Nigeria: Africa's Giant

The economy of Africa's most populous country - oil, a booming creative industry, currency challenges and major reforms since 2023.

Nigeria, with more than 200 million people, is Africa’s most populous country and one of its largest economies. Its economic story combines great potential with persistent challenges.

Oil

Oil was discovered in commercial quantities in Nigeria in 1956, and it has dominated the economy’s exports and government revenue ever since. Crude oil typically accounts for the large majority of Nigeria’s export earnings. This makes the economy highly sensitive to oil prices. Oil theft, pipeline sabotage and underinvestment have also limited production.

Beyond oil

Nigeria’s economy is far more than oil. Agriculture employs many people. Services, including banking, telecommunications and trade, make up a large share of GDP. Lagos is a major hub for technology start-ups, especially in digital payments. Nigeria’s film industry, known as Nollywood, is one of the most prolific in the world, and Nigerian musicians have become global stars.

Currency and inflation

Nigeria has struggled with its currency, the naira. For years, the central bank kept an official exchange rate that was much stronger than the rate on the parallel market. This created shortages of foreign currency for businesses. In 2023, authorities moved to unify exchange rates and let the naira float more freely. The naira fell sharply, and inflation rose to its highest levels in decades.

The fuel subsidy

For decades, Nigeria’s government subsidised petrol, keeping pump prices very low. The subsidy cost billions of dollars a year, benefited wealthier car owners most, and encouraged smuggling to neighbouring countries. In May 2023, President Bola Tinubu announced the end of the subsidy. Petrol prices jumped, causing hardship, but the reform freed up public money.

Why a big oil producer imported petrol

For years, Nigeria exported crude oil but imported most of its refined petrol, because its own refineries barely worked. It was selling raw oil and buying back the processed product. The Dangote Refinery near Lagos, one of the largest in the world, began production in 2024, aiming to change this pattern.

Challenges and potential

Nigeria faces high poverty, unemployment, insecurity in parts of the country and weak electricity supply. But its large, young population, entrepreneurial culture and creative industries give it great potential.

Thinking Nigeria's economy is only oil

Oil dominates exports and government revenue, but most Nigerians work in agriculture, trade and services. Its tech, finance and creative industries are among the most dynamic in Africa.

Key takeaways

Nigeria is Africa's most populous country, with over 200 million people.
Oil dominates its exports and government revenue, making it sensitive to oil prices.
Services, tech start-ups and Nollywood show a diverse, dynamic economy.
Reforms in 2023 unified exchange rates and ended the fuel subsidy, bringing both hardship and fiscal savings.