NIGERIA Invest in 2012-13 - Newsdesk Media

Nigeria has made enormous strides in recent
years in its journey towards democracy.
Adrian Holliday assesses the road ahead and
whether President Goodluck Jonathan can
continue with his reform agenda, create jobs
and draw quality investors to the country
There’s no getting away from the facts. Nigeria
has a starkly unequal distribution of resources,
startling ethnic and socioeconomic fault lines,
and there are real concerns about Islamist group
Boko Haram’s campaign of violence. Yet Nigeria
has come a long way since 1999, when military rule under
General Abdulsalami Abubakar came to an end and democracy
took hold, says London-based Norton Rose lawyer Bayo
Odubeko.
“What people have to remember is that Nigeria is a country
that only gained independence from the British in 1960,”
he says. “We have been building our democratic and political
system over these past 50 years. Nigeria has not had the same
sort of timeline that the UK and other developed countries
have had to develop more robust and accountable systems.”
Looking back over the past 12 years, he believes that
“[democracy] has been a key part in rebuilding Nigeria and
the increased foreign direct investment it has attracted.
The important thing is to maintain democratic and political
accountability, and while we’re not there yet, we’re on track.”
Elizabeth Donnelly, Africa programme manager at
London’s Chatham House, an independent international
think tank, says the country has achieved a lot in terms
of its young democracy. “There have been two peaceful
transitions of power,” she says. More recently, there has also
been the creation of the economic and financial crimes
commission. “It is a testing time for Nigeria, but the
progress at last year’s elections and in the reform
agenda is encouraging.”
Potential powerhouse
A lot of Nigeria’s issues, such as the large gaps between rich
and poor, its fractious and fledgling democracy, go back to
colonial times. Nigeria is a hugely diverse country in terms of
religious and ethnic complexion; managing and governing such
diversity is a stupendous challenge, but Nigeria is also an
African powerhouse – or it could be.
With a population of 170 million people and as a
huge producer of oil, Nigeria is expected to see its economy
the policy agenda 33
climb to $400 billion by 2016, from $268 billion this year,
according to the International Monetary Fund (IMF). It is
envisaged that Nigeria’s gross domestic product (GDP) could
even overtake that of South Africa by 2025.
Certainly, there has been a substantial power shift to
the south of the country in terms of central government over
the past 12 years. President Goodluck Jonathan, the former
vice-president, inherited his position upon President Umaru
Yar’Adua’s death in 2010, following a long illness. Jonathan
then went against the ruling People’s Democratic Party’s
tradition of presidential power-sharing between north and
south. It was a seemingly smooth, almost meteoric rise to
power. Military amnesties followed.
Steps to encourage investment
Tim Newbold, of pan-African communications consultancy
AfricaPractice, is hopeful for the future, but he doesn’t play
down the challenges facing President Jonathan. “A series of
vital economic reforms are on the agenda this year, including
the privatisation of the power industry and the restructuring of
the upstream oil and gas sector through the Petroleum Industry
Bill, which should kick-start investment when it is passed.
Alongside that you have potential for the complete removal of
the fuel subsidy, which would encourage refining investment
in Nigeria,” he says.
“The interesting thing here is that most people don’t
object to the basic economic argument behind this move. It is
whether the government can be trusted to use the savings to
drive the economy. It’s the trust deficit issue that drove protests
in January, and how the government is seen to address the
underlying issues, that will be key to Nigeria’s success in 2012.”
The fuel subsidy is a highly sensitive issue. The Economist
claims it costs Nigeria $7 billion every year, sucking cash from
the state and filling the pockets of various middlemen en route,
yet President Jonathan has vowed to deal with the issue this
year. If he succeeds where other Nigerian leaders have failed,
the achievement will boost support for him and, in the longer
term, may even encourage more people to become involved in
local and national politics.
Recently, President Jonathan persuaded World Bank
managing director Ngozi Okonjo-Iweala to return home from
Washington to become ‘super-minister’ for finance and the
economy. The governor of Nigeria’s Central Bank, Lamido Sanusi,
is also a reformer and uncompromising with regard to spending.
“Subsidies should be paid from savings and not from
borrowing and deficits,” he declared during a BBC radio
interview in January 2012.
invest in nigeRia 2012-13