5 reasons Nigeria might not just be Africa’s heavyweight - BUSINESSDAY
For years, Nigeria has been referred to as the giant of Africa basically because of its population size of about 200 million and its weight as Africa’s biggest economy in terms of real GDP. A large population, which represents an abundance of human resources, ought to be advantageous. Many countries including China and India have maximally utilised their large population as reflected in their development.
Taking into consideration the BRICS – a group of five major emerging economies of Brazil, Russia, India, China, and South Africa – one thing that comes to mind is almost all of them are largely populated.
While Brazil and Russia have the biggest population in Latin America and Europe, respectively, China and India are the most populated countries in Asia. This naturally raises the question why Africa’s most populous nation is not a member of this group, pointing to the fact Nigeria has not taken full advantage of its huge population figure, while a good number of its best brains are contributing to the growth of other economies.
Having the biggest economy in Africa is not an impressible feat as the country is currently the poverty headquarters of the world, inhabiting the highest number of extremely poor across the globe. This largely indicates that Nigeria’s growth is not ‘pro-people’, according to some development experts.
Comparing the economic transformation in countries like Rwanda, Ethiopia, and Ghana to Nigeria, it is clear the country needs to improve on critical areas if it, indeed, wants to remain a nation to reckon with in coming years.
Considering key performance metrics, Nigeria is a laggard among peers in Africa. Business environment
A gauge to assess business environment is the World Bank’s Ease of Doing Business Rankings. This metric ranks countries against one another on how their regulatory environment supports doing business.
A comparative analysis between 2017 and 2018 rankings showed that some notable African nations had improvement while for Nigeria, the ranking deteriorated.
Egypt jumped eight places higher to the 120th position; Kenya moved 21 spots higher to 61st position; Rwanda moved 12 places higher to 29th; Ghana moved six spots higher to 114th, while Nigeria dipped by a spot to 146th in 2018.
Little wonder the country recorded the biggest decline in FDI inflows in 13 years, at $2.2 billion, for 2018. Nigeria that used to be the largest recipient of foreign investment flows in West Africa has been dethroned by Ghana.
Rafiq Raji, chief economist at Macroafricanintel, said the uncompetitive nature of the Nigerian economy is traceable to high cost of doing business, weak infrastructure and half-skilled manpower.
“It cannot be surprising that a country with such woes cannot be competitive,” Raji said. Average income
While Nigeria boasts of Africa’s largest economy, data from the World Bank show that the average income earned by Nigerians has always been bested by African peers.
In 2017, per capita income for Nigeria stood at $1968.43, while that of South Africa and Egypt were higher at an enviable $6151.08 and $2412.73, respectively. Neighbouring Ghanaians also earned more than Nigerians at $2046.11.
More so, per capita growth revealed that Nigeria recorded consecutive decline in three years. The country’s GDP growth per capita was at -0.02, -4.16 and -1.78 percent in 2015, 2016 and 2017, respectively, lower than the regional average of sub-Saharan Africa that stood at 0.19, -1.46 and -0.16 percent in the aforementioned years.
Innovation In a modern economy, innovation is pivotal to value creation, growth, employment and competitiveness. Almost all innovation-driven economies are developed. The Global Innovation Index (GII) that ranks countries by their capacity for, and success in, innovation scored Nigeria 29.85 percent out of 100, with a rank of 116 out of 126 in its latest rankings.
Nigeria came 16th in the SSA region beneath South Africa (1st), Mauritius (2nd), Rwanda (3rd), Namibia (5th), and Kenya (6th).
Enase Okonedo, dean at Lagos Business School, expressed optimism that innovation would gain momentum in the country in the near term due to government’s commitment to promoting innovation and research and development.
Human development Human capital development has increasingly become important across the globe as most economies are becoming more knowledge-driven.
Since the inception of the Human Development Index (HDI) in 1990, Nigeria has always been ranked as a low human development country.
The United Nations Development Programme (UNDP) report on 2018 HDI, a composite index that captures the quality of health, education and living standard, showed that Africa’s acclaimed heavyweight missed out from the 10 nations with the highest HDI.
As a matter of fact, Seychelles, whose GDP is 253 times lower to Nigeria’s, led other countries in the continent with an HDI of 0.797, indicating a high level of human development.
Manufacturing capacity utilisation Manufacturing capacity utilisation represents the proportion of potential economic output that is actually realised. Average production costs tend to drop as output rises, so higher utilisation helps reduce cost per unit and triggers competitiveness.
Nigeria’s capacity utilisation is 54.60 percent in Q3 2018. According to an analysis conducted by Trading Economics, the rate reached an all-time high of 60.50 percent in Q1 2015, still lower compared with South-Africa’s, at 81.80 percent, in the same period.
If Nigeria wants to be regarded as the unchallenged heavyweight of Africa, it has to sit up and set the pace for transition of the continent from developing/underdeveloped to a developed one.
ISRAEL ODUBOLA & SEGUN ADAMS