Nigeria’s economy recorded a slight growth last year, as it pulled out of a year-long recession. Its exit from recession also coincided with the rise in oil price in late 2017. For the oil-dependent country, this was good news. Oil prices reached a four-month high this year, and it has also translated into an increase in Nigeria’s Forex reserves.
However, analysts say Nigeria should begin to think long term if it truly wants to maintain a steady economic growth. Firstly, it needs to industrialize its economy.
One of such analysts is the Global Chief Economist of Renaissance Capital, Charlie Robertson. While speaking on the sidelines of the Renaissance Capital Investment Conference last week in Lagos, he mentioned that for Nigeria to industrialize, it needs to carry out a massive literacy campaign.
“Government should think long term, and make sure 100 percent of Nigeria’s children are at school. They need to conduct an adult literacy campaign. All of the data we have shows you cannot take off the economy unless adult literacy is about 70 percent, preferably 80 percent. For Southern Nigeria, it is 70-80, or even better. In the North, it is 30 percent, 40 some states. And that as a rate is not enough to sustain or grow the economy,” he said.
Presently, Nigeria’s adult literacy rate is 51.08 percent, meaning only 51.08 percent of people aged 15 and older can adequately read and write. However, literacy is concentrated in only one region of the country. Adult literacy is as low as 7.23 percent in Yobe state, Northern Nigeria, which is a reflection of the rest of the region, while it is as high as 96.43 percent in Southern Nigeria, implying that education in Nigeria is a regional metric. Many have made direct correlations between the low literacy rate and the emergence of terrorism in North Nigeria.
Mr Robertson feels Nigeria should take a leaf from the book of South Korea, who underwent a massive adult literacy campaign in the 1950s, and that set it on the way to becoming one of the Four Asian Tigers.
“What Korea did in the 1950s was to get adult literacy from about 30 percent to 90 percent in 10 years…They were poorer than Ghana but then became richer in the 1960s. In the 1970s, electricity spread across the country. In the 1980s, people started to buy Korean goods for the first time in the world, in a big way. So, it started with an adult literacy campaign. And that is what I think in the long run will make Nigeria more attractive to investors.”
He also believes Nigeria needs electricity to industrialize. Presently, Nigeria generates 144.48 kWh per person. However, Charlie says 300 kWh per capita is the minimum power needed for industrialization. “There are very few instances in the last 50 years of countries with less than 300 kWh per person that have been able to industrialize.” he said.
“Now, investors may not realize that, because they are not thinking “how do I make a profit in three months.” They are thinking how do they make a return in 5 years. And you do that by investing in the country that’s got human capital, electricity, and actually an investment. But if the first two is in place, obviously investment will follow,” he further stated.
On the Ease of Doing Business Index
He also commended Nigeria’s advancement on the Ease of Doing Business Index and predicts that Nigeria would further move up the Index in 2018. Investors watch out for the priority that the government places on investments and businesses.
“It is not hard to jump in the ease of doing business. What you need is a government that says this is important. You need a government that says I care about investments and businesses. Nigeria didn’t move in the rankings for a long time, they said ‘they’ve got higher oil prices, fine. who cares about the ease of doing business.’ Angola hasn’t made any big improvement,” he said.
“Nigeria said in the last two years that they can improve that. They did that last year, and they are gonna do this year too. It’s a positive sign. Does it produce growth at 6 percent instead of 3 percent? No. But does it tell you, you have a government that wants to see growth go from 3 percent to 6 percent? Absolutely. And that’s something that works for investments.”