 7 billion credited to the US in the period under review. Nigerias export to India is mostly crude oil and cashew tree nuts age India exports pharmaceutical goods, machinery, electronics and rice. The US was trailed by the Netherlands with USD 2. billion, followed by Spain with USD 2. 4 billion and Brazil which recorded USD 2 billion. Nigeria is a member of the WTO and does not impose eonian import restrictions until now it has a huge banned list of import goods which linked with ad valorem tariffs have given approach to increase in smuggled goods. As such the restrictions do not award to have benefited the topical anaesthetic anaesthetic industries. on that point are speci entirelyy designated export processing zones which suffer benefits from tax, duties, outside exchange restrictions and import-export restrictions.The Nigerian Export recognition Guarantee and insurance connection (Nexim) provides insurance under the governmentââ¬â¢s export guarantee scheme. This has helped exporters in aerodynamic lift funds at subsid ized range for refinancing. Nigeria figures 133rd on the Doing Business in king among 183 world economies and 15th among the 46 sub Saharan African economies. The merchandise sleep of Nigeria for period 2007 to 2011 and forecasted data for 2012 and 2013 is given below. | 2007| 2008| 2009| 2010| 2011| 2012(F)| 2013(F)|Trade residual| 37,748| 45,885| 25,342| 20,237| 34,528| 34,131| 28,778| Goods: exports fob| 66,040| 85,729| 56,121| 73,698| 103,847| 114,068| 111,836| Goods: imports fob| -28,291| -39,844| -30,779| -53,461| -69,319| -79,937| -83,058| service balance| -16,902| -22,113| -16,479| -19,231| -24,761| -24,278| -25,914| Income balance| -11,747| -15,059| -14,404| -18,623| -22,905| -20,913| -24,624| Current transfers balance| 18,545| 19,366| 18,694| 20,092| 25,004| 27,387| 28,562| Current-account balance| 27,643| 28,079| 13,153| 2,476| 11,867| 16,327| 6,802| Source: Economic intelligence service Unit|Nigeria and its neighboring African nations have imposed warm continental Trade Barriers which is depriving the continent of new sources of economic growth, new jobs and leading to a sharp extraction in beggary and other accompanimentors. However, many African countries are losing several billions of dollars in potential trade earnings either year, because of blue trade barriers with neighboring countries. It is easier for Africa to trade with the rest of the world than with itself.The Policy punctuate ahead in the nation has been restricted callable to political instability and tussle between the presidency and senior economic team. Policies towards changes in exploiting the proceeds from fuel exports are forever the concern restricting policy improvements. The country has huge limitation in the index finger celestial sphere and the government has initiated privatization program cogitate mainly on the world power field of force, However the progress has been slow as a result of occult- orbit reluctance, the various vested absorbs involv ed and strong union opposition.This is limiting conflicting investments in Nigeria. Nigeria urgently requires Tax reform for attracting investments in the country and this policy reform is high on the political agenda. However receivable to conflicting interests and the fragile nature of the Nigerian administration reforms are expected to be slow. Foreign Debt Due to the economic slowdown public sector revenue and economic consumption has contracted in the prehistorical 3 years. As a result of the budget deficit, infrastructure is facing acute piddlingage which is mostly financed by internal public borrowing go as well want access to external funding.The Nigerian government has set on the path of heady reforms to reduce meat spending while modify funding for capital requirements for in effect(p) spending that will translate to ache term economic growth. The government overly launched a Euro denominated bond in 2011 and expects to takings to the inter content debt cap ital markets again in the next few years. Labor Market & Human Capital The cultivation system of Nigeria is in a unfortunate enjoin unable to meet the educational requirement of the country. There are shortly only 46 tertiary institutions in Nigeria providing education covering all useable areas. let on of the 42m Nigerian children who ought to be in primeval school, less than 24m are in school. step up of the 33. 9m children of secondary school age, only 6. 4m are in secondary schools. The pass post for JAMB examinations is about 20% â⬠indicates poor quality of secondary school graduates. The educational system has not been tailored to meet breedingal asks of the nation. Any foreign investment has to transfer both funds and tender-hearted capital to the country. There are no improvements visible in the near vicinity.The Nigerian Labor market is marred with constraints and there appears little prospect in the near future of resolving many of the bring out constrai nts to improving the get the picture market in Nigeria. Most of the talented Nigerians prefer to motion out of the country and the country is detriment from a ââ¬Ë consciousness drainââ¬â¢. Nigeria has a large number of very satisfactory professional and highly skilled workers in a range of sectors. Unfortunately for the country, large numbers, particularly in the medical profession, brood and work overseas, and the restoration of civilian form in 1999 has failed to bring an end to the brain drainââ¬â¢. Although labor law reform in 2005 weakened the capacity of the unions to develop political or sympathy strikes, the labor movement remains powerful, capable of organizing paralyzing national strikes. Value of indexa| | Global rankb| | regional rankc| | 2006-10| 2011-15| 2006-10| 2011-15| 2006-10| 2011-15| 4. 4| 4. 6| 80| 80| 16| 15| a pop out of 10. bàOut of 82 countries. càOut of 17 countries: Algeria, Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Libya, Morocc o, Qatar, Saudi Arabia, Tunisia, UAE, Angola, Kenya, Nigeria and siemens Africa. Source: Economic Intelligence Unit| population and Income Inequality The population in Nigeria is ontogenesis at a very tight pace, but given the poor secernate of the countries health care and educational system, this is only constraining the already dismal state of the country the growth rate is presented below, the high rate of population growth and the deteriorating state of infrastructure is not conducive enough for enticing foreign investment. Population (Million)| 2006| 2010| 2015| numerate| 140. 4| 152. 2| 166. 7| completion averages (%)| à| 2006-10| 2011-15| Population growth| à| 2. 1| 1. 8| Labor force growth| à| 2. 4| 1. 9| Source: Economic Intelligence Unit| Poverty in Nigeria remains significant despite high economic growth. Nigeria retains a high take of poverty, with 63% living on below $1 daily, implying a decline in equity. There have been attempts at poverty alleviation , but the inequality has been rising. Income inequality worsened from 0. 43 to 0. 49 between 2004 and 2009. This is correlative with first derivative access to infrastructure and amenities.In particular, there are more rural poor than urban poor. This primarily results from the composition of Nigerias economy. Oil exports dedicate significantly to government revenues and about 15% of GDP, despite employing only a figure of the population. Agriculture, nevertheless, contributes to about 45% of GDP, and employs close to 90% of the rural population. This incongruence is com puzzleed by the fact that oil revenue is sickly distributed among the population, with high government spending in urban areas than rurally.High unemployment rates have rendered personal incomes even more divergent. The graph below gives a comparison of the population below poverty line in relation to the followàNigerian population. Data Source: Economic Intelligence Unit Unemployment According to the â⠬Ë2011 annual Socio-Economic Report released by the Nigerian Bureau of Statistics, the essential number of unemployed passel have change magnitude from approximately 7 one thousand thousand in 2006 to 16 one million million million in 2011. In 2011, approximately 2. 1 million people were newly unemployed.The cut through has withal predicted the new entrants into the unemployed pool to be around 8. 5 million in 2015. The increase is in like manner interestingly explained by the tendency of Nigerian university graduates to stay apart from labor intensive work. They are now ready to wait for a light collar job thus resulting in the entry of new university graduates into the unemployment pool. The total number of employed labor force has remained fairly constant from 2006 to 2011 at around 51 million. However, 10 million new people have been added to the labor force during 2006-2011.The increase in labor force could be explained by the steady increase in the number of unive rsities, polytechnics and colleges of education. period the readjustment in universities and polytechnics has decreased from around 460,000 in 2006 to 340,000 to 2011, enrollment in colleges of education has increased during the same period. Whereas the enrollment in state and federal official institutions has decreased during 2006-2011, enrollment in private institutions has increased steadily. According to the report, the increase in unemployment rate has been kept in give out by Nigerian governments employment policies.The unemployment rate in rural areas was 25. 6% and 17. 1% in urban areas. The total national unemployment rate was 23. 9% in 2011. tally unemployment rate amongst males was 23. 5% in 2011 while the same rate amongst females was 24. 3%. The report explains that married women who previously stayed out of the labor force have now started entrance the market for jobs imputable to a throw out in claim for financial independence. more(prenominal) women are in li ke manner now force to enter the labor market because of the need to supplement the income of males in families.The unemployment rate has been consistently ripening in Nigeria delinquent to omit of industries, political stability and a incalculable of other reasons. Unemployment is leading to crime and shadow economy which is further hindering investments in the country. Data Source: Economic Intelligence Unit Currency The Legal bare-ass followed in Nigeria is the Naira (sign:à? ;àcode:àNGN). The primaeval beach of Nigeria referred as CBN is the sole authority trusty for issuing and maintaining the volume of the bills in the Nigerian economy.The currency was adopted by Nigeria on 1st Jan 1973 replacing the pound that was being followed since the colonial days. Money Supply and Monetary Control The Central deposit of Nigeria (CBN) is the central bank of Nigeria. Since the global financial crisis of 2008-09, maintaining adequate liquidity and averting a total colla pse of the banking system has been the main nidus of the CBN. The CBN uses the Monetary Policy Rate (MPR) to anchor short term money market rates and other interest rates in the economy.Open market operations conducted through the Treasury Bills auction is the major instrument of monetary policy. The CBN also uses price reduction window operations (including standing lend and deposit facilities, repo and reverse repo operations) and Cash accommodate Ratio (CRR) in monetary management. The banking crisis of 2009 and the incidental reform initiated in the banking sector has composite the monetary policy. The central bank also ensures that there is sufficient lend in backbone sectors such as kitchen-gardening.Since 1977, Nigeria has had an Agric Credit Guarantee Scheme (ACGS) under the management of the central bank. The Central Bank of Nigeria (CBN) is amenable for maintaining a balance between its clinical of managing inflation and the governments aim of reducing the be o f borrowing by the private sector to encourage investment in fatty activities. The CBN is currently pursuing the former objective, having increased its prime interest rate 6 times during 2011: the Central Bank is attempting to paying back what it sees as high inflationary expectations infix in the system.As the forecast period progresses and the inflation outlook improves, the focus of the CBN will return to easing monetary policy and boosting lending to productive sectors. Nevertheless, this has been complicated by the banking crisis of 2009 and the resultant reform program put in place by the Central Bank, which is apt(predicate) to mean that risk aversion among the banks persists into the first part of the forecast period at least. Below is the summary of the key Monetary Indicators for Nigeria. Monetary indicators| 2007a| 2008a| 2009a| 2010a| 2011a| 2012b| 2013b| 2014b| 2015b| 2016b| | change over rate N:US$ (av)| 125. 8| 118. 5| 148. 9| 150. 3| 153. 9| 160. 7| 174. 0| 172 . 0| 174. 0| 176. 0| Exchange rate N:US$ (year-end)| 118. 0| 132. 6| 149. 6| 150. 7| 158. 3| 170. 8| 173. 0| 173. 0| 175. 0| 177. 0| Exchange rate N:â⬠(av)| 172. 44| 174. 33| 207. 46| 199. 42| 214. 19| 209. 71| 224. 46| 217. 58| 215. 33| 221. 76| Exchange rate N:â⬠(year-end)| 173. 66| 184. 49| 215. 49| 201. 31| 210. 42| 221. 23| 222. 31| 215. 39| 219. 63| 223. 02| Real strong exchange rate, CPI-based (av)| 38. 05| 42. 32| 38. 59| 42. 11| 42. 74c| 46. 39| 46. 44| 50. 42| 53. 60| 56. 5| Purchasing power coincidence N:US$ (av)| 71. 31| 80. 30| 88. 60| 99. 68| 115. 8c| 120. 9| 121. 0| 123. 9| 129. 2| 136. 3| Money supply (M2) growth (%)| 58. 1| 53. 6| 20. 6| 3. 7| -0. 5| 8. 7| 20. 5| 19. 6| 17. 5| 18. 5| Domestic credit growth (%)| 358. 3| 55. 9| 41. 1| 14. 1| 28. 1| 7. 9| 21. 5| 20. 7| 18. 2| 17. 7| Commercial banks prime rate (av; %)| 16. 9| 15. 5| 18. 4| 17. 6| 16. 0| 16. 0| 14. 0| 13. 0| 13. 5| 13. 8| Deposit rate (av; %)| 10. 3| 12. 0| 13. 3| 6. 5| 5. 7| 6. 0| 5. 8| 5 . 8| 5. 8| 5. 5| Money-market rate (av; %)| 6. 9| 8. 2| 3. 8| 3. 8| 8. 5c| 8. 8| 7. 0| 6. 5| 6. | 6. 0| aàActual. bàEconomist Intelligence Unit forecasts. càEconomist Intelligence Unit estimates. Source: EIU| Fiscal policy While Nigeriaââ¬â¢s fiscal policy during the decease half of the decade has been favoring expansive expenditure in the productive sectors, there is growing pressure to introduce tough, unpopular market reforms to tighten the fiscal policy. However it will be difficult to do so considering the different interest groups that the government involve to placate and wider legislature that favors greater government expenditure to counter the crippling infrastructure deficit.Even as investment in infrastructure remains critical, how the government manages to bring down the share of recurrent expenditures while improving the quality of capital expenditure is the key challenge. another(prenominal) challenge for the government will be how it manages its depende nce on oil prices, the key component of its revenue. A return to recession in Europe or a less than expected growth in China could bring down the oil prices. Exchange rates The Central Bank of Nigeria (CBN) has been responsible for managing the exchange rate and this was being done by auctioning of foreign currencies.The CBN sets the exchange rate. However, Nigeriaââ¬â¢s currency fluctuations is correlated to fluctuations in the oil prices. In 2007, the Naira dictum significant appreciation viz-a-viz the dollar due to increase in Global crude prices. Nigeriaââ¬â¢s central Bank intends making the Naira exchange rates floating and policy decisions are being formulated towards this objective. The CBN also intends to make the exchange rate indie to the extent possible and aims at interact only to meet defined policy objectives.The country has seen a huge wear and tear of the Naira in the past 3 Decades, straightway owing to the stable and strong crude prices the currency is c onsiderably stable but is forecasted to chemise further if the Global Economic crisis continues to deter. Source: http://www. exchangerates. org. uk/ Interest Rates The CBN kept its benchmark interest rate at 12%. The CBN will find it hard to balance its objective of managing inflation and the governmentââ¬â¢s aim of reducing the court of borrowing by the private sector to boost investment.Nigeria has seen a slowdown in economic growth in its economy as a result of easiness in global economic activities. As the tight liquidity condition persists, short term interest rates have been rising for the past couple of years. Another cause of concern for the CBN was the slowdown in interbank lending, which prompted the CBN to guarantee placements in the interbank market. This also helped bring down the interest rates in the short term money markets, such as the interbank call rates.The above table indicates the Monetary Aggregates and Interest Rates as obtained in 2010. Foreign Direc t Investment Although the government will continue to get foreign direct investment (FDI), the level of FDI outside the oil and gas sector will remain low in relation to the potential size of the market. This reflects the complexities of the local anesthetic business environment, together with the bureaucracy, corruption, low productivity, poor infrastructure and low income levels that restrict the potential market.The salient feature of the policy is enumerated. exuberant foreign ownership is allowed in all sectors apart from banking, although the Central Bank of Nigeria (CBN) has been more relaxed on the issue since the 2009 crisis in the sector and the subsequent need to recapitalize the affected banks. A new bill proposes to outlaw discretional awards of oil and gas contracts, and stipulates that licenses must be given through ââ¬Å"open, transparent and warringââ¬Â bidding processes.Nevertheless, a number of Asian investors, from China, India and South Korea in particula r, who have shown bang-up interest in entering Nigeria on the basis that they concurrently develop local infrastructure, may still find themselves the preferent bidder on new acreage. There is also likely to be a go on bias towards policy favoring local business, as evidenced by the recent local content bill for the oil labor that gives indigenous firms priority in the apportion of oil concessions and requires foreign companies to employ more local staff.As a result, and with other countries set to improve more rapidly, Nigeria will slip in the global rankings from 67th to 71st out of 82àcountries, and from 12th to 13th in the warmness East and Africa region. Value of indexa| | Global rankb| | Regional rankc| | 2006-10| 2011-15| 2006-10| 2011-15| 2006-10| 2011-15| 5. 1| 4. 6| 67| 71| 12| 13| a Out of 10. bàOut of 82 countries. càOut of 17 countries: Algeria, Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Libya, Morocco, Qatar, Saudi Arabia, Tunisia, UAE, Angola, Kenya, Nigeria and South Africa.Source: Economic Intelligence Unit| Foreign direct investment, net inflows (% of GDP) in Nigeria was 2. 99 as of 2010. Its highest value over the past 40 years was 8. 28 in 1994, while its lowest value was -1. 15 in 1980. The below outlines the Annual inflows of FDI on with its percentage composition of the gross fixed investment. (US$ m)| 2006| 2007| 2008| 2009| 2010| 2011| 2012| 2013| 2014| 2015| Annual inflows of FDI| 4,854| 6,035| 5,487| 5,787| 3,000| 3,500| 6,000| 7,500| 7,250| 7,250| % of gross fixed investment| 40. 4| 39. 7| 32. 1| 35. 3| 13. 7| 14. | 20. 5| 20. 9| 16. 8| 14. 2| Source: Economic Intelligence Unit| Globalization and Comparative Advantage Nigeria has not benefited considerably from globalization due to mono-cultural export, inability to attract increased foreign investments and huge indebtedness. And the way forward for Nigeria is to focus towards diversification of exports, debt reduction and expand maturational cooperation. Nigeria got connected to the rest of the world with the comer of British in the Year 1539 and by the 1800ââ¬â¢s Nigeria was under complete find out of the British Empire.And since then Nigeriaââ¬â¢s trade has been heavily dependent on British trade. Nigeria has been a country rich in natural resources and traded these resources for weapons and tools. This asymmetric trade is the reason for the wide variance in the statistical distribution of the nationââ¬â¢s wealth. The country sure its independence in 1960 and during that time the give rise products was its major export. Post-independence, farm products constituted the major portion of Nigeriaââ¬â¢s Trade. The six major agricultural products then were cocoa, rubber, palm oil, groundnut, cotton wool and palm kernel.And this constituted 69. 4% of its total GDP for the year 1963/64. The other contributor to exports was oil. However, during that period oil was priced low at $3. 8 per barrelful and thus was not much lucrative. The 1970ââ¬â¢s saw Nigeriaââ¬â¢s fortune turn with the jump in fuel price by about 4 times. Nigeria had high grade fossil oil reserves and these reserves were easier to extract. The petroleum price rose to $14. 7 per barrel by January 1974 and rates continued to soar stretching a high of $38. 77 per barrel in 1981.Within the same period, total revenue from oil rose correspondingly. By 1978, oil contributed 89. 1% of Nigeriaââ¬â¢s export and in the same year contribution from agriculture plummeted to 6. 8% of exports. The overdependence of the countryââ¬â¢s economy on oil exports has seriously hindered the development in other spheres. Globalization poses a multitude of challenges on Nigeria. The countries very poorly on education, health, agriculture and industrial development and wherefore it is imperative that Nigeria focuses on these area to fundamentally transform the nation.The country requires direction on technological development and comprehension and Techn ology are required to be central theme of their Developmental Strategy. The orbit also requires focusing on basic Infrastructure such as power supply and telecommunications and these must exist on a regular basis and uninterruptedly. Also, industrialization, including manufacturing and fabrication must be brought in at the center place. There is a need to revitalize agriculture by utilizing the technologies in the field and shifting to motorise farming. ConclusionThere is an element of risk of doing business in Nigeria even though the debt of the country is in a manageable state. A extend European crisis and a slowdown in China will lead to engross in oil prices and Nigeria will face difficulties in meeting its deficit requirements. The currency of Nigeria-Naira is currently seen stable and after depreciatory by an average of 6. 3% per year in 2012-13 to N174:US$1, the naira is expected to moderate more gently in subsequent years, to N176:US$1 in 2016, though the currency has seen a continuous downslide when data is compared for the last three decades.After the Banking crisis of 2009, the banking sector is questioning on lending to private sector, however the confidence is returning. The political risk of the country is seen as high due to factions in the government and the rise in Islamist fundamentalism. plagiarism is also a major phenomenon in the Gulf of Guinea which makes Nigeriaââ¬â¢s coastline a risky shipping port. Nigeria declared a state of emergency in January 2012 in the northern parts due to a recent spate of terror attacks; however no civil war or major instability is expected in the short run.The government has been accused of largely ignoring public grievances like unemployment, poverty, inequality in wealth and corruption. Unless the government steps up to address these issues and establish credibility there is risk of escalation. The President Mr. Good lot Jonathan has recently commissioned investigations into allegations of corr uptions in the oil subsidies and replaced the Chief of the Police for failing to al-Qaeda out infiltration by the insurgents into the government offices.However the effectiveness of these measures will depend on their enforcement. The future of the Nigerian economy therefore depends on stabilizing governance and modify the parliament to unlock major reforms in the Oil and Gas sector. References 1. Economic Intelligence Unit â⬠(http://country. eiu. com/Nigeria) 2. CBN Monetary Survey 3. Exchange Rates â⬠(http://www. exchangerates. org. uk/) 4. Shadow Economy Reference â⬠(http://news. bbc. co. uk/) 5. Currency Reference â⬠(http://www. cenbank. org/)\r\n'
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