A Silent Economic Revolution Is Taking Place In Nigeria
by Aziza Uko and Christopher Morris
On January 23, 2015, CNN Money predicted as follows: “By our estimates, the fastest-growing economies in 2015 will be – China, Qatar and Nigeria.” Nigeria was predicted to grow at 7.0%.
To those who always see doom for Nigeria, that was a fairytale, but to those who see the economic foundation being laid in Nigeria in recent years, it was exciting news. CNN does not embark on fortune-telling. CNN has no reason to humour Nigeria. It makes its predictions based on financial statistics and realities globally available. But because of decades of financial stagnation (and even retrogression) in Nigeria, the progress made in last four years always seems like a drop in the ocean in the eyes of many Nigerians.
Similarly, in 2014, Nigeria came first in the Frontier Markets Sentiment Index, created exclusively for the Wall Street Journal by Washington DC-based advisory firm Frontier Strategy Group. The index measures the frontier economies that attract the most attention from American and European multinationals.
Many Western people still have an image of Africa as being an entirely poverty-stricken continent ridden with insoluble social problems, and somewhat backward in nature. The reality is that the continent is changing pretty rapidly. In 2013, the African Development Bank reported that Africa was now the fastest growing continent economically, and that this fiscal growth was also being passed on to everyday Africans.
Over 350 million Africans have been lifted out of poverty by this economic development, while the percentage of population living below the poverty line has reduced from 51 percent in 2005 to 39 percent in 2012. And central to this has been technological development. The BBC reported in July, 2014 that a mobile boom within Africa is powering an economy focused on innovation, as technological infrastructure expands swiftly across the continent.
Arguably, the jewel in the crown of this economic development in Africa has been Nigeria. The Western African nation was declared to be the largest economy on the continent in April 2014, overtaking South Africa for the first time. This economic success has been based on a diversified industrial base which includes telecoms, information technology, music, online sales, airlines, and film production.
While multiple factors have contributed to Nigeria’s success story, the economic policies of President Goodluck Jonathan have evidently played a major role. Jonathan has particularly focused on economic development in his overall ethos as president, and consequently, appointed technocratic economic experts to key positions in his government.
As a consequence of this, Nigeria has become the preferred destination for overseas economic investment in the African continent. Jonathan’s government has indeed generated $68 billion in foreign direct investment, with the largest project of note being Indorama’s $1.2bn fertilizer plant in Onne, Rivers State.
In 2014, Nigeria signed a $12 billion rail deal with China Railway Construction Corporation (CRCC), which was reported as China’s biggest foreign investment in history. The 1400 km rail line would link Calabar to Lagos. The same year, Jonathan commissioned the Olam’s rice mill in Nasarawa State, which was reported to be the biggest rice mill in Africa. Similarly in 2013, Vice President Namadi Sambo supervised the ceremony in which Alhaji Aliko Dangote, President of the Dangote Group, kicked off the process of building the largest fuel refinery and fertilizer in Africa.
On the back of this, Nigeria has grown to be the 26th largest economy on the planet under Jonathan’s tutelage, and his administration can certainly boast some impressive statistical feats. These have been achieved due to some diligent policy making, with Jonathan pushing strongly to improve both economic and labour conditions within the world’s seventh most populated country.
Jonathan has initiated numerous job creation schemes within Nigeria, which include the Community Service Scheme, Graduate Internship Scheme, and the Subsidy Reinvestment and Empowerment Program. Internal figures indicate that these have been responsible for collectively generating 1.6 million jobs within the nation.
Additionally, youth unemployment has been addressed by the Youth Enterprise with Innovation in Nigeria programme, which will assist in the creation of roughly 100,000 jobs over a three-year period, helping to greatly improve youth employment in Nigeria, and decreasing poverty among young people.
Another area of progress has been with regard to enhancing government transparency. Governments in Africa do not have a shining record with regard to democracy and the sort of standards of accountability that Western governments are typically associated with. However, President Jonathan has attempted to improve this situation by financing the publication of monthly FAAC allocations to federal, state and local governments.
The development that Nigeria has made as a nation, particularly economically, and its increasing presence on the global stage was underlined by an opportunity which was presented to the nation last year. Nigeria hosted the World Economic Forum on Africa for the first time in May, 2014. This gave the nation and the Jonathan administration the opportunity to showcase Nigeria’s economic growth and development to a global audience of nations, further enhancing the country’s foreign investment prospects.
While rapid economic progress has been achieved in Nigeria, the country is still faced with challenges in the future. Most notably, the nation has been particularly reliant historically on the exploitation of oil. A diversified economy is of course advisable under any circumstances, but this oil-based focus must also be placed in the context of rapidly plummeting oil prices.
Recent comments and analysis have suggested that oil prices may remain depressed for quite some time, and the long-term outlook for oil will certainly be an issue that Nigeria will be forced to tackle. The Economist noted in November, 2014 that oil still represents 75 percent of government revenue in Nigeria, and falling prices could have a significant impact on GDP.
Efforts have been made to diversify Nigeria’s interest away from crude oil. President Jonathan has placed a particular emphasis on developing infrastructure projects, as well as enhancing agriculture in the nation. Nigeria is seeking to add 20 million metric tonnes to the domestic food supply by 2015, and to create 3.5 million jobs through agriculture, a throwback to the country’s proud history. Nigeria had been one of the world’s leading agricultural producers in the 1960s, and between 1962 and 1968, export crops were the country’s main source of foreign exchange.
Clearly, there are challenges ahead for Nigeria, but the industrial and economic progress which has been made in recent years suggests that the country is well-placed to scale any obstacles to its continued prosperity. With Nigeria having significantly reduced its fiscal deficit and government debt in recent years, the country is now in a relatively stable economic position, and should continue to be a torch-bearer for a rapidly evolving Africa.
The Economist has this to say about Nigeria’s economy: “For the past three years, growth in Nigeria, Africa’s biggest economy, has exceeded 5%. You might think its growth is being powered by oil exports. Nigeria has Africa’s second-largest reserves, it is the fifth-largest exporter and, according to the IMF, oil accounts for 95% of all exports. But in recent years the Nigerian oil industry has stagnated. Growth has instead come from things like mobile phones, construction and banks. Services now represent 60% of GDP.”
Nigeria’s economy is attracting attention in spite of the falling price of oil and the activities of Boko Haram. It is obvious that this is not caused by luck. Something fundamental is happening to Nigeria’s economy.
Aziza Uko is Executive Editor of The Trent. She is also Chief Executive of Ziza Group, a company she founded in 2009. She is award winning graduate of marketing and a marketing communications professional with over 16 years post graduation experience. She is a writer, editor, and music lover. She can be reached on email HERE, on Twitter at@azizauko, and Facebook HERE.
Christopher Morris is a widely published writer on the subjects of economic, technology, computing, and sports. Morris’ work have been published on the Financial Times, Sunday Telegraph, and Yahoo!. He is a regular contributor to ValueWalk and the Digital Tourism Think Tank, and an several print publications. When not writing, Christopher enjoys sport, video games, gadgets and reading.