The Modern Nigerian Economy

The Modern Nigerian Economy

Nigeria is located on the west coast of Africa and is the most populous black country in the world, bordering the North Atlantic Ocean, between Benin and Cameroon. Nigeria covers 356,668 sq miles and is about the same size as California, Nevada and Utah combined. Nigeria is diverse in people and culture. Oil-rich Nigeria, long stunted by political instability, corruption, inadequate infrastructure, and poor management, is undertaking some reforms under a new reform-minded administration. Nigeria's former military rulers failed to diversify the economy away from its overdependence on the capital-intensive oil sector, which provides 20% of Gross Domestic Product, 95% of foreign exchange earnings, and about 65% of budgetary revenues. The largely subsistence agricultural sector has failed to keep up with rapid population growth. Nigeria is Africa's most populous country; and the country, once a large exporter of food, must now import food. The modern Nigerian economy is greatly dependent upon trade and it's changing from an agricultural export industry to a more competitive and prosperous oil exportation industry, thus affecting Nigeria's economic, financial and banking structures.

Most countries' economies are immensely dependent upon trade. Nigeria's economy is no different. Nigeria is based off of imports such as; machinery and transport equipment, manufactured goods, food and live animals, animal and vegetable oils and fats, mineral fuel lubricants, crude materials, beverages, tobacco, chemicals, and textiles. Nigeria's income is supported by the exportation of goods such as; petroleum and oil, cocoa beans, rubber, palm kernels, cotton, yam, hides and skins. Nigeria is dependent on the exportation of petroleum, without this export Nigeria wouldn't have much of an economy. Petroleum is the leading mineral produced in Nigeria. The growing oil industry attracted many to urban centers, to the detriment of the agricultural sector. In the 1980s a decline in world oil prices prompted the government to bolster the agricultural sector. Nonetheless, both refinery capacity and agriculture have not kept pace with population growth, forcing the nation to import refined petroleum products and food. Other minerals extracted include tin, limestone, columbite, coal, low-grade iron ore, and gold.The chief crops are sorghum, millet, soybeans, peanuts, cotton, corn, yams, rice, palm products, cacao, and rubber. In addition, poultry, goats, sheep, and cattle are raised. Crop production has fallen in recent years and Nigeria must now import food. Nigeria has a trade agreement with Britain (the largest), USA, Germany, France, the Netherlands, and Brazil to gain imported commodities and exports to countries including the USA, Germany, France, Italy, Brazil, Spain, and India.

The economy of Nigeria, historically, was based on agriculture and its economy is still greatly impacted by agriculture for exportation and also for local use. Nigeria's agricultural industry provides employment for a large amount of the country's population and more than half the workforce is engaged in farming. The discovery of oil resources in the country significantly affected the agriculture industry of Nigeria in negative ways, an industry which used to be Nigeria's main commerce. This sector has suffered a relative decline because of the dominance of oil in the economy, but it still accounts for 33% of GDP (Gross Domestic Product). As petroleum comes to the forefront of the Nigerian economy, agriculture is slowly deteriorating in its influence on the mainstay of the Nigeria's modernizing economy.

Finally, banking and finance plays an essential role in any successful and prosperous country's economy. Nigeria is relatively behind in this area, but is gradually increasing in knowledge to improve their financial system. In 1892 Nigeria's first bank, the African Banking Corporation, was established. No banking legislation existed until 1952, at which point Nigeria had three foreign banks (the Bank of British West Africa, Barclays Bank, and the British and French Bank) and two native banks (the National Bank of Nigeria and the African Continental Bank) with a collective total of forty branches. A 1952 ordinance set standards, required reserve funds, established bank examinations, and provided for assistance to native banks. The history of the country goes back to 500 BC when the Nok people were the inhabitants. It was the ending of the 15th century European explorers and traders began their lucrative slave trade with the Yoruba and Benin peoples. In 1861 Lagos was colonized by the British and 1914, the entire country became "The Colony and Protectorate of Nigeria". Nigeria became independent in 1960. The Nigerian economy has had a condensed history. In the period 1960-70, the Gross Domestic Product (GDP) recorded 3.1% growth annually due to their independence from their colonizing country, Great Britain. During the oil boom era, roughly 1970-78, GDP grew positively by 6.2