The growing inequalities between
the rich and the poor, labour unrests, service delivery protests and corruption
among a range of other ills have hampered South Africa`s progress. Enter Nigeria, Africa`s most populous country
with over 160 million people
and whose GDP has grown at an average of 6 percent since 2006 according to the
World Bank. Nigeria`s rapid growth over the years appears to have attracted
noteworthy foreign investments as witnessed by global giant Procter &
Gamble`s recent $300 million manufacturing plant, Dubai like Eko Atlantic City
being built on land reclaimed from the Atlantic ocean among other foreign
investments.
Nigeria`s Statistics Bureau is in
the process of recalculating Nigeria`s Gross Domestic Product to better reflect
the country`s changing economic configuration over the years. The
recalculation, called rebasing is an adjustment that will account for changes
in market prices and weights of goods and services, and will also see the base
year of calculation change from 1990 to 2010. The last rebasing exercise in the
West African country was carried out in 1990. If Nigeria`s GDP were to rise by around 60% as
estimates indicate to around $432 billion, it will be the 28th largest economy in the world,
and overtake South Africa as Africa`s biggest economy in terms of GDP .
The country has set itself an
ambitious target of becoming one of the world`s top 20 economies by 2020.
Nigeria has been second only to China in terms of cumulative real GDP growth in
local currency terms since 2008. Jim O`Neill, economist at Goldman Sachs famous
for coining the acronym BRICS has now
shifted attention to what he terms the MINTs, Mexico, Indonesia, Nigeria and
Turkey which he sees as the pillars of
global growth in the coming years, with Nigeria being the most prominent among
them. Accounting for $5, 5 billion of the Foreign Direct Investment
into Africa in 2013 alone, clearly Nigeria is in good stead to be
one of the leading economies with time.
On the surface this makes for some
scintillating reading. However, a closer look at the dynamics of Nigeria`s
economy reveals structural
deficiencies that are overlooked by GDP figures as indicators of
economic growth and development.
Military Extremism in the North
Nigeria has had to contend with
threats posed by Boko Haram as well as other Islamist militant groups for a
while. The Muslim North has been the area most affected by the activities of these
extremists, perhaps the most antagonistic of them being Boko Haram. It is
estimated that since 2002, the group which has been proscribed as a terrorist
organisation by most foreign governments, has accounted for over 10 000 deaths
in the region.
Often, it is argued that the unemployment,
lack of education opportunities, poverty and socio-economic inequalities rife
in the northern parts of the country provide a steady supply of youths who can
be recruited into the radical organisation. The consequences of such extremism
on the country have been all too apparent, ranging from kidnappings, bombings
and assassinations. In May 2013, the Nigerian President declared a State of
Emergency on three states in the northern parts of the country as part of state
efforts to thwart insurgents.
This could potentially be a self-perpetuating
cycle where the northern parts of Nigeria, because of the instability, fail to
attract investments thereby further entrenching roots of income inequalities and
under development compared to the oil rich south. This extremism is more than
just about religious pursuits to impose Sharia Law. Commenting on Boko Haram
and their activities, Femi Odekunle
Professor of Criminology at the University of Abuja says, “The government needs
to address the social order issues which constitute economic and educational
issues that are underlying the emergence and sustenance of Boko Haram.” As long
as wealth and opportunities remain or are perceived to be concentrated the
Southern states with the oil refineries, it is not immediately conceivable how
the terror caused by militant groups in the North will abate. The costs of such
insurgents on the economy are too dear, and could all but reverse strides made
in developing Nigeria.
Corruption, ‘the in elephant room’
Recently, Nigeria has made the
headlines with high profile cases of corruption. From allegations by former
Central Bank governor Lamido Sanusi of $20 billion being unaccounted for by the
state, to senior government ministers being sacked, reportedly for corruption, clearly
corruption is rampant in Nigeria. Transparency International`s Corruption Perceptions
Index ranks Nigeria at 144 out of the 177 countries measured, underlining the
extent to which corruption is endemic in Nigeria.
Nigeria`s Finance Minister Dr
Ngozi Okonjo-Iweala who in her book ‘Reforming the Unreformable: Lessons from
Nigeria’, dedicated an entire chapter to corruption concedes that Nigeria
indeed has a problem with corruption. However she like other members of
President Goodluck Jonathan`s government, with haste downplays corruption.
Speaking to Christiane Amanpour, CNN`s chief international correspondent, Dr
Okonjo-Iweala says “Nigeria does have a problem with corruption and so do many
other countries, including developed countries.”
To be fair, corruption is not
only peculiar to Nigeria, and notable strides have been made to try to stamp
out corruption in that country. Yet,
corruption could see income remain unevenly distributed in a country where the
World Bank estimates that 67% of the population still live in poverty. Former
Executive Chairman of Nigeria`s Economic and Financial Crimes Commission, Nuhu Riabadu
revealed that since independence in 1960, Nigeria has lost close to $380
billion to corruption and mismanagement. Corruption then is the ‘elephant in
the room’ the country has to address if these statistics are anything to go by.
Structural Economic Issues
On a broader level, Nigeria`s
economy is laden with structural issues that threaten the growth it has been
witnessing. 80 percent of the country`s revenues come from crude oil exports
and this signifies an undiversified economy reliant on the oil and gas sectors
that are susceptible to the caprices of fluctuating commodity prices. This
speaks to the obvious need to diversify Nigeria`s economy.
Furthermore, growth in the
Nigerian economy has been in less labour intensive sectors such as oil and gas,
telecoms and banking. As a result not everyone enjoys the growth of the economy
as most people remain unemployed. Agriculture which can potentially employ many
people needs to be modernised and more employment opportunities created.
300 000 barrels of oil were
reportedly lost in 2013 alone due to vandalism, production shut downs and theft.
These are the sort of leakages that will need to be reined in, as the country
endeavours to develop. The work does not stop there, together with Afghanistan
and Pakistan, Nigeria remains one of only three countries where Polio is still present.
Then there is the ‘paradox of plenty’, where an estimated 120 million people do
not have access to electricity in Nigeria which is the largest oil exporter on
the continent. The clear implications being that investments have to be made in
shoring up health care systems, ensuring efficient service delivery, upgrading
key infrastructure in the country, propping up systems as well as ensuring
growth and development is equal. Nigeria`s demographic structure presents
opportunities for an economy driven by robust domestic demand. Yet this hinges upon
a growing middle class whose spending will drive the economy.
Though South Africa will likely remain
the bellwether economy in Africa for the foreseeable future due to its
diversification, investments in infrastructure, its size and the systems it has
in place, it is obvious that it has underwhelmed of late. With Nigeria`s
national elections looming in 2015, it remains to be seen whether the new
government will implement the much needed socio-economic reforms and
consolidate its new found position as Africa`s biggest economy.
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