PESTEL analysis of Nigeria
This detailed PESTEL analysis of Nigeria aims to address some of the macro factors that have significant impacts on Nigeria. Nigeria is a West African country. It is officially known as the Federal Republic of Nigeria. It is expected to be the first superpower in Africa soon.
Political environment in Nigeria
Nigeria is a federal republic. It comprises of 36 states and 1 Federal Capital Territory. Each state has a semi-autonomous status and works closely with the Federal government. The president has executive power as he/she is both the head of the federal government, and head of state.
Nigeria is a founding member of the African Union (previously known as Organisation for African Unity). It is also a member of the Organization of the Petroleum Exporting Countries (OPEC) and the Commonwealth of Nations. It maintains very good foreign relations with many countries around the world.
Nigeria is a key part of MINT economies. MINT refers to the economies of Mexico, Indonesia, Nigeria, and Turkey. However, it is worth mentioning that several challenges such as corruption, political crisis, vote-rigging, violence, national insecurity, and tribalism have slowed down the growth in Nigeria and impacted badly on its image.
Economic environment in Nigeria
The next topic of discussion in the PESTEL analysis of Nigeria is the country’s economic situation. The GDP of Nigeria is likely to reach around 454.05 billion US dollars by the end of 2023 (Trading Economics, 2023). It was 440.83 billion US dollars in 2021.
Nigeria is one of the largest producers of oil in the world. However, it should reduce the over-reliance on oil industry and diversify the economy. It also needs to improve its infrastructure. A good thing is that a number of sectors e.g. education, retail trade, entertainment, and solid minerals are rapidly growing in the country.
Nigeria exports crude petroleum, petroleum gas, cocoa beans, gold, and some other commodities to countries such as the USA, India, Spain, South Africa, and France. Its main imports such as ships, cars, wheat, and packaged medicaments come from countries such as China, the Netherlands, India, South Korea, and Luxembourg (OEC, 2023).
Nigeria is very good place to do business in terms of return on investment (ROI). It is a country that is abundant with cheap labour and has a huge domestic consumer market. Likewise, relatively low corporate income tax rates (CIT) also go in favour of business.
For instance, the CIT rate is 0% for small companies that generate NGN 25 million or less a year, while 20% for medium size companies that generate greater than NGN 25 million but less than NGN 100 million a year. The CIT rate is 30% for large companies that generate greater than NGN 100 million a year (PwC, 2023). It is relevant here to mention that the Naira is the official currency of Nigeria.
Nigeria has several investment opportunities across various sectors. It is rich in natural resources such as oil, gas, and minerals, making it an attractive destination for investors in the extractive industries. It also has a large agricultural sector, with opportunities for investment in the production and processing of various crops such as cocoa, cassava, and yams. Other sectors with investment opportunities include manufacturing, tourism, and real estate.
Social environment in Nigeria
Social environment is the next topic of focus in the PESTEL analysis of Nigeria. English is the official language in Nigeria, and the major religions are Islam, Christianity, and indigenous beliefs. Nigeria is expected to be the third largest nation on earth with over 387 million people in about 25 years. Its current population is over 220 million (Worldometer, 2023).
Nigeria is a country of some of the greatest writers in the world such as Chinua Achebe and Wole Soyinka. Many other promising writers such as Chigozie Obioma, Chibundu Onuzo Sefi Atta, Helon Habila and Adaobi Tricia Nwaubani are also drawing a lot of attention. Nigerians are friendly and loud and the country has a massive film industry, known as Nollywood.
However, Nigeria is faced with some massive social challenges. For example, poverty, inequality, high unemployment rate, poor literacy rate, high child mortality rate, crime, urban housing problem, and a weak education system are at the core of the social challenges.
Technological environment in Nigeria
Nigeria has made use of technology well in the past as evidenced from the fact that it has Africa’s one of the biggest media markets. It houses thousands of radio stations and TV networks. Technology has been heavily introduced in its many industries such as banking, energy, agriculture, health, and finance.
Technological disruptions are creating new target markets in Nigeria. Online shopping is very rapidly increasing and interestingly, many sellers are promoting themselves in social media such as Facebook and Instagram. Many tech entrepreneurs are coming up with their startups to solve different problems. The government of Nigeria also has made technological development a priority.
However, poor tech infrastructure, electricity shortage, and lack of skilled IT workforce are stalling the technological growth. Inadequate infrastructure, particularly in the areas of power and transportation, is a massive problem in Nigeria. This has made it difficult for businesses to operate efficiently in the country. However, the government has been making efforts to improve the country’s infrastructure, such as the construction of new roads and the privatization of the power sector.
Environmental situation in Nigeria
Nigeria is a beautiful country with numerous attractions such as mountains, beaches, traditional dishes, tropical forest, annual Durbar festival, deserts, and many more. No wonder why millions of tourists visit the country every year.
However, Nigeria faces some environmental challenges such as desertification, deforestation, water scarcity, water and air pollution, loss of biodiversity, and oil spillage. Likewise, flooding in different states affects the economic activities as well.
Legal environment in Nigeria
Legal environment is the last area of discussion in the PESTEL analysis of Nigeria. The relationship between employees and employers must be in line with the Nigerian Labour Act. Foreigners can buy land properties through a company or entity registered in the country. Many analysts argue that the country needs to do more to deal with human rights violations. It also needs to allocate more resources to the justice system to reduce delays in legal processes.
Summary of PESTEL analysis of Nigeria
In conclusion, Nigeria is a growing hub for business and investment opportunities. Despite its social and technological challenges, it has a large and growing economy with a wealth of natural resources and investment opportunities across various sectors.
The government has implemented policies and incentives to attract investors to the country. However, more needs to be done to reduce the widening inequality which is indeed the central socio-economic problem in the country.
We hope the article ‘PESTEL analysis of Nigeria’ has been useful. Please share the article link on social media to support our work.
You may also like reading PESTEL analysis of South Africa. Other relevant articles for you are:
Last update: 10 March 2023
OEC (2023) Nigeria, available at: https://oec.world/en/profile/country/nga (accessed 10 March 2023)
PwC (2023) Nigeria, Corporate – taxes on corporate income, available at: https://taxsummaries.pwc.com/nigeria/corporate/taxes-on-corporate-income (accessed 10 March 2023)
Trading Economics (2023) Nigeria GDP, available at: https://tradingeconomics.com/nigeria/gdp (accessed 10 March 2023)
Worldometer (2023) Nigeria population, available at: https://www.worldometers.info/world-population/nigeria-population/ (accessed 10 March 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.