How Africa’s Biggest Economy Lost 50% of Its GDP

Nigeria is home to one of the largest populations and economies in all of Africa that combined with a wealth of Natural Resources a good position for global trade across the Atlantic and a surprisingly diverse economic Foundation means that a lot of economists find the country incredibly exciting as an economic Hub that the rest of the region could grow around in 2011 a group of economists predicted that Nigeria would be the single fastest growing economy in the world between 2010 and 2050 and for a while they were correct as the country became a major resource service

trade and even Financial Hub acting as a bridge between the region and a collection of international parties unfortunately someone should have told them about economist's ability to predict the future because since its peak in 2014 Nigeria has actually become one of the fastest shrinking economies in the world the causes of this decline are simultaneously all too familiar all while being very unique to this country corruption and instability are the obvious problems but what is causing them is a very interesting case study into issues like foreign investment Regional dispari and conflicts happening on the other side

of the world then there are the intangible problems that Nigeria genuinely needs to address the first thing that most people think of when they think of Nigeria is a grammatically incoherent investment opportunity coming to them from a deposed Prince now obviously this is a bit of a joke at this point but this kind of stuff matters if the country is going to live up to its potential it's going to need International Investment and cooperation if the first thing that people think about when they think of a country is scammers and the first thing they read

about is ongoing cont conflict it doesn't present the image of a safe investment and this applies to even the most sophisticated of investors in a cruel Twist of irony it was the unique economic conditions of Nigeria that gave them that infy in the first place so can Nigeria still become the world's fastest growing economy what would it need to do to make that possible and of course what is currently holding them back once we've done all of that we can put Nigeria on the economics explained leaderboard when you're traveling often staying connected is essential whether

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s app pick up the data package that fits your needs and activate it the moment you land your online and ready to go whether you're working from a cafe in Tokyo streaming by the beach in Greece or navigating through New York s has you covered to try it out you can scan this QR code or visit s.com economics and use our code economics to get 15% off your first purchase Nigeria and the region it inhabits are still tangibly impacted by many aspects of their long and often tragic history most notably of course the Atlantic slave

trade which among other things exacerbated tribal grievances that still persist to this day the economy as it exists today though really got started in the 1950s when they started to push for independence from Britain a push that a lot of countries around the world were also going through at the same time in 1956 during that period of decolonization Nigeria discovered massive quantities of oil enough that they were conceivably well on their way to becoming the largest producer in Africa and when the country finally achieved independence in 1960 it really looked like Nigeria could become one

of the wealthiest African nations there were romanticized predictions that differences could be put aside given the enormous opportunity making headlines whenever the country seemed to be on the right track a trend that still seems to surface every time things appear to be stabilizing however again this belief plaguing a majority of the continent was predicated on the idea that the country was one cohesive whole that collaborated productively which could not have been further from the truth eventually religious and cultural infighting would soon affirm Nigeria's greatest fears turning into a loose Coalition increasingly paranoid about each other's

true intentions and the country initially tried to partition itself into four ruling regions however the North and South constantly Express concern that the other would make decisions to expand their influence by 1966 all of this culminated in a series of bloody conflicts where Nigeria would eventually become a country operating under a single federal entity this forced homogeneity wouldn't last very long because there wasn't much actually holding it together as the now Nobel Prize Economist Daren asoglu put in a video exploring African poverty colonialism left only the shell of its institutions which proved not to be

useful for building new economic activities instead they were simply very very amable for a strong man to take them over and use them for extraction in Nigeria politicians enriching themselves with natural resources and cases of election fraud became commonplace the country found itself facing a brutal Civil War and its fifth coup in less than 40 years with its only consistent development being its increased Reliance on petroleum which accounted for 87% of its exports and 77% of its Federal government's Revenue by the late 1980s often using these difficult times to their advantage plenty of criminals and

syndicates would conduct a variety of of scams taking advantage of any laps in governance they do things like meet with unsuspecting business partners carrying a large sack of dirty bills promising a cut if they help pay the large sums of money to clean them called washwash they also use telx a telecommunications service that provides teex based messaging exchange over the circuits of private lines convincing Western Europeans that they could acquire Nigerian crude for Money Paid upfront Nigeria was just prosperous and advanced enough to have access to the banking and Communications infrastructure to make these scams

possible while still having such widespread poverty that for many it was their only option to support their family today call center scams are common in dozens of countries in the economic South because Communications infrastructure has become far more common but this scamming goldilock Zone was quite unique to Nigeria for a long time which cemented its unfortunate reputation this pattern of domestic and foreign deception combined with General mismanagement would become a huge branding issue one that's only grown in recent decades but more on that later what really makes Nigeria's presid present situation such a tragedy is

the remarkable rise and fall it's had over just the last 20 years in the early 2000s modern Nigeria was still using Colonial infrastructure to its Advantage averaging a GDP growth rate of 7% oil and gas exports still accounted for most of the countries export Revenue keeping them Reliant yet domestic sectors remained fairly consistent and often appeared to thrive at this point oil only accounted for 14% of the country's GDP agricultural output appeared to be steadily growing as well with about 70% of the Nigerian labor force connected to it in some way the country was also

on paper becoming a Powerhouse in the manufacturing sector after suffering major losses in the early 1990s output rapidly recovered from 9.64 billion to $55 billion by 2014 and perhaps amongst the most important developments that accelerated this growth was that Nigeria was one of the first African countries to have widespread access to the internet something that they obviously used exclusively for legitimate business activity the government granted licenses to Telecommunications compan in 2001 and by the end of 2003 they already had thousands of active users which is now almost 100 million of course this was seen as

a major milestone in Nigerian development because access to academic research government and Commercial information as well as other previously inaccessible details about the world around them finally provided the public with the potential to interact broadly and make more data driven decisions at least in theory but no exaggeration if everything ran smoothly there is a good chance Nigeria could have or still could become the next African economic super superpower with an increase in commercial agriculture a number of areas on the path to urbanization access to the internet and the potential to produce 2 million barrels of

oil a day Nigeria's rise made it look less like a pro State and more like a self-sufficient Nation with a valued resource that was on its way to rivaling South Africa but of course it hasn't at least not yet because despite all of its advantages it still hasn't managed to secure ongoing stability if institutions are Hollow and mismanaged it really doesn't matter what can be grown on the surface what's found underground or even how many have access to online information the landlock country of Botswana which doesn't have the same Geographic endowments has been able to

reach record lows in corruption and greater levels of stability resulting in an economy that's not rich by global standards but is almost five times more productive than the comparatively blessed Nigeria an achievement made possible with consistent and reliable standards unfortunately this is exactly the same reason why Nigeria's success story upon further inspection was never actually achieved and why resources while having the potential to catalyze growth unfortunately cause more harm than good depending on the circumstances between 2014 and 2016 inconsistent crude oil prices finally caught up with Nigeria in a big way when prices fell by

44% now of course this wouldn't be a problem if Nigerian Industries lived up to the hype if they transcended be on the oil curse but spoiler alert they didn't in many ways this drop just exposed Nigerian industries that were propped up by a strong oil sector while agriculture had been seen as a growing industry yields were considerably lower than expected as Precision farming and fertilizer are still generally in accessible to most Farmers moreover the only cause that could be found for higher crop yields was Nigeria's growing population which led to an increase in labor and

subsequent cultivation to make matters worth individual productivity Still Remains devastatingly low a trend that is only Amplified in urban centers which goes against the conventional views of industrialization but in economies like Nigeria and other undeveloped regions manufacturing can actually be a very parasitic Enterprise compared to many of its neighbors the country provides very little regulatory oversight with troublingly large portion of its owners and those in management positions taking significantly more than the average employee in fact during the final 3 years of unprecedented growth that would soon prove to be a total Destruction from the real

issues millions of Nigerians making up over 25% of the population didn't have access to low wages at all rather they were unemployed living in complete poverty now in a lot of undeveloped economies people who are unemployed or completely outside of the labor force can at least rely on informal subsistence agriculture to meet their bare human needs but as the country had rapidly urbanized this was not an option for a lot of people in City centers who didn't have access to the land to cultivate all of this is to say that although Nigeria was prospering in

the realm of GDP for quite some time this didn't as is often the case genuinely represent the life of the average citizen and when even headline economic figures started failing nothing protected the government or its ongoing conflicts from extreme scrutiny scrutiny that would just reveal what most Nigerians have become accustomed to disparity although there were early improvements in transit linking Nigerian together it didn't solve the regional disparity between the North which is geographically an arid desert devoid of resources and the South which is much more Lush with much better farmland and a lot of oil

now in most economies this would normally just encourage people to move from the north to areas with more opportunity but the country was crudely put together by the British with little regard for the tribal regions the country inhabits so there are a lot of groups that don't want to leave their Homeland even though they wouldn't be leaving the country to make matters worse the widespread poverty in the northern regions has made them the prim AR Target of Terror groups like Boko Haram ricking havoc and causing further damage to their already crippled industry which have caused

ongoing violence and Chaos in the country and have pushed many people to flee the AFF forementioned unemployment crises have also stifled the ongoing struggle to suppress them because many of the young men in the north are forcely recruited with some joining voluntarily with little to no chance of finding consistent pay elsewhere the resulting violence is often so horrific that sharing more details would probably get this video removed from YouTube this combined with regular old political corruption means that a lot of investment has been pulled out of the country and taken economic opportunities with them the

country is well positioned to be the financial capital of Africa and it could benefit greatly from investment into the continent as a facilitator but in order to do that there needs to be a culture of trust something that has taken a significant hit for all of these reasons and the Very fact that scamming is often the only choice left for a lot of people in both the public and private sectors Nigeria has had massive scam operations That Grew consistently over the last half century and with the proliferation of internet cafes many of it citizens only

use the resource to email unsuspecting westerners with stories involving oil Investments or the classic Nigerian print story a Dutch private investigation firm noted that companies and individuals lost approximately $3.2 billion in 2005 alone roughly the same amount as the country received in legitimate foreign direct investment over the same time these scams are often referred to as 419 scams after the Nigerian penal code that addresses these scams as fraud which actually brings to light another issue that isn't even Nigeria fault over 70% of the current Nigerian online scams people attribute to the country's corruption are actually

coming from the West so there's sadly very little they can do about that but they still get the bad rap for it additionally while online access was framed as a way where all Nigerians were now capable of reaching out for ethical business and educational purposes Rural and undeveloped urban communities struggled with the speed in general access which has produced a new level of disparity called the digital divide further widening the Gap in literacy rates amongst young people of course all of this means that has fallen into an all too familiar trap much of what the

government had set out to do to benefit the public has had questionable results in fighting persists without clear objectives all while non-renewable export dependency put them on a troublingly common economic roller coaster ride that continues to this very day and yet despite all of this and there is a lot of it it doesn't mean that the Nigerian dream is out of reach their economy has seen signs of recovery since the 2014 crash and after 25 years of democratic is Rule they are in a good position to finally get things right as long as they focus

on what benefits the vast majority of its people agriculture is one of the top priorities for Nigeria and it's also one of the industries that is constantly under threat changes in climate poor pricing policies and land tenure have pushed Farmers into violent struggles to compete and protect themselves from insurgencies while some of these issues are out of Nigerian hands there are a number of things the government can do to drastically improve output less than 1% of their cultivated land is irrigated and fertilizer is not yet popularized but much of this can't be resolved without proper

investment into train and basic infrastructure they also have a decent position for trade that could make it a great manufacturer right on the Atlantic but the problem is that many aren't remotely incentivized to participate in these industries when something like subsistence farming gives them a better chance of putting food on the table given inconsistent wages if they could convince foreign investors and their own people that they could make this a sustainable industry though they have more than enough manpower to get the job done the country has a huge population now exceeding 220 million and most

of them regardless of their background would much rather live in a stable safe and wellfed environment than the horrors they've seen in recent decades if Nigeria were to focus more heavily on infrastructure safe work environments and precision farming there's no reason why a few basic improvements couldn't put a significant dent in their fight against Mass poverty and while the fluctuation in oil prices has proven that Nigeria is still technically a pro State there's no reason they can't use this to get back up while restoring their Global reputation they have the potential to produce 2 million

barrels of this Liquid Gold every day it's just that they lack sufficient systems to fully Tak advantage of the resource one of the primary concerns for Nigeria is that even though they have a lot of this non-renewable resource this is quite possibly one of the most mismanaged oil Industries in the world which is saying something with some past government leaders citing it as their biggest failure the government possesses four refineries but they're absolutely ancient often unable to refine petroleum products because they run out of Parts all materials were stolen overnight making the processes extremely hazardous

or outright impossible Nigerian leadership has tried to fix this by asking for outside help from company like shell but the response is usually negative because like every other Nigerian industry from agriculture to manufacturing to internet accessibility most investors have started to give up on the country due to constant corruption after the crash consequent investigations and ongoing struggles a massive amount of foreign investment left Nigeria its potential just wasn't enough for companies to stick around recovery has occurred yet without assistance it's been slow insurgencies still occur and divide can be felt everywhere and this is really

the warning the Nigerian tragedy presents what comes out of acquiring a bad reputation plenty talk about the oil and resource curse location and everything else under the sun when it comes to a failing economy however without trust everything else becomes noise the people of Nigeria and the world around them ultimately make decisions based on social credit numbers might look great but if Farms have been burnt people lack access to education and every investment in infrastructure is under threat none of it matters especially if these cases are cyclical and haven't been resolved in over 50 years

in truth the story of Nigeria isn't the story of a p State a story of poverty or a story of crime at least not exclusively it's a lesson for all countries that branding is everything the rest will follow okay now it's time to put Nigeria on the economics explained leaderboard starting as always with size the country has a GDP of $363 billion which currently makes it the fourth largest economy in Africa behind South Africa Egypt and Algeria this comes after its rapid contraction since 2014 when at its peak it was actually the largest economy in

Africa now that still makes it the 56th largest economy in the world overall so it gets a 6 out of 10 GDP per cap is obviously quite poor since that shrinking output has been spread out over a very large population of more than 220 million people on a per capita level it has an output of just $1,621 approximately an eighth of the global average and that too Is tragically rapidly declining but now it gets a 2 out of 10 stability and confidence is practically non-existent between opon Regional conflicts poor resource management and its legendary reputation

it gets a 2 out of 10 keeping in mind that anything lower means it's fighting in an allout Civil War growth has also been poor over the last decade the country has lost almost half of its GDP in one of the most severe protracted declines in the 21st century zero out of 10 industry is obviously lacking but it still does have potential a large and lowcost labor force and abundance of Natural Resources all in a region that is desperate for a commercial hub is a golden opportunity that is there for the taking but until they

do it can only get a 2 out of 10 altogether that gives Nigeria an average score of 2.4 out of 10 putting it all the way down here on the leaderboard demonstrating decisively the power of a bad brand image now to see what we mean in Reverse go and watch our video on switzland a landlock country devoid of resources which was surrounded by the world's largest conflicts on all sides and yet has become one of the world's richest places simply because it has an impeccable brand image you should be able to click to that video

on your screen now thanks for watch watching mate bye