Is Nigeria still Africa’s oil giant?

Jul 01, 2022|Noelle Okwedy

Economists define the components of an economy using a simple equation where a country’s income equals the sum of consumption, investment, government expenditure and net exports (exports minus imports).

For Nigeria, all the components seem to be declining. Thanks to high rates of inflation (almost 18%), unemployment (33%), and falling exchange rates (₦600=$1), consumption and investment levels have dropped.

Key takeaways:

Nigeria’s oil production volumes have been waning for some time now due to theft and vandalism. This has affected our foreign exchange reserves and government revenues which are critical parts of the Nigerian economy.
Whereas Nigeria used to be Africa’s top oil producer, our production has fallen so much that we can no longer be called Africa’s oil and gas giant.
While Angola and Nigeria contend for the “African oil giant” title, both countries lag in the context of the global oil supply.

The other parts of the economy are also affected. Crude oil is the lifeblood of the other two vital components of Nigeria’s economy—government revenue and net exports. Oil earnings contribute at least 50% of government revenue, and crude oil made up 79% of Nigeria’s total export value for Q1 2022.

However, our crude oil production has been falling, and Stears has been ringing the alarm since last year.