Nigeria’s independence anniversary is often marked every year with a string of commonalities. It starts with the government holding elaborate national celebrations in commemoration of the historic day, economic and policy analysts advocate better socioeconomic policies while the citizens call out the powers that be on the failed promises of successive administrations and deplorable state of the country.
October 1st this year holds in somewhat unique circumstances, however, coming amid a devastating global pandemic that has set back the fight against poverty by years and an economic crunch that has only reiterated Nigeria’s vulnerability to external shocks. Thus creating further uncertainty around what the future holds for Africa’s largest but monotonous economy.
As the country’s political freedom clocks 60, the outlook has never been bleaker. But amid all the woes and gloom, a number of trends are worth celebrating while others, if anything, offer some hope for what is to come in the years ahead.
Changing oil industry
Despite being the largest oil producer in the region, Nigeria spends billions of dollars on the importation of petroleum products yearly due to a lack of functioning refineries. That should change over the next couple of years, however, with recent developments that promise to usher in a new era in the petroleum industry.
Dangote Industries is on the verge of launching its 650,000-barrels per day petrochemical refinery, billed as the world’s biggest single-refinery train and on course to become operational early 2021. Abuja’s other industrial behemoth, BUA Group, also plans to set up its own integrated refinery and petrochemical plant with a capacity to produce 200,000 barrels of refined petroleum daily and 10 million tonnes per annum, expected to come on stream in 2024.
Upon completion, the combined 800,000+ bpd facilities should go a long way in serving local fuel consumption needs, which currently stands at some 500,000 to 550,000 bpd, thereby reducing the reliance on importation. That would help the country save scarce forex reserves and possibly earn the government billions of dollars in export earnings. Given the crucial role the industry plays in the economy, these could serve as a springboard for Nigeria’s fortunes to change for the better.
Rural electrification with renewables
While Nigeria is still behind in renewable energy development and usage, there has been significant growth in its adoption, availability, and government support, all of which indicate an increasing prospect for renewable energy to play a greater role in the country’s power mix.
The majority of wins in this regard have been in rural areas, where access to energy is an enormous challenge. Companies such as Solynta, Arnergy and Solarwox are powering thousands of Nigerian households, SMEs, and industrial users with solar energy. Such off-grid renewable energy solutions in Nigeria leads to important social benefits for vulnerable households while contributing to rural development.
Efforts from the private players are complemented by those of the government, which in January launched a $75 million fund to provide off-grid solar electricity to the people. Solar panel manufacturer Lumos is contracted to use part of the fund to electrify one million households over the next five years. Besides the partnership, the Rural Electrification Agency has been implementing several off-grid energy programs, all of which could light up the country’s vast off-grid locations.
Booming technology sector
The Nigerian tech ecosystem has grown significantly over the past few years with a plethora of innovative startups disrupting different sectors. Nigeria in 2018 overtook South Africa as the market of choice for startup funding, with 58 startups raising more than $90 million in investment.
Perhaps the most notable has been the technological advances in the Nigerian financial services sector, previously stifled by infrastructural challenges and unable to meet 21st-century challenges, which a number of financial technology (fintech) firms – Flutterwave, PiggyVest, Vesicash, and Nvoicia – are now solving. Elsewhere, crowdfunding platforms are giving a greater number of people the opportunity to co-own farms and make profitable investments in agriculture while in healthcare, Lifebank makes blood available when and where it is needed to save lives and 54gene is addressing the need to include under-represented African genomic data in research.
With a concurrent rise in the number of tech hubs in the country – from 23 in 2016 to 55 in 2018 – and investor funding more available than ever, the tech sector is expected to maintain the upward trajectory over the next few years and that is good news for Nigerians.
…and telecoms and financial services
Nigeria is home to one of the fastest-growing telecoms markets in the world, boasting the presence of major emerging market network operators, all of which have their largest and most profitable centers based in the country. The success in the deregulation of the telecoms industry paved the way for today’s vast improvements in internet services and the availability of cheap data. This has helped facilitate the development of ICTs, catalyze development in virtually every sector, and can be linked to today’s growing tech space.
More so, the Nigerian financial services sector, comprising a varied mix of service providers, is unarguably stronger than ever. The banking industry boasts at least five local players that have seen significant continental expansion over the years, enabled by central bank recapitalization exercises since 2004 that has helped banks appreciate in terms of performance while improving the financial health of the sector.
Under pressure from the COVID-19 pandemic, Nigeria’s economy saw its biggest contraction in at least a decade in the Q2 2020. Only 13 sectors saw positive real growth compared to 30 in the previous quarter with the standout performers being financial services and telecommunications. Given the central roles these sectors play in economic development, their stability and growth momentum bodes well for the future of the Nigerian economy.