Macroeconomic performance
The growing importance of services has supported economic growth. The sector accounts for around half of GDP, with 10% coming from oil and 22% from agriculture. Real GDP growth was estimated at 1.9% in 2018, reflecting a recovery in services and industry, particularly mining, quarrying and manufacturing. The recovery benefited from greater availability of foreign currency. Growth in agriculture was lackluster, partly due to clashes between farmers and herders, flooding in key regions of the middle belt and the ongoing insurgency in the northeast.
On the macroeconomic front, Parliament's delay in approving the 2018 budget affected implementation and increased fiscal uncertainty by pushing the bulk of spending into the second half of the year. But thanks to oil revenues, a value-added tax on luxury goods and a tax amnesty, the budget deficit narrowed in 2018, financed mainly by public debt.
In June 2018, outstanding public debt stood at $73.2 billion, up from $71.0 billion in 2017, or 17.5% of GDP. Despite this increase, Nigeria's risk of debt distress remained moderate. In November 2018, the government issued US$2.9 billion in Eurobonds, reflecting its new public debt management strategy that prioritizes external debt to mitigate the high financing costs of domestic borrowing. In addition, relatively good oil revenues helped consolidate the current account surplus, estimated at 3.7%, and improve the terms of trade by around 13% in 2018 alone.
Real GDP is expected to grow by 2.3% in 2019 and 2.4% in 2020, as implementation of the economic stimulus and growth plan gathers pace. However, the fall in oil prices from the end of 2018, combined with the production cut imposed by the Organization of the Petroleum Exporting Countries, poses a downside risk to the economic outlook. Parliamentary approval of the N8.83 trillion “continuity budget” in 2019 could also be delayed due to the presidential elections scheduled for February 2019.

Outlook: positive and negative factors
The outlook depends on the pace of implementation of the Economic Recovery and Growth Plan, which anchors Nigeria's industrialization by creating industrial clusters and commodity processing zones to give companies a competitive edge through access to raw materials, skilled labor, technologies and materials.

The power sector reform programme, if implemented effectively, could attract private investment. It targets an operational capacity of 10 GW by 2020. But Nigeria needs to reorient its federal budget, currently dominated by recurrent expenditure, towards more capital expenditure and savings accumulation to support social spending.
The federal government has made progress on institutional and governance reforms, including the implementation of the Integrated Financial Management and Information System and the Integrated Personnel and Salary Information System. The adoption of the 2017 Law on Secured Transactions in Movable Property institutionalized and expanded collateral coverage to stimulate lending to small and medium-sized enterprises. Although Nigeria's debt-to-GDP ratio is relatively low. Financial prudence remains necessary to avoid a debt trap, especially if global interest rates start to rise. Therefore, a contraction of new external debt will need to balance spending needs with the ability to improve the economy's competitiveness and boost growth.

Nigeria accounts for nearly 20% of the continent's GDP and about 75% of the West African economy. Despite this dominance, its exports to the rest of Africa are estimated at 12.7 per cent, and only 3.7 per cent of total trade is within the Economic Community of West African States. Nigeria has not yet ratified the African Continental Free Trade Area Agreement, pending the outcome of extensive consultations with captains of industry and other countries.

Source: African Economic Outlook (AEO) 2019