NIGERIA Invest in 2012-13 - Newsdesk Media

Nigeria has experienced a decade
of democracy, a credible election
in 2011, and is now positioned as
one of the world’s fastest-growing
economies. Heather McKenzie
considers the country’s investment
potential in light of the recent
transformation policy outlined by
President Goodluck Jonathan
Between 2003 and 2010, Nigeria
recorded average GDP growth of
7.6 per cent, in part driven by an
ambitious reform agenda and
almost a decade of political
stability. With the largest population in Africa
– around 167 million people – and significant
reserves of natural resources, Nigeria is
attracting increasing interest from
international investors.
The World Bank’s Country Brief on
Nigeria states: “With these large reserves of
human and natural resources, Nigeria is poised
to build a prosperous economy, significantly
reduce poverty, and provide health, education
and infrastructure services to its population
needs.” But there are challenges ahead for
Nigeria if it is to fulfil such potential.
At a meeting in January 2012, at the
London School of Economics, Lamido Sanusi,
governor of the Central Bank of Nigeria (CBN),
said the Nigerian economy was still plagued
by some daunting challenges, despite its
robust growth. These challenges, which have
slowed down the transmission of growth into
higher employment opportunities, include
weak links between the main growth drivers of
agriculture and manufacturing and the high
cost of infrastructure.
“The need for low-cost, long-term
infrastructure financing requires more than
the Central Bank of Nigeria alone can tackle,”
he said. “Major bottlenecks and supply-side
constraints, including an enabling legal
framework, have slowed the responsiveness
of some CBN reform measures.”
the policy agenda 25
In a developing economy such as
Nigeria’s, the central bank should not only offer
price stability, but also play a developmental
role to support positive economic
transformation and rapid growth, he said.
In its appraisal report of its economic
and power-sector reform programme in
Nigeria, the African Development Bank Group
(ADB) pointed out that the second-round
effects of the global financial crisis and its
associated economic downturn had adversely
impacted the economic outlook of Nigeria.
“This situation still presents tremendous
macroeconomic challenges for Nigeria, as oil
continues to play a dominant role in the
economy, accounting for over 95 per cent of
exports and nearly 80 per cent of government
revenue. It also threatens the significant gains
from reforms successfully implemented by the
Federal Government of Nigeria (FGN) since
2003, and the subsequent economic
performance achieved so far.”
Signs of economic improvement
Overall, recent developments indicate that
the macroeconomic framework of Nigeria is
improving as a result of past successful
reforms, the government’s response to the
global crisis and the improving external
environment, said the ADB. However, major
constraints remain and have been exacerbated
in the context of the global crisis, it added.
Challenges faced by the government
include maintaining macroeconomic stability,
ensuring the banking sector’s soundness and
addressing power-sector bottlenecks. This will
create an enabling environment for private
activities in order to sustain growth in the
non-oil sector, create jobs and reduce poverty.
Major changes are under way in the
country to diversify the economy beyond
petroleum, improve food sufficiency,
upgrade critical infrastructure and increase
private-sector participation in the economy,
says Niyi Yusuf, managing director of
consultancy firm Accenture Nigeria. He cites
seven important changes that “have the
invest in nigeRia 2012-13