Tuesday, March 22, 2011

What the Elections Hold For Nigeria: Gloom or Glory (An Economist View)

From the greatest of economic optimism to the highest forecast of gloom, Nigeria is always tossed in between when looked through the knowledge prism of intellectuals around the globe. Global Trend 2025 Report forecast Nigeria to be part of the ‘arc of instability’ due to its youthful age structure and rapidly growing population. This ‘youth bulge’ is expected to remain on rapid growth trajectories and according to this report, unemployment conditions must change ‘dramatically’ to avert instability and state failure. This report holds element of truth, but there is greater optimism. My personal findings working with young people in Nigeria and been a youth myself in my mid-twenties, I have come to understand more fundamentally that the youth, as much as they hold the ability to ruin the nation as seen in the case of Niger Delta militias, they also have the capacity to transform the Nigerian economy. A phenomenon I call the ‘Y-index’ (i.e. youth index). Another intellectual, Okonjo Iweala calls it ‘demographic dividends’. Together with growing technology in the area of telecommunication and the Nigerian Banking reforms (see figure below), the impact the telecoms industry is playing in the banking sector is now so obvious. This provides a bouyant financial sector for core economic activity. Nigeria is on its pathway to growth and that is more so now than ever before. Approaching elections, due in April 2011 (couple of weeks time), is likely to usher in a period of political instability that will probably see a significant increase in political tension. This is the opinion of a school of thought,but on the other hand, we as a nation have become wiser, thus this political tension can be averted or at least minimized in order for Nigeria to attain the required economic growth as a nation. Again, the youth has arole to play in achieving this. Economic expansion will be buoyed by robust performance in the non-oil sector. Real GDP growth is expected to average over 6.5% in 2011-15, provided political tension do not alter these forecasts, Nigeria can be seen to be on its path to economic glory.

Looking Beyond the BRICS: Nigeria, Among the Emerging Emerging Markets 'Frontiers'
Key Data: GDP growth: 5.8%, GDP: $248bn (PPP: $397bn), Inflation: 11.2%, Population: 155.2m, GDP per head: $1,600 (PPP: $2,560).

The biggest concentration of overlooked markets is in Africa (which is in many ways an overlooked continent). In 2011, according to The Economist (2010), there will be a great deal about the unexpected merits of ‘frontier’ economies such as Nigeria who are poorer and riskier than the emerging BRICS (Brazil, Russia, India and China). Multinationals intending to invest in foreign countries will be wise to do so now in order to enjoy location economies while leveraging the valuable skills in Nigeria to increase profitability and profit growth. Based on my recent work, I'll recommend two major non-oil sectors for profitable investment: Agricultural sector and the film industry (Nollywood).
Although with very high volatility, moving into Nigeria can provide a foreign company the needed vitality. Companies that move first will enjoy lots of advantages. They will be able to forge deals with aggressive young companies, strike infrastructure deals with local governments. And they can shape the tastes of future consumers. Companies that succeed in these neglected emerging markets are not only putting down roots in the world’s most fertile soil. They are giving themselves a chance to establish business habits (learning experiences/curves) for years to come. Many reforms are on-going in Nigeria and many is still to come. After all, there are hardly easy markets.

Seun Oyeniran

The Economist (2010), Businesses will learn to look beyond the BRICs, Nov 22nd 2010 | from The World In 2011 print edition (http://www.economist.com/node/17493411?story_id=17493411)
Hill, C.W.L., (2011), International Business: Competing in the Global Market Place, New York: Mc Graw-Hill
Global Trends 2025, (November 2008), A Transformed World,
UNCTAD Report, http://unctadstat.unctad.org/TableViewer/tableView.aspx?ReportId=719
CORRUPTION PERCEPTIONS INDEX 2010 , accessed 3/3/2011
Human Development Report 2010, The Real Wealth of Nations:Pathways to Human Development, UNDP 2010, accessed 3/3/2011
United Nations (2004), Conference on Trade and Development , Eleventh session São Paulo, 13–18 June 2004, GE.04-51545
Sloman, J. , and Wright, A., (2009), Economics, England: Pearson
Saugato Datta, (2011) (Eds), Economics: Making Sense of the Modern Economy, London: Profile Books

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