Nigeria’s tale is of contrasting fortunes – a coin with two different features on either side. While one side of the coin – largely discussed in the public domain – presents an inhabitable environment, following the spat of violence perpetrated by the dreaded terror group coupled with a huge gulf in income status with 43 percent of the Nigeria’s 174 million people still living below the poverty line, the other less-talked-about side showcases the vast potentials embedded in the fragments of a rapidly growing economy.
“While recent global attention has focused on violent unrest in certain areas of the country, less has been written about the significant economic progress that has been made in recent years,” read the McKinsey report themed: ‘Nigeria’s Renewal: Delivery Inclusive Growth In Africa’s Largest Economy.’
Nigeria is one of the fastest growing economies in Africa (and globally), with an average growth rate of 7 percent. It also boasts an increasingly dominant financial market, with market capitalization exceeding N13.23 trillion ($82.8 billion) this year, which makes it one of the 10 fastest growing equity markets globally – the only other African market drafted in the list is Zambia. Also, the country’s foreign investment portfolio stock as at last count stood at $85 billion, a figure that negates public notion that international investor interest in Nigeria might be dampened, as these positives where recorded under a period with constant publicity on security challenges and the poverty levels in the country.
“Let us focus like a laser beam on the quality of growth and that growth needs to create the jobs for our rural people and our urban people,” Ngozi Okonjo-Iweala, Nigeria’s Coordinating Minister for Economy and Minister of Finance, echoed at World Economic Forum on Africa (WEFA) which ends today.
More than just oil?
It is no longer news that Nigeria is Africa’s largest economy following a GDP rebase last month, which saw it outpace South Africa with its $510 billion GDP. More importantly, the rebasing process revealed that the country’s economy is now diversified, leaving its oil-dependent past, with sectors like telecommunication and manufacturing contributing larger percentages to growth than oil.
“Nigeria is no longer just a petro-economy—86 percent of GDP now comes from activity outside the resources sector,” the report read. Data from the report show that while resources’ – the category under which oil is listed – contributed 5.1 percent to GDP growth last year, telecommunication and ICT contributed 10.4 percent while manufacturing and trade contributed 14.3 percent and 20.1 percent respectively. However, this does not discount the fact that Nigeria currently relies heavily on oil revenues. According to the country’s Finance Ministry, more than 75 percent of the country’s national revenue still accrues from oil exports.
Four key sectors
Trade, Manufacturing, Infrastructure and Agriculture were listed as key sectors that will drive economic growth and development in the near future. According to the report, these four sectors contributed a combined 59.2 percent to GDP growth between 2012 and 2013.
The report says all four key sectors would contribute as much as $800 billion by 2030 – more than the current GDP figures, and more than double the current combined output of $251 billion. “The selected industries—trade, agriculture, infrastructure, and manufacturing—will be among the most important in driving GDP and productivity and contributing to inclusive growth in Nigeria,” it reads.
The emerging consumer
Nigeria’s consuming class is expected to spark a simultaneous growth in total consumption, predicted to reach a high of $1 trillion. This classcould grow to 160 million in 2030 in a population of 273 million—more consumers than the current populations of France and Germany combined, the report reads. Thus, the country is a prime destination for manufacturing-focused international businesses, as they are certain to enjoy a huge return on sales by investing in a soon-to-explode economy.
Already, retail chains have started to cash in on the country rising middle class. South Africa’ retail giants – Shoprite, Mr Price, Foschini and Game – have already started reaping from the spending power of this consumer class.
Need for improvement
Today, most of the economic positives in Nigeria have largely been driven by the private sector, with the government arguably taking a more supervisory role, implementing and monitoring enabling policies.
The government has also pushed certain policies in diverse sectors such as the Automotive Policy, which should help boost local production and encourage domestic purchase, the Sugar Master Plan, launched to raise production and boost manufacturing of sugar, and the Nigerian Local Content Policy, which requires all foreign oil industry operators to allocate a percentage of their operations to local companies, focused on delivering improved economic and social conditions for the Nigerians. However, the impact on the average man seems marginal, as large sections of its over 170 million population lack access to still live below poverty levels, with the gap between the rich and poor widening on a daily basis.
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