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As Africa's largest economy, Nigeria's economic development continues to attract the attention of global investors and economic observers.

06-19

I. Nigeria's Development Situation in 2024

Before discussing future development trends, let's first look at Nigeria's economic situation in 2024:

As early as 2023, Tinubu submitted the 2024 budget bill to the joint session of the National Assembly, aiming for a 3.76% growth in GDP.

This is an important step in Nigeria's economic recovery and further lays a solid foundation for maintaining sustainable economic development.

In 2024, one of the main trends to watch in Nigeria is the implementation of tax reforms.

The Nigerian government is striving to balance its ambitions with fiscal implementation; finding the right balance is crucial to ensuring the stability of the national economy.

Regarding economic growth prospects, supported by continued policy reforms, Nigeria's GDP may grow slightly by 3.1%. However, due to significant economic pressures, growth prospects may be limited.

In summary, Nigeria faces numerous challenges and opportunities in 2024. Successful implementation of tax reforms, sound monetary policy, debt management, and governance transparency will be key factors in promoting economic growth and boosting investor confidence.

II. Future Economic Development Trends in Nigeria

In the next decade, Nigeria's economic development will mainly focus on the following aspects:

1. Economic Aspects

——Slow economic recovery, increased confidence in the capital market

(1) Africa's largest economy, slowly recovering from the crisis, entering the "post-oil era".

Nigeria is Africa's largest economy, with a GDP of approximately $397 billion, exceeding one-fifth of the total GDP of all sub-Saharan African countries. The per capita GDP is close to $2100, making it a middle-income country.

Thanks to abundant natural resources such as oil and natural gas, Nigeria's economic growth has long been dominated by crude oil exports, resulting in a relatively single and fragile economic structure. This has led to significant economic shocks multiple times throughout its history due to global oil price fluctuations.

For example, from 2014 to 2016, when crude oil prices fell below 60%, exports decreased by half, and its GDP growth rate plummeted from over 5% to 2.7%, even turning negative in 2016, leading to a recessionary crisis.

However, the Nigerian government has also realized the necessity and urgency of reducing its dependence on oil;

Not only did the 2016 "Economic Recovery and Growth Plan" outline policy priorities, but it also emphasized reducing the impact of external factors and global economic cycles on the Nigerian economy in several future aspects, diversifying economic development.

According to the International Monetary Fund (IMF), Nigeria's average annual GDP growth rate is expected to remain around 2% over the next 5 years, entering a relatively stable recovery period.

It is expected to maintain a stable status quo in the future, further consolidating its position.

(2) Currency devaluation and inflation are under control, but still higher than government expectations.

The oil price crisis from 2014 to 2016 had a profound impact on the Nigerian economy, with the exchange rate being the first to be affected.

To control the exchange rate, the Nigerian government implemented currency controls. Although the exchange rate against the US dollar has been maintained since 2016, it has also consumed a large amount of foreign exchange reserves.

In addition, through the exchange rate, the impact of the oil price crisis was also transmitted to domestic price changes, causing inflation to soar to over 15% at one point.

However, through the government's combined fiscal and monetary policies in recent years, the inflation rate has stabilized at around the 2009 level, but it is still higher than the government's target range (6%-9%).

Although the exchange rate has always been a major issue for Nigeria, it is expected that the government will pay more attention to the exchange rate issue in the future, viewing it as a lifeline for economic development.

2. Social Aspects

——Large population, huge potential for a young labor market and consumption upgrades

Nigeria's "largeness" is reflected not only in its economic size but also in its population size. Nigeria has a population of 198 million, accounting for nearly half of the population of West African countries.

The population will continue to grow at a rate of 2.6% in the medium term. It is expected that by 2050, Nigeria's population will grow to nearly 400 million, surpassing the United States to become the third most populous country after India and China.

Currently, Nigeria has seven cities with populations exceeding 1 million, with Lagos experiencing particularly rapid population growth. In 1960, the population was only about 760,000, but it has now grown to 13 million.

According to Nielsen's prediction, by 2025, Nigeria's urban population will reach 55%, and by 2050, Lagos will become the sixth most populous city in the world, with approximately 32 million people working and living there. In comparison, the current permanent resident population of Shanghai, China, is only close to 24 million.

In terms of population structure and quality, people under 25 years old account for more than 60% of the total population, and the adult literacy rate is as high as 62%. According to a McKinsey report, in 2013, 20% of Nigerian households had an income exceeding $5,000, and this increased to 70% by 2020.

In addition, the middle class accounts for 23% of the total population, with a total purchasing power exceeding $28 billion, greatly contributing to the development of retail and e-commerce.

Furthermore, the growing middle class has further driven consumption upgrades, with a noticeable increase in demand for healthcare, investment and wealth management, and a higher quality of life in recent years.

Medical tourism is a product of this background.

It is predicted that Nigerians spend about $1 billion annually on overseas medical care, while less than 1% have domestic medical insurance.

The potential of the local medical and pharmaceutical industry has not yet been fully developed. The future potential in this industry is expected to bring unlimited development to Nigeria's economy.

3. Internet Aspects

——Mobile internet is booming, and the digital social culture is relatively mature

——移动互联网欣欣向荣，数字社交文化较为成熟

ICT infrastructure has significantly improved, and mobile internet has seen rapid development.

In 2013, Nigeria's broadband internet penetration rate was only 6%. Thanks to the National Broadband Plan, the broadband internet penetration rate has jumped to 31.5%.

As of 2023, Nigeria's internet penetration rate is 40.72%, and is expected to rise to 48.11% by 2027.

(2) The culture of using mobile application platforms will become increasingly mature.

In 2019, Nigeria only had 24 million active social media users, but in 2023, it has risen to 31.6 million, with huge development potential.

Currently, the most used social platforms are WhatsApp, Facebook, Instagram, and YouTube.

In addition, according to statistics, the top five most downloaded apps for Android users in Nigeria are WhatsApp, the short video app Likee, the file sharing platform Xender, Facebook Lite, and the web browser Opera Mini.

It is expected that in the future, mobile application platforms will be a very promising area of development in Nigeria.

III. Major areas of future development

1. Transportation sector:

Transportation is a hot sector attracting numerous investments in Nigeria, and its future development trend is very promising.

In Africa, the private car ownership rate is low, 2% in sub-Saharan Africa, 70% in the United States, 50% in Europe, and 6% in China. According to global standards, the motorization rate in Africa is relatively low. More than 75% of the total number of trips made by poor people in Africa each day are on foot, and ordinary taxis and motorcycle taxis account for 75% to 80% of the total motorized travel in Africa.

However, Nigeria is currently vigorously developing electric transportation, marking the country's unwavering commitment to sustainable development and achieving cleaner transportation.

His Excellency Vice President Kashim Shettima inspected the electric vehicle solar charging station at the National Assembly and also emphasized this matter at the Presidential Villa, demonstrating Nigeria's determination to vigorously promote environmentally friendly transportation alternatives.

The Nigerian Federal Government actively supports energy transition, including improving the local assembly capacity of electric vehicles, building charging infrastructure, and encouraging private sector participation.

Through such measures, it demonstrates a willingness to adopt cleaner, greener transportation alternatives; the country's energy transition journey reflects the powerful potential of sustainable energy in shaping the future of African countries.

Looking forward to the upcoming COP28, Nigeria hopes to take this opportunity to attract global investment and promote the establishment of partnerships to enable Nigeria to have a cleaner and more energy-efficient future.

And in the more common ride-hailing service in Nigeria—two-wheeled transportation—a large amount of capital is flowing into this sector with higher frequency and a wider user base.

Motorcycles are more flexible and faster in transportation, not only carrying people but also playing a key role in logistics delivery.

Oride is a motorcycle ride-hailing service under Opay, which has grown rapidly since its launch in 2019. In addition, there is Max.ng, which received US$7 million in funding in 2019, and Uganda's Safeboda has also expanded to Nigeria.

2. E-commerce sector

According to optimistic predictions, Nigeria's e-commerce market will increase to US$50 billion in the next 10 years.

Meanwhile, according to Jumia's Nigeria Mobile Report released in 2018, Nigeria's overall e-commerce market size reached US$13 billion in 2018.

36.4% of Nigeria's startup funding went to e-commerce companies, totaling US$12 million.

Among them, giants such as Jumia and Konga have emerged, leading in both operating scale and funding.

According to the Nigerian Business Post, based on the forecast of the Nigerian Federal Ministry of Industry, Trade and Investment, Nigeria's e-commerce revenue is expected to grow by 477% from the current US$13 billion annually to US$75 billion by 2025.

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