Nigeria combined with South Africa, Angola, Algeria and Egypt, accounts for nearly two-thirds of total African gross domestic product and is the largest economy on the continent.
Recent revisions to historic gross domestic product data confirmed Nigeria as the largest economy in Africa with nominal gross domestic product of over US$500 billion in 2013, surpassing that of South Africa. However, with a population three times as large, Nigeria is still underperforming on a per-capita basis.
Looking ahead, a positive growth outlook means that Nigeria should extend its lead over the region and, as has been the case over the past few years, growth is likely to be driven by consumer-facing sectors such as the retail and wholesale trade industry, and telecoms. While oil accounts for 70% of government revenue, its share of the economy has decreased in recent years, which may dampen the positive outlook slightly.
According to the United Nations, Nigeria is projected to have the third largest population in the world next century, after China and India. While this rapidly expanding labour force has the potential to lead to high rates of growth, it comes with challenges. The rate of unemployment in Nigeria rose to 27.4% in 2012 from 12.7% in 2007, which is largely attributed to population growth.
The rapidly expanding labour force, coupled with ongoing structural reforms point to high rates of potential growth and the economy could expand at an average rate of 6.7% each year to 2040. Nigeria’s political instability and concerns over security in the country remain the key domestic risk.
Nigeria currently accounts for 2.3% of the African fund business in Jersey.