[size=14pt]Nigeria's economy: headed for the G20?[/size]
Africa's economic powerhouse is booming, but serious problems persist.

(Akintunde Akinleye/Reuters) LAGOS, Nigeria — While the G20 leaders huddle in Seoul, what may soon be the world's fastest growing economy is a continent away in Nigeria.

The West African nation could be the world’s next emerging giant — or its next giant emergency.

Nigeria is "in a position to be a part of the G20," Secretary of State Hillary Clinton told reporters last year, "but the corruption reputation, it's a problem."

Her perspective is hardly novel. On a continent whose collective economy is now expanding faster than all but China and India, Nigeria has long loomed as a metaphor for Africa’s immense potential and its daunting problems.

“Nigeria is pivotal to the fortunes of sub-Saharan Africa,” said Razia Khan, an economist at Standard Chartered Bank. “It is the Africa story in a way no other economy can claim to be.”

But since May, when Nigeria's ailing president Umaru Yar'adua died in office, the continent’s second largest economy has tiptoed nearer to boom times — as well as catastrophe — than at any moment since its 1970s oil windfall, according to analysts.

Currently, Nigeria’s macroeconomic math augurs well.

The International Monetary Fund estimates the economy is growing at 7 percent annually, a burst of economic lightspeed that “represents serious inroads against poverty,” and will continue next year, according to the fund’s Deputy Director for Africa, Mark Plant.

Nigeria's Gross Domestic Product, at $353.2 billion, is the largest on the continent and with 155 million people, it is Africa's most populous nation.

Nigeria's mobile phone industry is Africa’s fastest growing, while internet access — three out of 10 Nigerians have it — soars beyond rates anywhere else below the Sahara. Nigeria's film industry has achieved significant growth, too.

Then there’s cement: The country’s kilns are churning hundreds of millions of dollars of the stuff to supply West Africa’s construction boom.

Plus, Nigeria’s auspiciously named President Goodluck Jonathan boasts a electricity reform “roadmap” he says will reduce the country’s infamous blackouts to a historical memory — a reform that, by itself, could further gas growth to 10 percent annually, according to the Finance Ministry.

That kind of double-digit surge could make Nigeria the world's fastest growing major economy, China and India included — which means the ministry’s forecast raises as many eyebrows as expectations.

“Of this 10 percent growth, where’s it going to come from?” asked Jenny Kehl, global development professor at Rutgers University, and a self-identified skeptic of Nigeria’s new hype.

Beyond cement, the country’s feeble manufacturing base suffers intractable snags like gridlocked ports and threadbare roads. That’s why Nigeria’s rise would likely mimic India’s, rather than industrial China’s, said Andrew Alli, CEO of the African Finance Corporation.

Meanwhile, the Nigerian financial system is still convalescing from 2008’s near-total collapse of lending and there has been a chronic credit crunch for the small businesses and farmers fueling Nigeria’s current 7 percent expansion.

“The banks grew hugely until 2008 without lending to small businesses, they fell apart in 2008 and 2009 without lending to small businesses, and are recovering in 2010 without lending to small businesses,” said economist David Asserkoff. “That’s unlikely to change in the next two to three years.”

Even Nigeria's infamous oil sector, besieged by rebels and new regulations, is somehow producing near capacity, Kehl notes.

“Growth is going to have to come from foreign investment,” she said “But politics in Nigeria is volatile. Political stability is more important to investors than economic stability.”

If that’s true, then the bankrollers of Nigerian growth have a full newsfeed of headlines to fret over, starting with the January through March pogroms between Muslims and Christians that kill hundreds.

The north’s militant Islamic sect Boko Haram — “Western Education is Sin” — has attacked schools, police stations and jails in a war to impose fundamentalist law. The militia may not reflect the views of the country’s vast Muslim population — Africa’s largest — but that reputation wasn’t helped when a 23-year-old Detroit-bound Nigerian attempted to detonate a bomb in his underwear last Christmas.

Last month’s car bomb that killed 12 on Nigerian independence day came from a wholly unrelated group of anti-oil industry rebels who have disrupted shipping lanes as far south as Angola.

Meanwhile, 2011 is an election year, possibly Nigeria’s most contentious ever, Kehl said.

“China didn’t have these kinds of obstacles,” she said.

Nor did China and India face as much competition, she added.

“Nigeria has a lot more competition. Beyond oil, what are the competitive advantages that it has compared to South Africa, Bolivia, or even China?”

Youth, might be Ben Fisher’s response to Kehl’s rhetorical question.

The author of a British Council demographic study on the nation of 150 million views the four out of 10 Nigerians who have yet to turn 16 as the country’s secret weapon — or ticking timebomb, “a make-it-or-break-it generation.”

“If we look at similar models such as India or Pakistan, we have seen a huge amount of economic growth if the correct policies are in place to enable those people to enter the workplace,” he said.

And yet, he noted, the country’s education seems poised to fail its future workforce, with too little funding for vocation programs, scant space in crowded university lecture halls and almost no government support for Nigeria’s flourishing fashion and film industries.

“There a huge amount of young people without access to work or to expressing themselves politically,” he said. “Obviously, this could spill over into unrest.”

Jonathan’s roadmap to a thrumming electric grid might not solve such intrinsic dilemmas, Asserkoff said, because electricity would boost worker productivity more than increase jobs.

But if the country is accomplishing 7 percent growth on long odds and diesel generators, he projects it could easily hit 10, even 12 percent growth amid a wind of reform.

“You don’t have to make everything perfect,” he said. “But you have to make progress.”


http://www.globalpost.com/dispatch/nigeria/101110/nigerias-economy-the-worlds-fastest-growing

7% economic growth? That actually isn't bad. I'm a bit impressed.

DapoBear:

7% economic growth? That actually isn't bad. I'm a bit impressed.

Here's another one for you . . . almost 50% of that growth comes from the Agricultural sector, the same that is now importing banana's among so many other things.

LOL its Nigeria are you sure those figures are real

ladi02:

LOL its Nigeria are you sure those figures are real

Yes its 9ja! We aren't doing to badly and there are very high hopes on the planned reforms, so yeah! Oyibo's are already planning, we better keep our eyes open and have structures in place before growth explodes, because eyes in Europe are fully red now (especially UK); things have ground to a halt there.

Kobojunkie:

Here's another one for you . . . almost 50% of that growth comes from the Agricultural sector, the same that is now importing banana's among so many other things.

My well-informed Kobojunkie, you truly need to post more frequently going forward. That I did not know. Can you provide a citation for this?

And discuss what spurred the change? Why is agriculture growing so rapidly in Nigeria? Has something caused us to be more competitive, ?

Not well-informed - I myself read of this from the many Nigerian newspapers and the Nigerian Bureau of statistics . http://www.nigerianstat.gov.ng/

Thanks for the link. Looks like this report contains most of the recent information:
http://www.nigerianstat.gov.ng/ext/latest_release/GDP_Q22010.pdf

Agriculture is roughly 41%+ of the economy, oil and gas roughly 16%.

Trade is about 18%.

Growth in agriculture last year was nearly 6%. Kind of interesting. . . and for me, counterintuitive.

For the past 40 years, agriculture as a proportion of our GDP has never fallen below 60%.

Forget petro dollars, and erstwhile booming financial sector, agriculture has always been the quiet, unglamorous mainstay of our economy.

Do you know also that between 50 - 60% of Nigerian workers are employed in the agricultural sector.

As for the recent spur in agriculture, look no further than Obasanjo. Yes, the guy is disliked by many, & they would not want any positive development credited to him.

But the truth is, during his 8-year term, he was a huge promoter of the sector & a fair amount of money was pumped into the sector too.

That's all bearing fruit now.

A friend in London was telling me he is starting an orange plantation (only a few hectares I suppose) in Ondo State, and he was surprised by how much the State govt has been willing to help him - he's not connected in government btw.


States like Ondo, Ekiti & some others accros the country live on agriculture.

^^^ Is it possible to get access to this your friend so one can get advice of some kind?

For those who studied economics, does GDP accurately capture "impact on the ground for the typical man"? I somehow feel that high oil GDP is not really indicative of how the average man is doing. Yet I suspect that in a rich agricultural society, the per capita GDP is going to reflect standards of living a bit more. Somehow, agricultural money spreads itself around a bit more than say oil does.

Does this concept exist in economics? If so, what is it called?

not sure if he's on NL. will encourage him to join & share his experience.


according to CIA factbook, almost 70% is employed in agriculture (extraordinary!), though agric's contribution to GDP seems less than I'd read elsewhere.



https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html0%


You are right that oil makes very little impact on Nigeria's real economy & employs disproportionately few people when you think of the huge amount of capital investment it requires on an ongoing basis.

One of the key reasons Nigerians are 'suffering but smiling' (ala Fela) is because food is relatively abundant.

DeLaRue:

One of the key reasons Nigerian are 'suffering but smiling' (ala Fela) i[b]s because food is relatively abundant.[/b]

That one na big lie!! Now . . . come on!!

trust me!

I said abundant, not cheap. I stand to be corrected.

I mean our staple foods.


Yes, Nigeria now imports a lot of western foods, but these are for the afluent. It does not affect the ordinary Nigeria.

The only 'basic' stuffs that are in relative short supply & probably expensive is meat. As our per capital income and population have increased, we have become a huge net importer of meat, from as far away as Europe.

Though, most of the beef (cows), sheep, goat etc come from neighbouring countries, like Niger Republic.

There is a fine line b/w Economic Growth and Economic Development. Whereas Economic growth can be captured by indices such as GDP, same cannot be said of Economic Development. Though it is an all embracing term that captures the general state of well being of d populace, it is immeasurable in most areas.

DeLaRue:

trust me!
I said abundant, not cheap. I stand to be corrected.
I mean our staple foods.
Yes, Nigeria now imports a lot of western foods, but these are for the afluent. It does not affect the ordinary Nigeria.
The only 'basic' stuffs that are in relative short supply & probably expensive is meat. As our per capital income and population have increased, we have become a huge net importer of meat, from as far away as Europe.
Though, most of the beef (cows), sheep, goat etc come from neighbouring countries, like Niger Republic.

What staples are you referring to? Over 60% of rice consumed in the country is still imported. Almost same picture with garri, beans, poultry product etc. Many people cannot afford yam, and most of what we produce out people cannot afford because of the still very high cost of production. Majority are still unable to access a well balanced meal, even on a weekly basis.  So what abundance are you speaking of?

It is too convenient to claim the imports are for the affluent when in actual fact, most of our people will probably not be able to afford food at all if not for the cheap import that continues to flood the markets. Sure, in theory, it all seems the case that we are doing great agriculturally, but we need to visit reality often to compare what we hear with what is actually obtained.

wesley80:

There is a fine line b/w Economic Growth and Economic Development. Whereas Economic growth can be captured by indices such as GDP, same cannot be said of Economic Development. Though it is an all embracing term that captures the general state of well being of d populace, it is immeasurable in most areas.

And the growth can lead to development if managed , abi?

DeLaRue:

according to CIA factbook, almost 70% is employed in agriculture (extraordinary!), though agric's contribution to GDP seems less than I'd read elsewhere.

Hrm, this is a good way to look at it, %age of people employed divided by fraction of GDP.

yes, as I said, poultry & some other meat are imported.

Rice is currently abundant & very cheap in Nigeria, even though it is imported. The fact a product is imported doesn't mean it is not readily available and at a reasonable price.

A 50kg bag of rice sells for about 7k - 8k - about 30 pounds ($45). Good for a family of four for about 3 mths (am guessing).

Go into any shop, you'll find up to 15 different brands.

Also, Nigeria's locally produced rice is gaining in popularity so much that it is more expensive than the imported variety, and many States now have & implement blueprints for rice production.

@Dapobeer

From the 1970s, oil revenue are used for infrastructural developments roads, schools etc however they are greatly mismanaged which is the problem by the rich and invested outside the country at the detriment of the poor. However, agriculture has been there before oil and incomes are steady although government policies at different point has affected its potential. OBJ tried in this area both in 1979 and the 2000s

@kcjazz, its complicated. In economics there's a term called Economic Dualism - d existence of 2 economies in one nation. One ( the big mans economy) is captured by the GDP and is given all the attention by the govt, and the poorer one ie the poor mans economy is completely ignored and d result is d existence of extreme poverty and unequal devt in a booming economy a la India, and I believe Lagos state is towing that line in terms of Unequal devt.

actually, most of the oil revenues go into paying for our voracious apetite for imported goods & supporting the value of the Naira.

That is why, even during OBJ's regime when our coffers were flowing with dollars, the government couldn't do much in terms of improving infrastructure. The external reserves do not necessarily translate into money the government can use locally - well, not to a great extent.


That's why a country like Japan can have huge foreign reserves, but still be up to its neck in Yen (local) debt.

Nigeria cannot spend dollars on the streets of Uyo or Kanfanchan!

Just my primitive understanding of economics. Sure, an economist out there can correct me.

wesley80:

@kcjazz, its complicated. In economics there's a term called Economic Dualism - d existence of 2 economies in one nation. One ( the big mans economy) is captured by the GDP and is given all the attention by the govt, and the poorer one ie the poor mans economy is completely ignored and d result is d existence of extreme poverty and unequal devt in a booming economy a la India, and I believe Lagos state is towing that line in terms of Unequal devt.

Yes and that is where leadership comes in. What the government can do is to support the peasant farmer by seeking better techniques with the use of technology and formulate policies aimed at expanding their markets. This will reduce Urban/rural migration. We can set goals be self sufficient and even feed West Africa. The goal is to suppress one economy while elevating the other.

90% of federal revenue is due to oil, thats the money available for development and stealing.
On the other hand, farmers do not pay tax, so their input to the economy can only be measured by what and how much Nigerians eat.

kcjazz:

Yes and that is where leadership comes in. What the government can do is to support the peasant farmer by seeking better techniques with the use of technology and formulate policies aimed at expanding their markets. This will reduce Urban/rural migration. We can set goals be self sufficient and even feed West Africa. The goal is to suppress one economy while elevating the other.

You have not been following what has been going on in the country, have you? Millions of dollars that have been supposedly put aside for the poor peasant farmers continue to go to the rich to this day.

If true then its good news. The nigerian economy would do so much better if monopolies by people like deangote were stop. Yaradua tried until Dangote told him hands off. Nigeria will soon produce its own cars, thats another booster. The privatization of the Power industry would definitely get nigeria where it wants to be.

Kobojunkie:

You have not been following what has been going on in the country, have you? Millions of dollars that have been supposedly put aside for the poor peasant farmers continue to go to the rich to this day.

And I alluded to that in my first post. Mismanagement is a problem. That has been the problem from Gowon government to this day. Hence, the need for leadership.

OBJ's regime set the ball rolling unfortunately massive corruption almost derailed the whole process. What the government needs to do now is check corruption and ensure capital expenditure is used for capital expenditure.

Now people like IBB want to comeback and enjoy what they destroyed, i'd rather this country burn to ashes with no trace it ever existed than that happening.

edoyad:

OBJ's regime set the ball rolling unfortunately massive corruption almost derailed the whole process. What the government needs to do now is check corruption and ensure capital expenditure is used for capital expenditure.

Now people like IBB want to comeback and enjoy what they destroyed, i'd rather this country burn to ashes with no trace it ever existed than that happening.

That is not entirely factual. The Obasanjo, as well as governments before it, and the yar adua government after it, worked with WHO on agricultural projects designed over 20 years ago to help develop our industry. I think this one of the main reasons why some believe Obasanjo did so much in the area of advancing agricultural industry. The truth is millions of dollars allocated for helping of the poor and small scale farmers by various programs went to rich farmers and politicians even back during Obasanjo’s time in office. The trend was only continued during yar adua's time in government.

There is definitely an economic boom in Nigeria that surpasses anything we've seen since independence.

Even the Nigerian construction industry is set to be the world's fastest growing:

http://allafrica.com/stories/200911130010.html

Added to the GDP growth figures, all this translates of course, to more jobs, more income, and higher living standards in the long run for the generality of Nigerians. I also believe strongly that the power situation, much improved as it is, will continue to be worked on to the point where power outages become history. I'd say 3 to 4 years at the most for that.

It is also not a coincidence that we now have for the first time a genuinely indigenous car manufacturing industrial concern in the country - the first of several to come.

There is change in the air, that's for sure.

roflmao!!

One more thing: There's absolutely no way on earth we will continue to record growth rates of 7% + per annum without it leading to dramatic improvements in living standards across the board.

If we conquer the power problem, which seems likely, we're talking 10-12% annual growth, and that's Asian Tiger territory we're talking.

So if we play our cards right, we WILL be the 'next big thing' after India and China.

This is why we desperately need characters like Babangida and Atiku to stay away from governance, so we can achieve these objectives, and redeem the image of the African on this earth.