Showing posts with label World in 2050. Show all posts
Showing posts with label World in 2050. Show all posts

Saturday, July 02, 2011

Can Nigeria Outstrip Italy and Canada?

As I start my MSc dissertation this week, I keep jumping into several details that excites and fascinates me. I know the caption above may sound very controversial, but that's just how journalists are beginning to ask the Goldman Sachs team. Its not just the question in itself that seem interesting, the mere fact that  these questions can be asked is a testament to the shift in the global economy and it makes me sit down and press forward to focus my [re]search light on this area. And I think I will be talking about this a bit more for weeks to come. 

Whether or not the Nigeria's vision 20/2020 dream is built on this postulation is not so clear but materials available at the National Planning Commission office show some elements of Goldman Sachs Report on N-11 which I have discussed briefly on my previous post on this blog. The N-11 term is more than an acronym, it is a distinct group of countries in itself, albeit one defined by population. Following the BRICs (Brazil, Russia, India, China) are the N-11 which includes: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam. Mainstream economic growth theories put forward by Adam Smith and Alfred Marshal have pointed out that labour and capital are two fundamental variables that can propel a country's productivity. Other neoclasical economists have extended this aspect of labour to include particularly human capital. It is thus expected that a country with high population will have a high growth potential (i.e. GDP). Inadvertently, if we agree with both classical, neoclassical and modern theorist, Nigeria as a country can leverage it vast human capital resources and youthful population to foster economic growth and development (remember 'demographic dividends' and youth 'bulginess' from previous posts?). Building up on stories of gloom for Nigeria being as a failed state (as put in some recent publication with questionable sources), we are once again faced with reports of hope. Whether they are forecasts targets or estimates, the Nigerian government is seen to align in this positive direction of making the future brighter than the past.
 "One of the most remarkable phenomena of the past couple of years is just how enthusiastic the leaders of some of the N-11 countries seem to be about changing policies and wanting to engage in globalization. Nigeria is one country that deserves special mention, and is certainly a country that has captured my attention. With a population close to three times that of South Africa, Nigeria's ability to deliver on our 'dream' could be vital for the whole African continent" Jim O'Neill (November 23, 2007)
Nigeria has the scale to be important in global economies if it can deliver sustained growth. Although not very popular like other N-11 countries e.g. Korea and Mexico, but it is precisely this uncertainty and the fact that Nigeria lie well off the radar screens that makes it so intriguing. If Nigeria defy skeptics and take concrete steps towards addressing areas of weakness, her growth could be much higher. Certainly, improving global conditions while the global backdrop is benign is likely to offer the best chance of weathering the next storm.

So the question of whether Nigeria can outstrip Italy and Canada has already be shown to be possible in the  figures above showing GDP estimates in 2050.These forecasts are subject to inaccuracies caused largely by variable that were not considered prime of which is the climate change. While that is a global perspective, How we handle our systemic issues (i.e. violence, crime, corruption, political stability, etc) as a nation will determine to a large extent where we will be in the nearest future. I will be dedicating the next few weeks to considering factors that may or may not make us achieve first the vision 2020 targets as well as the N-11 vision 2025 and then 2050.

However, just as someone was asking me after my presentation on Nollywood in Lancaster, UK whether it was a 'Good People, Great Nation' propaganda I was doing for...you know ([laughs]), I want to answer a similar question headlong: these blog posts are not for propaganda or to put a government in a good light or otherwise. Although they carry element of good will to both the people and the government of Nigeria, they are purely academic and aimed at stirring further research and discussion. 

Seun Oyeniran.




References
Downloads . (n.d.). NIGERIA NPC - National Planning Commission | National Planning Commission Offices . Retrieved July 1, 2011, from http://www.npc.gov.ng/home/doc.aspx?mCatID=68253

Goldman Sachs | BRICs. (n.d.). Goldman Sachs. Retrieved July 1, 2011, from http://www2.goldmansachs.com/ideas/brics/index.html

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Saturday, May 14, 2011

Repositioning Nigeria's Position

As I look through the media recently I pick a wave of interesting facts. What actually stirred my quest was the outcry against the war in Iraq shown in an IVAR video on facebook. As I dig deeper I realized that most war have direct or indirect economic implications and quite interestingly Nigeria is at the core of all the issues raised. Why I eventually decided to write this piece is to throw more light on the critical need for us to move our attention off crude oil and reposition ourselves as a country, to what our fore fathers handed down to us during our independence, a culture of hard work and creativity.

‘Depression 2.0’: March towards 2050, The Period of abundant oil opportunity or Misery
More than ever before the myth that crude oil production is increasingly diminishing is now hitting the world like never before. The industrial doomsday scenario put forward by peak oil theorists isn't just for far flung voices on the Internet anymore. A term shell itself (the second largest company in the world) call ‘Depression 2.0’. Not that crude oil reserves all over the world is running out, in fact the world has enough to sustain energy, productivity and growth globally, the critical issue lies fundamentally in the fact that it is becoming very expensive for firms to afford its mining and processing which on their own attract tremendous oil usage. Apart from the critical link oil has with many of the recent war that truncated global peace, the adverse effect of oil to the economy and society is obvious. The growing volatility of oil prices together with the externality it creates such as global warming, human right violation, pollution, blocking of alternative energy sources and in our own Nigeria context, corruption should make us think of alternative economic engines that crude oil. As the demand for oil buts up against actual production and remaining reserves, the climbing price of oil will cause the gross domestic product of all nations to decline.

Crude oil or Palm oil: A dire need to diversify our economy


The figure above is from one of my recent presentation on Nigeria’s Creative Economy. It’s obvious that while crude oil production fell between 2006-2008, the value and share of creative goods exported (and produced) by Nigeria increased. It was interesting to note that income per capita also increased as returns from oil dwindled. This is a practical exhibit to prove that earnings from our local production capacities has the ability to propel growth that envisaged in previous years. Yes, we have crude oil, God blessed us with it. But going by the recent trends, it is becoming increasingly obvious that an economy that solely depends on crude oil production is as volatile as the prices of the crude oil itself. While Libya’s issue has caused Nigeria, UAE and Kuwait to jack up our daily production quota, we may benefit from the oil boom. However, this may prove contrary to the countercyclical domestic demand policy that proved useful for Nigeria during the time of depression in 2008/2009. What helped us then, when prices of oil fell was the fact that our agricultural sector and other domestic creative capacities especially within the West-African sub-region helped cushion the effect. We should not lose focus of these benefits in the face of the recent sudden rise sudden hike in OPEC crude oil prices to distract us from the need to pay attention on diversifying the economy. From my research on agriculture, palm oil, one of our main produce in the 60s and 70s has the capacity to produce jobs quite dynamically to eradicate poverty than crude oil would do. The non-oil Sector is the way forward after the elections. Most developed countries are willing to seek cheaper source of raw material input for their industries, the more reason why China is becoming very popular.

Let me try to keep this short from here as I conclude. Nigeria’s GDP was remarkable in 2010 at $207 billion or $2,400 per capita on a purchasing power parity basis, with real growth of 6.8 percent. The International Monetary Fund's World Economic Outlook predicts GDP will increase 7 percent in 2011. What this means to a lay man is that the total value of goods and services produced in Nigeria in 2010 was higher than that of 2009 and this trend is projected to increase in 2011. In fact by 2012, it is expected that Nigeria’s GDP would exceed South Africa (which is currently Africa’s leeding economy). Achieving vision 20/2020 seem sceptical and more pessimistic is to assume that we can’t achieve it, but it’s clear that the economic records of 2010 hinges upon internal domestic activities and policies that strengthened local production capacity. Many of the foreign reserves (down by 23% from 2009) are been depleted to fund infrastructural projects, which is reasonable in my personal opinion as long as those infrastructural project will continue to yield increasing domestic factor productivity and attract FDI into Nigeria. Consolidating democracy as seen in the recent April election, building on the banking and financial sector reform so as to make credit available for local entrepreneral engagements as seen in the ‘AMCON to NPL buy-offs’, building on gains from telecommunication and linking them directly with the financial systems and implementing plans for the energy reform will go a long way in 2011 and vision 20/2020 in general. In fact, the Nigerian Stock Exchange All Share index closed on April 18 at 25,429, up 1.6 percent. It is up 2.7 percent since the end of 2010.

As I go on to carry out further research on Nigerian non-oil sector and its implication for sustainable economic growth and development, some other seemingly important issue is burning in my mind. We needs to address this urgently and it has to do directly with how the Nigerian parents are bringing up their young ones. We need to consider if the idea that ‘my children must not suffer what I suffered’ is actually a good idea for our society. Maybe it’s a slogan that has allowed corruption to thrive and the resultant drop in quality and work ethics in Nigeria, especially among the youths.

Seun Oyeniran

Reference
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