The industries behind Nigeria’s economic explosion

Nigeria is the largest country by population on the African continent. But despite having 218.5 million people, the country has remained in the shadows behind more developed countries like South Africa for decades. However, this changed a decade ago and has catapulted the country to the fore.

Nigeria’s estimated GDP at the end of 2023 was $1.12 trillion, the largest in Africa. By comparison, South Africa, which had the largest economy until 2014, generated only $812 billion that same year.

This spectacular growth in Nigeria’s economy is not due to sheer luck. The country is home to numerous massive industries, many of which have experienced a boom in recent years, that have contributed to the country’s GDP reaching new levels.

With an expected GDP growth of 3.2% for 2024, the industries boosting the economy show no signs of slowing down. If you’re wondering what factors have made these industries grow faster and stronger than others, read on.

Agriculture

Agriculture has always been a staple of the Nigerian economy. Boasting vast, fertile lands, the country has always been able to grow large quantities of food staples and export them to neighboring countries and abroad.

Responsible for around 18% of the entire GDP, the industry is essential to economic growth, employing an estimated 30% of the country’s workforce in some form.

Although palm oil has been the largest export item for years, global awakening to the harms of growing, processing, and using the oil could cause this demand to drop. However, cocoa covers the loss of palm oil sales, which total approximately eight million tons annually.

Growing abundantly, Nigeria generates more than 230,000 tons of the plant annually. In the face of a global shortage, demand for this product has skyrocketed and is set to help boost the agricultural market even further.

Tourism

Nigerian tourism has grown steadily in recent years due to the country’s myriad breathtaking locations. After the reprieve from global lockdowns in 2020, the industry has been growing rapidly as it tries to reach pre-lockdown levels, which amounted to more than two million tourists annually.

With pristine beaches and tropical jungles in the country’s southern half, rolling lands, and safari destinations further north, the country has plenty for tourists to see. Herds of elephants, critically endangered in the region, are also included in these attractions.

For those who have had their fill of the country’s natural beauty, major cities like the capital of Lagos have abundant nightlife. With a new ministry, the Ministry of Culture, Tourism, and National Orientation, working hard to develop more tourist attractions, this industry is sure to continue growing.

Petroleum

Despite accounting for almost 98% of the country’s annual exports, petroleum products only account for around 14% of the GDP—2% less than agriculture. This is primarily due to the vastly varying cost of the commodity internationally.

Changing prices aside, oil is one of the largest industries in Nigeria and has been a burgeoning industry since the 1950s. With some deposits estimated to hold more than 35 billion barrels, Nigeria is one of the top ten oil producers internationally.

While the industry will undoubtedly continue growing in value, it isn’t without problems. Oil was one of the primary driving forces behind the Nigerian Civil War and continues to be a source of contention. An estimated $10.9 billion worth is stolen annually to be sold on the black market.

Air Travel and Transport

Many countries rely on extensive aviation industries to supplement ocean freight exports and help move consumers from one place to another. In Nigeria, air travel and transport have been experiencing a massive influx of demand that has helped the industry grow quickly.

Recording growth of 26.23% in 2022 forced the air transport sector to increase supply as demand for fast, reliable, and cost-effective airfreight blossomed. This has continued, with many companies benefiting from the surplus of consumers.

This sector includes air transport services (both scheduled and chartered) and air cargo transport, which aids companies in exporting their goods internationally with a quick turnaround time.

iGaming

Just like it is growing internationally, iGaming has also experienced incredible growth among Nigerian players. Attributed to the younger generation becoming aware of the ease with which iGaming allows wagers to be placed, the industry has almost doubled in size since 2019.

Aside from younger players opting to try their luck, another critical influence on the industry’s growth has been the penetration of reliable internet and smartphones in the region. With more of the populace accessing these devices, operators are offering sites and games optimized for mobile play across smaller screens.

This has led to an industry estimated to be valued at around $185.6 million in 2024. However, this industry is expected to grow incredibly, with almost 61.4 million users estimated to use iGaming services in 2027. These users will likely generate industry revenue of almost $226.6 million in the same year.

Financial institutes and services

Finally, the financial services sector has also been steadily contributing to the country’s GDP. With increasing economic activity due to the industries above, many Nigerian citizens are seeking financial services they’ve previously done without.

As of mid-2023, estimates showed that almost 50% of the adult population in the country was unbanked (didn’t have an account with a formal banking institution). Demonstrating the growth of the industry estimates from early 2024 show that those with a bank account have crossed the 50% mark, with many more expected to follow this year.

The increased financial awareness among the population has also led to an increase in other financial services, including investment portfolios and insurance policies. These, in turn, are also increasing the rate at which the industry is growing.

Source: gazettengr.com

About Post Author

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.