Nigeria

3 Chapter Economic Environment

    • Nigeria attracts attention as a "next country"

      Nigeria has the largest African population of 166.2 million, has abundant underground resources such as oil and natural gas, and continues economic growth of more than 5% annually for more than 10 years. It is said that the population will continue to increase in the future and will enter the world's top 5 by 2025. The Nigerian economy is the second largest in South Africa in Africa, West Africa's largest.

      It is drawing attention as a developing country of emerging economies second to the BRICs worldwide. In the economic forecast report released by Goldman Sachs in 2007, it is also one of the countries listed in 11 countries "Next Eleven", which was selected as a country expected to grow after BRICs.

      Source: IMF World Economic Outlook Database, April 2013
       
      ■ Changes in GDP and GDP growth rate
      Since the beginning of the 21st century, the Nigerian economy has been constantly growing fast. We have maintained a very high level of growth rate of 5.4% in 2005, the lowest level in the last 10 years, and there are multiple years in which we are growing two digits. Despite the strong connection with Europe and the United States, we have continued high growth despite the aftermath of the Lehman shock and the fiscal crisis in Europe.
      Per capita GDP was only 361 US dollars in 2001, exceeding 1,000 US dollars in 2006 and US $ 1,631 in 2012. Still, more than 60% of the population living on less than 1.25 US dollars a day, which is internationally referred to as the poor, has continued. Although there are signs of improvement slightly at 54.4% in 2011, there are also views that poverty problems are not improving as the gap between rich and poor is widening. Moreover, the unemployment rate is high as 23.9% (2011), and among them, it is pointed out that the high unemployment rate of young people contributes to the high crime rate and brings bad public security. It is Nigeria, which has continued high economic growth, but it is also true that tasks are piling up.

       

       

    • Key political, economic and social stability

      It can be said that the Nigerian economy has great potential such as business opportunities making full use of abundant underground resources, the arrival of "population bonus" by increasing labor force population, expansion of domestic market. Meanwhile, instability in politics, economics and society is recognized as a high country risk, and it is also a factor that makes investment hesitate.
      However, the Nigerian economy is out of the state with hyperinflation and overweight external debt in the 1990s, and the government has shifted to civilianization in 1999 beyond the frequent military coup.
      President Jonathan won the prize in 2011 as a promise to effectively distribute oil revenues and improve the lives of the people. It is Nigeria with many problems and instability factors in the country such as conflict and security, so there are many uncertainties in the results, but it is said that it is in the process of working on various measures aiming at the next step.

    • Financial health and oil income

      Looking at the financial situation of Nigeria, along with the rapid economic growth, revenues and expenditures have been increased several times since the beginning of the 21st century. Supporting revenue is a rich oil income. Oil income accounts for more than 70% of revenue, and Nigerian finance is highly dependent on oil.
      For this reason, the financial situation has a unique constitution of the oil-producing country, which is greatly influenced by international crude oil price. International oil prices fell from 2009 to 2010 after the global financial crisis, with the result that the fiscal balance became a deficit. After that, international oil prices picked up again and in 2011 we are regaining our fiscal surplus again.
      The federal government of Nigeria aims to escape from the financial constitution which is unduly influenced by such international oil prices. In 2007, we adopted the "fiscal responsibility law" to legislate that the fiscal deficit does not exceed 3% of GDP, and in 2010 we will accumulate a portion of oil revenue for fiscal stability We have created measures to create funds and stabilize the finances.

        

    • Changes in external debt

      Despite being an oil producing country, Nigeria was unable to effectively link oil income to the development of its own economy for a long time due to unstable political situation and failure of government functions. Thanks to aid and investment from foreign countries, it is hard to realize the story of cultivating industry that adds value and creating added value, resulting in a lot of debts.
      However, with the civilianization being made in 1999 as one opportunity, economic reform has gradually progressed. In addition, the main debtor country meeting in 2005 (Paris Club) decided over $ 18 billion of debt relief out of Nigeria's external debt. As a result, the outstanding debt outstanding is below 3% of GDP, and we are out of the crisis situation.
       

    • Hyperinflation

      In the 1990s, the Nigerian economy had repeated hyperinflation of dozens of percent, but in the 21st century it began to stable. Nevertheless, most years marking a 10% inflation rate are most.

      In view of the impact of the global financial crisis, the central bank of Nigeria took a low interest rate policy until 2010, but due to the rise in caution on inflation, in September 2010 the central bank turned into a high interest rate policy. Although inflation seems somewhat subsided after that, it seems that inflationary pressures are still strong, such as raising price of food items and raising minimum wage, and where prudent interest rate policy is still required Let's see.

      In a country where GDP continues to grow at a rate of a few percent annually, there is a view that this degree of inflation is not a very serious situation, but concerns over the sudden monetary tightening by the government and central banks are still It is also a fact that it has led to a movement to refrain from investing. So it is important that prices are stabilized and continuous monetary policy is implemented over the long term. By doing so, we can earn the trust of domestic and foreign capitalists, attract foreign capital, we can expect to cultivate domestic industry and expand consumer market.

    • Trade of Nigeria

      Let's see the Nigeria's trade. Although there are some irregularities both in import and export, it is on the upward trend. The export value has expanded more than ten times over the past 10 years, whereas imports remain several times higher, so the trade surplus continues to be in surplus. Exports in 2011 all increased by 50% compared with the previous year to a record the highest.

      As a background for this, there is an increase in export value mainly due to soaring crude oil prices. However, because domestic redistribution of these oil incomes has not been done efficiently, cultivation of domestic industry and stimulation of consumption have not been made sufficiently. As a result, we can see structural problems such as imports not growing as much as exports.


      ■ Percentage of oil in trade

       

      Of the oil produced in Nigeria (2.64 million barrels / day), domestic consumption is about 280,000 barrels, so most of it is exported abroad. In 2011, the share of crude oil accounted for 98.3% of exports.

      Most agricultural products are clearly related to domestic consumption and those extensively produced for export, but since most of the oil goes to export, domestic petroleum industry, especially upstream of the upstream industry We are planning to rebuild it and make it a pillar of industry.

       


      出所： NBS: National Bureau of Statistics（ナイジェリア連邦統計局）
       

      ■Exports viewed by item / country

       

      As can be seen in the table below, 71.2% of the export value in 2011 is crude oil, and if other underground resources such as natural gas are put in, it will be 86.8% of the total export value. The proportion of crude oil is still down year after year. Although the proportion varies depending on crude oil price, you can see the aim of changing the constitution of dependence on oil.

       

      Looking at exports by country, it is about 40% in North America / Latin America and about 30% in Europe. Many of them are due to crude oil exports, which is 43% in the US in 2010, about 20% in Europe, Spain, France, England, Italy etc. Italy, 14% in India and Brazil%.

      In addition, crude oil other mineral products include natural gas. Natural gas is consumed domestically for power generation, and many have been exported to Europe etc. as LNG. However, in 2010, the West Africa Longitudinal Gas Pipeline (WAGP) opened and exports began by pipeline transportation to three West African countries of Ghana, Togo and Benin. In addition, as the demand for LNG increased in Japan, nuclear power plants stopped operation all at once after the Great East Japan Earthquake, LNG's exports to Japan in 2011 increased to 4.8 times the previous year.


       

      ■Import viewed by item / country

       

      Looking at imported items, machine and electrical equipments account for the most 20%. Mineral product also accounts for 18.6, which reflects the trade structure that Nigeria is a producer of crude oil but refining facilities are not in place, so importing many petroleum products It is. Looking at by country, it is 27.0% in North America / Latin America such as the United States, 25.4 in Europe, and accounts for more than half of the total. In African countries, there are many countries traditionally having strong relations with the West, but Nigeria has its tendency. Also, as imports from Japan are increasing, the amount is still small but imports from the West African community are also increasing.

       
       

    • Economic structure of Nigeria

      Looking at the industrial structure of Nigeria by GDP composition ratio, it turns out that agriculture accounts for 40%. On the other hand, mining and manufacturing account for less than 20%, and the crude oil sector accounts for 14.8%. The tertiary industry, wholesale, retail and transportation, has been increasing in proportion, increasing the ratio to 38.5%.

      The Nigerian government is planning to lower the dependency of oil and cultivate domestic industry, but due to social problems such as tribal conflicts and corruption and terrorism, the transformation of the industrial structure is said to have many obstacles.

       

    • Potential of Nigeria agriculture

      Nigeria is also a top farming country in Africa. Located in the middle of the country, the Niger River and the Benue River basin and the delta area spreading along the coastal area are blessed with fertile soil, the climate belongs to the tropical rainforest climate zone from the savanna climate and sunshine and rainfall suitable for cultivation Yes. Also, the coastal waters are also fishing grounds with abundant fishery resources.
      Approximately 60% of the population of Nigeria with a population of 166.2 million are engaged in agriculture and fishery, the share of agriculture, forestry and fisheries in GDP is high, which is 40%.
      The staple food cassava, yam potato boasts the world's largest production volume, exports cocoa beans, sorghum, millet, sesame etc. Most of the sesame consumed in Japan is imported from Nigeria.
      Meanwhile, despite the fact that small-scale agriculture based on tribal conflict and the like is the main, and agricultural development is not progressing, despite consuming a large amount of major cereals such as rice, self-sufficiency rate is about 30% There are situations.
      Many agricultural products prohibited from importing in Nigeria are applied to not only primary products such as meat, fruits, vegetables, eggs but also processed foods such as cocoa, noodles and cereals. In the future, it can be said that we are confronted with conflicting issues of protection of agriculture protection and liberalization of the West African economic zone.

       


    • Current status and issues of the oil and natural gas industry

      ■ Oil industry

      Nigerian oil is the world 's eighth largest producer, the first in Africa, the tenth place in the world, the second largest in Libya in Africa. We are exporting most of the abundant reserves of oil and are also members of the Organization for Petroleum Exporting Countries (OPEC). Although the proportion of petroleum-related items in the export value has declined, it still accounts for about 70%, and about 70% of the government's revenue is due to oil revenue. Petroleum for Nigeria is an important product to raise foreign currencies to raise the treasury.

      However, the oil industry in Nigeria is facing a number of serious challenges. As shown in the graph below, petroleum production declined until 2008, peaked in 2005. This is due to frequent terrorist attacks on oil field facilities by anti-government organizations such as the Niger Delta Liberation Movement (MEND). Petroleum production declined from about 910 million barrels per year to about 760 million barrels per year. You can then introduce the "Amnesty Program" to promote the suppression of terrorism by the practice of the job creation and education opportunities, by the implementation of the amnesty for political prisoners, the decline in oil production took prima facie of the pawl . Although we do not allow digression, after 2010 we are in the process of increasing production again.

       In addition, four oil refineries in Japan are in a situation where the occupancy rate is low due to the fact that the maintenance of facilities is behind, and the damage by fire and theft groups is significant. There are also some new refinery construction projects, but it is said that it is behind due to lack of funds.

       The Nigerian government drastically reformed the petroleum industry, aiming to increase oil and natural gas supply and tax revenue accordingly. In order to achieve these reforms, Jonathan administration submitted "the bill to reform the oil industry (PIB: Petroleum Industry Bill)," to Congress, but because there are pros and cons and was difficult to discuss,   it has not beenestablished.
       
        
       Source: NNPC: Nigeria National Petroleum Corporation 2011 Draft Annual Statistical Bulletin
       
      ■ Natural gas

      Nigerian natural gas reserves are the ninth in the world, the largest gas holding country in Africa. Although it has been consumed for domestic power generation for a long time, export of LNG began with the development of liquefaction plant equipment, and it is now mainly exported to Europe, North America and elsewhere. However, in recent years, gas field development advanced and production volume improved, The flow of natural gas is changing dramatically worldwide, due to the reason that shale gas put into practical use in the United Statesthat lead the demand in the US to decrease, and from rapidly increased demand in Japan since the Fukushima nuclear power plant accident.

       In addition, as the West African longitudinal gas pipeline was completed and pipeline transport of natural gas to Benin, Togo and Ghana began, we were able to export beyond LNG.

       Also, as a feature of Nigeria, there is a fact that almost all of the accompanying gas accompanying oil production is abandoned due to infrastructure shortage. It can be said that the natural gas of Nigeria, such as the development of these infrastructure and the development of the deep-sea gas field, is a state of great growth.