Nigeria: a newly emerging economy
Africa's most populous country is shifting from oil dependence towards services, while TNCs, aid and oil pollution shape its development.
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- Nigeria
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Evidence
8 figures, each threaded to its source
Population of Nigeria
237.5million people
“Population, total (millions) 199.9 195.4 200.3 204.9 209.5 214.0 218.5 223.2 227.9 232.7 237.5”
Nigeria's GDP
253billion US dollars
“Following the 2023-2024 devaluation of its currency, the naira, the IMF projected that Nigeria's GDP would decline to $253 billion in 2024, making it the fourth-largest economy on the continent, behind Algeria, Egypt, and South Africa.”
Oil and gas share of total exports
80percent
“Although the oil and gas sector accounts for only about 4 percent of GDP, it typically represents more than 80 percent of total exports.”
Oil and gas share of GDP
4percent
“the oil and gas sector accounts for only about 4 percent of GDP”
Shell settlement paid to the Bodo community
55million pounds
3 sources
“Leigh Day took the case of the Bodo villagers to the High Court in London, four months before the case was due to go to trial, Shell agreed a landmark settlement for £55 million”
Bodo claimants compensated by Shell
15,600people
2 sources
“Each of the 15,600 claimants was paid over £3000.”
Oil spilt in the two 2008 Bodo spills
560,000barrels
“In 2008 two massive oil spills from a Shell oil pipeline spilled at least 560,000 barrels of oil into the Community's land.”
Nigerians poor on the 2022 multidimensional measure
133million people
2 sources
“63% of persons living within Nigeria (133 million people) are multidimensionally poor.”
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Background
Nigeria has the largest population in Africa, around 237.5 million people, and one of the continent's largest economies, with a GDP of about 253 billion US dollars in 2024. Since independence in 1960 its fortunes have swung with the price of oil, discovered in the Niger Delta in the 1950s. Oil still earns most of the country's foreign currency, but the wider economy has changed shape. Services such as banking, telecoms and the Nollywood film industry now produce over half of GDP, while the oil sector itself produces less than a tenth. Transnational corporations play a large role. Shell has pumped oil in the Niger Delta for decades, bringing jobs, taxes and investment, but also pipeline spills that have poisoned creeks and farmland, damage for which it has been taken to court. Nigeria trades oil to Europe, India and the US and imports machinery and refined fuel, with China a growing partner and lender. The country also receives foreign aid, which funds health and education programmes. Wealth remains very unevenly spread between the industrialised south and the poorer north.
Causes
Oil wealth and its limits
Oil and gas have long provided the bulk of Nigeria's export earnings, typically more than 80 percent of the total. That money funded cities and infrastructure but left the government exposed to price crashes and did little for farming regions. Reducing this dependence is the main reason Nigeria has pushed to diversify its economy.
A huge and fast growing home market
With around 237.5 million people, Nigeria offers companies the largest market in Africa. High birth rates mean a young, growing workforce and rising demand for phones, banking, food and films. This market pulls in transnational corporations and home grown firms alike, and it is a major driver of growth in services and manufacturing.
Growth of services and technology
Banking, telecoms and entertainment have expanded far faster than oil. Services now contribute over half of GDP, and Lagos hosts fintech startups and Nollywood, one of the world's biggest film industries. This shift shows an emerging economy moving from dependence on raw materials towards higher value work, the classic sign of an NEE.
Foreign investment, trade and aid
TNCs such as Shell and Unilever invest because of oil, cheap labour and the vast market, while China finances railways and ports. Aid from donor governments and agencies supports health campaigns such as polio vaccination. These flows bring money and skills but also debts, dependence and disputes over who really benefits.
Effects
Primary
- Oil exports still dominate foreign earnings, so government income rises and falls with world prices.
- Services have grown to produce over half of GDP, while oil's direct share has fallen below ten percent.
- Millions have moved from farms to cities such as Lagos in search of industrial and service jobs.
Secondary
- A middle class has emerged, buying phones, cars and Nollywood films, which fuels further growth.
- Regional inequality has widened, since oil money and new industries concentrate in the south while the north stays mainly agricultural.
- Reliance on imported refined fuel and machinery keeps trade unbalanced despite oil wealth.
Social
- Incomes and school enrolment have risen on average, but a 2022 national survey found 133 million people poor across several measures of deprivation.
- Oil spills destroyed fishing and farming livelihoods in Delta communities such as Bodo.
- Rapid urban growth has left cities short of housing, water and power.
Economic
- Nigeria's GDP of about 253 billion dollars makes it one of Africa's largest economies.
- TNCs bring investment, jobs and tax revenue, though profits mostly return to shareholders abroad.
- Frequent power cuts force firms to run costly generators, holding back manufacturing.
Environmental
- Decades of pipeline leaks have polluted the creeks, mangroves and soils of the Niger Delta.
- Gas flaring from oil wells releases greenhouse gases and causes local air pollution.
- Two 2008 spills at Bodo alone released at least 560,000 barrels of oil into land and water.
Responses
Immediate
- After UK court action, Shell paid £55 million in 2015 to the Bodo community for the 2008 spills.
- Government amnesty payments to former militants reduced attacks on Delta pipelines.
- Aid funded programmes deliver vaccines, mosquito nets and school support across the poorer north.
Long term
- A UN backed clean up of oil pollution in Ogoniland is underway, funded by the oil industry and running over decades.
- Successive governments have pushed diversification into agriculture, manufacturing and tech to cut oil dependence.
- The huge Dangote oil refinery near Lagos aims to end Nigeria's reliance on imported refined fuel.
- Chinese financed railways and ports are being built to lower transport costs and open trade routes.
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