Nigeria is very vulnerable to fluctuations in international prices and demand for oil and gas, which accounts for more than 90 per cent of export earnings and the greater part of federal revenue. During many years of military rule, economic management was generally weak. When oil prices were high, the revenues flowed into increased public spending and conspicuous consumption, and imports soared. GDP grew by 1.6 per cent p.a. 1980–90.
Some public investment went into prestige industrial projects which were generally a burden on the economy, failing to generate profits, depending on imported components or materials and increasing external debt. But the development of non-oil industries that relied on local raw materials and would generate employment and exports was not encouraged and the consistently overvalued currency deterred exports.
By 1997–98 the economy was in a critical condition. Once self-sufficient in food, the country had become a major food importer. Development aid and foreign loans and investment had decreased dramatically. From May 1999, with the support of the IMF, the World Bank and the international community, the civilian government committed itself to reforming policies, including privatisation of state enterprises and modernisation of agriculture, with the public sector concentrating on infrastructure and education and the private sector leading economic growth.
However, reversing the many years of weak and corrupt economic management was a daunting challenge and progress was slow. Nevertheless, in a climate of stronger international oil prices GDP growth picked up in 2000 and from 2003 was generally more than six per cent p.a. for the rest of the decade, despite the world economic downturn of 2008–09. It was then at least four per cent p.a. throughout 2010–15 and even in 2014 when oil prices fell it was estimated to be seven per cent.
Nigerian oil has a low sulphur content and reserves of oil were estimated in January 2014 to be 37 billion barrels. Production during 2013 was at the rate of about 2.3 million barrels a day.
Reserves of gas were estimated in January 2014 to be 5.1 trillion cubic metres. Exports of liquefied natural gas began in 1999 and grew rapidly. The West African Gas Pipeline began in 2008 to pump natural gas from Lagos along the coast to Benin, Togo and Ghana.