Nigeria’s economy, traditionally based on agriculture and trade, changed profoundly under colonial rule, beginning in the late 19th century. In the 1960s and 1970s the petroleum industry developed, prompting greatly increased export earnings and allowing massive investments in industry, agriculture, infrastructure, and social services. Many of these large investments, often joint ventures with private corporations, failed.
In 2005 Nigeria’s gross domestic product (GDP) was $99 billion. The poor have been especially hard hit by Nigeria’s economic problems, notably by devaluations of the currency, which make basic imported goods more expensive.
AGRICULTURE: Agriculture, including farming and herding, accounts for 23 percent of Nigeria’s GDP and engages 3 percent of the economically active population. Agriculture contributed more than 75 percent of export earnings before 1970. Since then, however, agriculture has stagnated, partly due to government neglect and poor investment, and partly due to ecological factors such as drought, disease, and reduction in soil fertility. By the mid-1990s, agriculture’s share of exports had declined to less than 5 percent. Nigeria’s major crops include palms (used to produce palm oil), cacao, rubber, and cotton.
MINING: Petroleum dominates the Nigerian economy: Virtually 100 percent of export earnings and about four-fifths of government revenues are derived from petroleum. Half of all exports go to the United States, and most of the other half to Europe. Nigeria has Africa’s largest reserves of natural gas, most of which are associated with the oil fields.
MANUFACTURING: During the 1950s and 1960s a few factories, including the first textile mills and food-processing plants, opened to serve Nigerians. During the 1970s and early 1980s industrial production increased rapidly. Nigeria’s major manufactures are food and beverages, cigarettes, textiles and clothing, soaps and detergents, footwear, wood products, motor vehicles, chemical products, and metals. Smaller-scale manufacturing businesses engage in weaving, leather making, pottery making, and woodcarving.
FORESTRY AND FISHING: The bulk of Nigeria’s forest production is fuelwood, consumed either as wood or as charcoal. In 2005 fuelwood production was 61 million cubic meters (2.2 billion cubic feet), harvested mostly near dense urban areas.
ENERGY: Petroleum, natural gas, and hydroelectricity are Nigeria’s major sources of commercial energy; they are slightly outpaced by the largely noncommercial consumption of fuelwood and charcoal. Despite major programs to extend electricity to homes, only a small portion of rural households are electrified. Hydroelectricity is generated at Kainji Dam; only a small percentage of the country’s potential hydroelectric capacity has been developed.