Nigeria turns 66: Africa’s giant is still measuring success by the wrong yardstick

Nigeria, Africa's largest country both by headcount and market size, has struggled to maintain its position as a giant economy. With a GDP per capita of around $1,556, Nigeria ranks around 30th in Africa, below the continental average. While South Africa and Egypt are wealthier, Nigeria's economic challenges have persisted over the past six decades.

The country built Africa's largest domestic market, weathered civil war, serial coups, and a fluctuating currency, and fostered a thriving services economy. However, Nigeria's economic failure can be attributed to a phenomenon known as Dutch disease. This was evident in the early 1970s, when oil revenues flooded the country, leading to currency strengthening, imports becoming cheaper, and local industries struggling to compete.

The disease persisted due to state spending that had become reliant on oil revenues. Three symptoms characterized the local mutation of Dutch disease: the exchange rate being used as a welfare policy, the budget being run as a residual, and the generation of firms seeking licences rather than customers. This led to a situation where Nigeria's vast population never became an engine for prosperity.

In 2025, Nigeria's macroeconomic fundamentals began to show improvement, with zero petrol subsidies, a stable exchange rate, rebuilding forex reserves, and real growth slightly above 4 per cent. While Nigeria still needs to double its GDP per capita in the coming years, the focus should be on improving power, infrastructure, and tax collection, rather than solely relying on oil as the engine of growth.