Some ray of HOPE

Bric: Nigeria may beat SA
Dec 13 2010 21:03

Reuters


London - South Africa, the largest economy in Africa, is eager for elevation to the coveted Bric status of emerging markets, but investors say Nigeria is a more probable African contender, even if promotion for either is some way off. Russian President Dmitry Medvedev, at last month's G20 meeting in South Korea, said South Africa had "applied" to join the four-member BRIC grouping of fast-growing emerging economies - Brazil, Russia, India and China.

Turkey, Mexico and Indonesia are typically the countries investors eye as an addition to the BRICs, which have grabbed an outsize slice of emerging market investment in recent years due to their scale, growth and impact on the global economy.

But resource-rich Africa, boasting some of the fastest-growing countries in the world, has become a focus for investors looking for high returns over a longer timeframe.

Investment flows into Nigeria are tiny compared with South Africa. Nigeria saw equity fund flows of just $216m for the first 10 months of this year, compared with $3.4 billion for South Africa, according to fund tracker EPFR.

Yet while South Africa is the larger economy, Nigeria is expected to catch up in the next few years.

"In Nigeria, you still have 70% of the population living on a dollar a day, but there is a demographic impact. In the next five years, Nigeria will add another 23 million people and South Africa will add another 2.8 million," said Razia Khan, head of Africa research at Standard Chartered.

Nigeria's economy may overtake South Africa's by 2023, Standard Chartered says, assuming South Africa grows by 4% and Nigeria by 7% on a purchasing power parity basis.

Goldman Sachs Asset Management chairperson Jim O'Neill, who coined the term BRIC nine years ago, told last week's Reuters 2011 Investment Outlook Summit he was constantly getting e-mails suggesting he added or subtracted countries from the acronym.

South Africa, at a population of under 50m people, is just too small to join the Bric ranks, O'Neill says.

"How can South Africa be regarded as a big economy? And, by the way, they happen to be struggling as well."

Meanwhile, recent policy changes in Nigeria, including the appointment as finance minister of former Goldman Sachs banker Olusegun Aganga, could present new possibilities.

"Nigeria has shown some vague signs. If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is I think very interesting," O'Neill said.

"It's 20% of Africa's population, which means it could be pretty powerful."

Nigeria's population already totals more than 150 million, larger than Russia's, and on some estimates could double in the next 20 years.

Investors are already targeting the African consumer and growing middle class, and a rising population would increase consumer demand.

Acha Leke, a Lagos-based director at consultancy McKinsey, is cautiously optimistic on the power of population.

"Demographics is a double-edged sword - you have a massive, massive market, but you have a bunch of people to educate and create jobs for. This could be a great opportunity, it has to be carefully managed."

Corruption watch

Nigeria may have an edge over South Africa, but it still has a long way to go.

Corruption is a deterrent, with the country coming 134th out of 178 countries in Transparency International's 2010 Corruption Perceptions Index, compared with 54th for South Africa.

Some of Nigeria's biggest challenges include its inadequate power grid and other infrastructure shortages.

In the short term, political uncertainty is also an issue for Nigerian investors ahead of April elections, with southerner President Goodluck Jonathan facing a tough battle securing the ruling party nomination because of a pact in the party that power rotates every two terms between the mostly Moslem north and largely Christian south.

And in capital markets, South Africa is far and away the winner, as the biggest financial market in Africa.

South Africa is a regular borrower in international debt markets, while Nigeria last week delayed a debut sovereign bond.

South Africa is also a constituent of the benchmark MSCI global emerging equities index, while Nigeria is only in the less liquid frontier markets index.

Andrew Brudenell, a frontier markets fund manager at HSBC Asset Management, says Nigeria's elevation to major emerging market status is not likely to be any time soon.

"There is potential for Nigeria in macro-economic terms, the stock market is a little bit further behind. The question is whether it becomes an emerging market as there are all these checks and balances -- liquidity and other financial criteria have to be met."
http://www.fin24.com/Economy/Bric-Nigeria-may-beat-SA-20101213

Look, if GEJ can sort out the power problem, we're home and dry with those predictions.

Thankfully, I've never felt more positive about the future of power supply than I do today.

GEJ is working on it. 

really? so you think power alone will fixed our economy? in a country froth with undescribale level of corruption and mis-rule.

We have had oil for almost 50yrs, how has that improved the economy of nigeria?

Really? Pelu kini?

With our suya-making abokis, street fighting ngbatis, and "gbomogbomo" [wachumacallit in Igbo?] kidnapping okoros?

Hehehehe.

sochan:

really? so you think power alone will fixed our economy? in a country froth with undescribale level of corruption and mis-rule.

In a nutshell, yes. Most countries in the world are corrupt to some degree or another. Honestly, I think the power issue is more important than even corruption. After all, even if the pie were perfectly shared, it would still be tiny. Simply put, the economy is too small. We need more money. Power helps you make money.

spearman:

Some ray of HOPE

Bric: Nigeria may beat SA
Dec 13 2010 21:03


Meanwhile, recent policy changes in Nigeria, including the appointment as finance minister of former Goldman Sachs banker Olusegun Aganga, could present new possibilities.

"Nigeria has shown some vague signs. If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is I think very interesting," O'Neill said.

I couldn't move on without saying this.

Why is it that the only Nigerian technocrats that have ever delivered (according to their pedigree) for the country has only been Igbo?

Most Yoruba technocrats just come to the job with their qualifications and pedigree only to deliver nothing at the end.
This Olusegun Aganga is one. When this guy was appointed finance minister, most people were jumping up that a Goldman Sachs technocrats would pull wonders just like Ngozi Okonjo Iweala did when she single handedly negotiated and packaged Nigeria out of debt. But alas that has not happened! All we hear is just talk talk and more talk. Meanwhile Nigeria's economy keep getting lampooned by real experts!
Of all the Nigerian technocrats appointed by Obasanjo, only the Igbo ones performed. I'm sorry if anyone is offended, but it is the truth!

That is why I no longer cerebrate appointment of technocrats these days until I'm sure they are Igbo.
No shaking! 

Check out the next 11 countries http://en.wikipedia.org/wiki/Next_Eleven

Only if we could have people with the right mental attitude

wale4x35:

Check out the next 11 countries http://en.wikipedia.org/wiki/Next_Eleven

Only if we could have people with the right mental attitude

No USA?

No surprise there. Messed up country packed with useless AA ready to kill.

wale4x35:

Check out the next 11 countries http://en.wikipedia.org/wiki/Next_Eleven

Only if we could have people with the right mental attitude

Instead of fools who somehow managed to work at Goldman Sachs only to fail us when really challenged to deliver.

Our economy has steadily declined since Igbo technocrats left office.

What we have now is cooked up economic figures with nothing on the ground to show.

Aganga = a Failure with false pedigree

@Eku_bear,

what happned to the prosperity promised with the discovery of Oil? If you like have light, but with bad government that light will seem like darkness.

Nigeria still prevents a very hostile environment for doing business, and the number 1 problem is corruption not light.

Nigeria has so much potential, yet it is wasted by the type of leadership we have in this nation. We need a socialist running Nigeria. There was a time, in which we had such thinkers, like Dr. Michael Okpara who believed in "Pragmatic Socialism."

ROSSIKE:

Look, if GEJ can sort out the power problem, we're home and dry with those predictions.

Thankfully, I've never felt more positive about the future of power supply than I do today.

GEJ is working on it. 

My guy , take this section of the article in , because it is all important, and you will understand Jonathan is not the President we need in 2011 :

"Nigeria has shown some vague signs. If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is I think very interesting," O'Neill said.

Gbawe said:

Quote
"Nigeria has shown some vague signs. If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is I think very interesting," O'Neill said.

What many of you guys fail to realise is that corruption has actually reduced in Nigeria.

I remember in the late 90s under military rule when Nigeria consistently ranked No 1 or No 2 in Transparency International's corruption index.

In their latest index, we're at No 58 or something. We've been overtaken by the likes of Russia, Ukraine, Pakistan, Venezuela, and so on.

So it's not inconceivable at all that corruption can be reduced even further, under a Jonathan administration.

ROSSIKE:

Gbawe said:

What many of you guys fail to realise is that corruption has actually reduced in Nigeria.

Mai ROSSIKE.

Jaundiced analysis again?

Jaundiced analysis?

Look, we cannot compare the madness of the Abacha era or the IBB era with what we have today.

For goodness sakes' those men used to see off visitors to Aso Rock by filling their car boots with Ghana must go bags stuffed with dollars!

They weren't 'leaders' in the true sense in which we understand the term.

More like bandits let loose in a jewelry shop.

They'd call the CBN governor and order him to wire a billion dollars or more into their Swiss accounts, at a go.

We KNOW that level of impunity has been banished in Nigeria for good.

There's no way you gonna tell me that kind of thing is still happening!

14 of the countries in the G20 have population less than the New Republic of Benin. I am telling you, within the first 3 years we would be in the G20 before Nigeria.


Argentina
Australia
Canada
China
France
Germany
Italy
Republic of Korea
Mexico
The Netherlands
Saudi Arabia
South Africa
Spain
Turkey
United Kingdom