Economic sectors in Nigeria: Do you have a general understanding of the major sectors of the Nigerian economy? See the diagram below for an overview of the Nigerian economy. The economic structure of Nigeria is as follows:
The Nigerian economy is divided into three types of sectors:
- Primary (agriculture, oil/gas extraction, mining, and forestry)
- Secondary (light and heavy industry)
- Tertiary (other services and industries)
Nigeria is the most populous country in Africa, and its economy has the potential to contribute to the growth of the continent’s largest economy (ahead of South Africa). Check out the following industries that are critical to the Nigerian economy:
Oil and gas
The oil industry serves as the foundation of the Nigerian economy. Oil accounts for 90 percent of the country’s total export earnings. Nigeria ranks first in Africa and eighth in the world in terms of oil exports, according to the International Energy Agency. In 1958, the first oil well was drilled in Nigeria. A significant portion of the world’s oil reserves are concentrated in the Niger Delta. Nigeria has maintained its oil production in order to increase revenues, despite the fact that oil prices were extremely low during the 1990s. Nigeria produced 2.1 million barrels of oil per day, according to the International Energy Agency. The Nigerian National Oil Company (which generates 75% of the country’s revenue from the sale of oil) and Royal Dutch Shell are the two largest players in the oil industry.
Since 1970, oil has served as the primary raw material source for Nigeria’s mining industry’s raw material base. Exploration for oil deposits has taken place in the open ocean, near the Niger River delta, and in the Anambra River basin. Niger Delta and Ughelli are the primary oil production areas, with the majority of production taking place around Port Harcourt and surrounding areas. Nigerians achieved a record level of oil extraction in 1979, with 114 million tons of crude oil extracted. The world’s oil reserves are currently estimated to be approximately 35 billion barrels.
Nigeria’s natural gas reserves are estimated to be approximately 100 trillion cubic feet, with half of these reserves being located in oil and gas deposits. By 2010, the country had risen to become one of the world’s leaders in the export of liquefied natural gas (LNG), with an annual export volume of 21.9 million tons of LNG. The West African gas pipeline to Ghana was constructed as part of the company’s expansion of gas exports. It should enable Nigerian natural gas to be sold on the West African market. Apart from that, Nigerians intend to construct a Trans-Saharan gas pipeline through the territory of Niger and Algeria, with the goal of supplying natural gas to the European market.
Minerals account for a significant portion of Nigeria’s total national income. Tin ore and coal were among the first mining products to be exported from Nigeria. Private companies have always been in charge of cassiterite and tin ore mining on the Jos plateau, while central government has always been in charge of coal mining in the Enugu district, which dates back to 1904. After the establishment of a tin-melting plant in 1962, a greater proportion of the tin produced began to be exported in the form of bars. After 1960, as a result of the conversion of railroads to diesel fuel and the introduction of more affordable and environmentally friendly petroleum products, coal production began to decline.
Despite the fact that Nigeria is a petroleum-rich country, agriculture employs more than 60% of the country’s population. When it comes to rural areas, the agricultural sector accounts for more than 90 percent of total employment. The following are the primary food crops grown in Nigeria’s southern and middle belts:
Nigerians cultivate the following crops in the southern regions: yam, rice, and maize. Nigerians cultivate the following crops in the northern regions: sorghum, millet, rice. In the northern part of the country, there is also an increase in the development of livestock farming. Cassava, tomatoes, and beans are grown all over the country, including in the tropics. Onions are grown in meadows and pastures, for example, near Kainji Lake, where irrigated land is used for the purpose of growing the vegetables. The favorable climatic conditions in the Lagos area allow for the harvesting of two crops at once. Coffee, tobacco, and kola nuts are all grown for the domestic market, as are other crops. Among the agricultural products produced are cotton, palm oil, peanuts, and rubber, which are sold both domestically and internationally; cocoa beans, on the other hand, are sold only internationally. The agricultural sector accounts for approximately 24% of the country’s gross domestic product. The agricultural potential of Nigeria is still far from being fully realized.
Nigeria ranks among the top countries in the world in terms of accessibility to transportation and the density of its road network. Nigeria is connected to a large number of countries around the world via air and sea transport. Highways are the primary mode of transportation, accounting for approximately 95 percent of all passenger traffic in the United States. The total length of the roads is 193,2 kilometers in length. Kano, which has a predominantly Muslim population, has separate carriages for male and female passengers on public transportation, which is a first in Nigeria (for Christians there are vehicles of mixed type). The total length of rail lines is 3557 kilometers.
In addition to the complex of ports in the Niger Delta (Warri, Koko, and Sapele), the country also has ports in Calabar, Lagos, and Port Harcourt, which are all well-developed. It is possible to ship oil from Bonny and Burutu, which are both specialized ports. Its commercial fleet includes 303 ships, including 29 oil tankers and four tankers dedicated to the transportation of chemical products.
Nigeria’s energy sector is underdeveloped, and the country’s demand for electricity far outstrips the country’s supply. Electricity is provided to approximately 40% of the population, with the remaining 40% relying on wood and petroleum products for their energy needs. Electrification is generated at thermal power plants in Egbin (Lagos state), Ogbia (Kogi state), and Sapele (Delta state), which operate with the help of oil or natural gas and coal, and a hydroelectric power plant in Sapele (Delta state) (the largest Kainji on Niger river). Thermal power plants generated 64 percent of all electricity generated in the United States in the year 2000.
Nigerians are experimenting with nuclear energy at the Center for Research in the Energy Field (in Zariya), where they are examining the potential applications of the technology. Private generators are installed in almost every business and a large number of homes.
Speaking of service provision, Nigeria ranks first among all African countries in terms of the quality and quantity of services provided. Comparing the current situation to previous years, the Nigerian banking services sector is thriving. The private sector in Nigeria is beginning to play a more and more active role in the provision of services.
So, hopefully, you now have a better understanding of the structure of the Nigerian economy as well as the major sectors of the Nigerian economy.
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