NIGERIA Invest in 2012-13 - Newsdesk Media

Diversifying the economy: oil and gas
revenues as a percentage of Nigeria’s GDP
1980s 2009
35% 16%
the Nigerian economy as a whole. In
2005, Goldman Sachs picked Nigeria as
one of its ‘Next 11 economies’, the
emerging growth centres that are
taking over the growth mantle from
the BRIC countries – Brazil, Russia,
India and China. By 2050, it expects
Nigeria to possess the 12th largest
economy in the world.
Citigroup puts Nigeria in its
Frontier 15 – countries that, it says,
“have the potential to generate the kind
of returns for equity investors over the
coming decades that the emerging
markets themselves have produced over
the past quarter-century.”
Reasons for optimism
Business Monitor says Nigeria is one of
the most promising markets in the
sub-Saharan Africa region: “Despite
ongoing challenges, its large youthful
population, scope for efficiency gains,
emerging middle class and competent
(and improving) macroeconomic
management all suggest immense
potential. Indeed, in several segments
of the economy, this optimistic view
has already begun to play out.”
The importance of agriculture and
oil and gas to the economy
Combined
percentage of
Nigeria’s GDP
60%
Between 1971 and 2000, Nigeria’s
average rate of growth in its gross
domestic product (GDP) was just 3.0 per
cent. Since 2000, real GDP growth has
more than doubled, to 6.4 per cent.
What has changed? In part, argues
Citigroup’s Africa economics analyst
David Cowan, it is a question of politics,
with the country leaving behind its
history of military coups and brief
civilian governments. “While it would be
a long stretch to describe the current
political structures as democratic,
there still does seem to be a consensus
that the 2011 elections were one of
the freest and fairest in the country’s
history,” he says.
The government has run a very
small fiscal deficit, of around 1.6 per
cent of GDP, in the past 10 years, and
privatisation and financial reform has
deepened and strengthened the
country’s financial system.
The ingredients for growth
Fundamentally, the global banks argue,
the country has all the raw ingredients
for growth. Nigeria’s large population –
170 million people – makes it a good
the economy And fInAnce
candidate for fast growth, Cowan
says: “For poor countries with large
populations, growing fast can actually
be quite easy if the government gets
the basics right and catch-up growth
starts to accelerate.”
That view is in keeping with
Goldman Sachs’s Next 11 countries
exhibiting a common thread of having
large populations that are also young:
“The N-11 countries have large
populations and a majority have a
median age of under 30, creating the
potential to become a massive
consumer base, as well as provide scale
to other growth trends.”
Nigeria has demonstrated some of
that consumer potential. The country
has witnessed a mobile-phone revolution
– at the end of 2001, there were
266,461 connected mobile lines,
increasing rapidly to 96.7 million by the
end of 2010. This phenomenal rise has
highlighted that Nigeria is not just an
oil-rich nation, but also a nation with
the potential for huge growth in its
consumer markets.
The country is also weaning itself
off its dependence on oil. Crude
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