Imagine a company that is void of a perceived competent management team, lacks the necessary capital for realistic expansion – even when bestowed with such luxuries lavishes it on satisfying personal wants of its executive team – and has to contend with a very hostile business environment which discourages growth. However despite these challenges, it still produces a healthy balance sheet yearly, that company will be called Nigeria – at least in the last half-decade.
The newly crowned “Africa’s largest economy” is mastering the art of pursuing financial and economic prosperity amidst a multitude of political and socio-economic challenges; from insecurity to inadequate infrastructure, the country continues to defile common logic, leaving one to ponder just how this is being achieved.
Extensive social challenges
There is an overriding country-wide notion that every Nigerian is her own government. For a start, a family has to fend for most of its energy. A household isn’t complete without the noisy distraction of a generator. More recently, innovative energy sources such as Inverters are seeing increasing sales in the West African country as publicly generated electricity remains a luxury to many.
The current power output is placed between 2,500MW to 3,500MW and is generated for a population that exceeds 170 million people. A comparison with its closest rival makes for a clearer picture; South Africa generates 40,000MW for a population barely over 50 million – three times less than that of Nigeria’s, indicating the enormous power deficit challenge faced by Africa’s largest economy.
In a speech at the recently held Lagos Economic Summit (EHINGBETI 2014), Babatunde Fashola, the governor of Lagos State, Nigeria’s commercial hub, shared an experience of meeting a publishing company owner who moved his business – which employs over 600 people – to Dubai, simply because sourcing power independently contributed 40 percent to his overall cost in Nigeria, compared to 4 percent in the UAE. With such assertion, little is left to the imagination, how many more businesses have toed this path, further limiting the opportunity to tackle the unemployment menace bereaving the country.
Healthy water facilities also remain non-existent in many communities, leaving individuals with the singular option of erecting independent water sourcing system. The educational system persistently receives marginalized attention, churning out half-baked graduates, ill equipped to lead the next level of technological and social prosperity. Insecurity is also brewing rapidly as the designated terrorist group “Boko Haram” continue to wreck havoc in Northern Nigeria, detonating explosives and carrying out raids in several communities, destroying thousands of lives and properties and halting economic activities in those geographies. Despite these challenges though, Nigeria has posted significant records on economic gains in the past few years.
Contrasting economic fortunes
Nigeria still remains the ideal destination for investment in Africa. With a population of 170 million, and counting, the consumer market is unrivalled. The west African nation boasts the largest populated country on the continent, ensuring that despite several societal challenges, producers are assured a healthy return on investment and a viable market to grow sales. This is evident in the swelling portfolio of Foreign Direct Investment (FDI) inflows which is currently stocked at $85 billion.
The country’s capital market received $4.7 billion of the FDI inflow in 2013, a 56 percent contribution to the total market participation, making it the second fastest growing bourse on the continent with 33 percent. Nigeria is presently ranked the top destination for FDI in Africa.
The recent rebasing of the Nigerian Gross Domestic Product (GDP) also revealed a more diversified economy, as industries such as Telecommunication and Entertainment featured as significant contributors to the country’s GDP, previously dependent heavily on oil revenue. Nigeria’s film industry, Nollywood, reportedly now contributes as much as 1.3 percent to GDP.
The result of the rebasing puts the country’s GDP at $510 billion, 32 percent larger than Africa’s most reveled economy, South Africa, and elevates Nigeria to the position of Africa’s largest economy, a significant milestone, considering its enormous social drawbacks.
Following the financial meltdown in 2008, which resulted in the near-collapse of the financial system, a forced rethink in the approach to handling the banking and financial sector has spurred the country to unprecedented growth levels in the last half-decade. Since 2010, Nigeria has recorded a year-on-year growth of 7 percent, with analyst such as Fitch rating firm, Moody predicting Nigeria will emerge amongst the top 15 economies by 2050. Renowned international economist, Jim O’Neil, the man who coined the BRICS (Brazil, Russia, India, China, South Africa) as the next global economic powers, also included Nigeria in his recent invention, the MINT (Malaysia, Indonesia, Nigeria, Turkey) – flanked as the next world economic frontiers – a damming endorsement of the West African nations achievements and unearthed potentials.
This is an excuse for the slack political leadership seen in the country, but an opportunity to investigate the plausibility of recording progress in the toughest of conditions, imagining the possibilities offered if vision, efficiency and tenacity are aggressively employed in governance. Nigeria has reshaped the common notion that poor governance results in economic downturn, and should provide a suitable case study to organizations and individuals seeking to address similar scenarios.
