Last month I discussed ‘the future of Nigeria’ in a televised debate with George Galloway, the famous British MP. I told him that Nigeria’s GDP would rebased to be over $400bn soon – a mid range guestimate – from its $262bn at the time. He wasn’t that convinced. But later the Nigerian economy hit $530bn on rebasing.
The country now presides over an economy that, according to the World Bank is bigger than that of South Africa, Denmark or Singapore. There were gasps of surprise from some quarters, but rebasing isn’t new, or isolated. Ghana did it a few years ago …. Kenya is planning to do theirs soon.
Rebasing is just an example of what happens when you try to second guess a period of unplanned development.
According to Dr Yemi Kale, Nigeria’s Statistician General between 1990 – 2014 the country only had GDP adjusted by RPI increases every year. Adding almost 100% of GDP for 24 years is actually about a 3% per annum compounded adjustment. Not that big if you look at the grand scheme of things.
The truth is the addition of the services such as the real estate, mobile phone and film or Nollywood sectors are huge in Nigeria and it posed a counter point to the much heard critique that Nigeria is too dependent on oil and gas. This is good news.
This was not however an economic cure-all. Nigeria still has its fair share of problems. Rebasing has shown that the economy is unbalanced regionally, sectorally and with an inequality in the distribution of income and wealth that is not sustainable.
Over the last month The Economist, The FT, Business Day to name a few all wrote about the rebasing of Nigeria’s economy. The world was paying attention.
But from the two weeks ago onwards … outside of Nigeria, it was politics that took centre stage.
During my TV debate with George Galloway, he wanted to talk about the impact that Boko Haram. But I reassured him that a focus on economic growth was more important.
We mulled over the cause of some of Nigeria’s economic imbalances.
Why were some regions The North east in particular – so violent?
I knew that as at 2012 many churches in the region had been burnt to the ground. Mostly on Sundays and mostly with their congregations worshiping inside – fires were started by members of Boko Haram. In Borno, by some estimates as many as 80% of the catholic churches had been burnt down. Since 2002, hundreds of thousands of people have been displaced, injured or killed.
However I wanted to consider the economic causes.
Last week the same debate hit the headlines – globally.
World Economic Forum in Abuja versus the twitteratti
While Nigeria held the largest World Economic Forum meeting in Africa – the focus of the west was politics, while the focus of China was economics. The difference was startlingly clear event from the levels of attendance.
China’s premier Li ke Quiang was in Abuja in person and said Africa’s raise would make the world more stable. In his speech he implied four principles would govern Sino-Nigerian relations – Sincerity, Results, Affinity and Good Faith. Which sounded to the audience like ‘trust me, I can make this work’.
The absence of any European or American heads of state making a similar economic case was striking. Especially because we are living in an era were a new group of countries including Mexico, Indonesia, Nigeria and Turkey have been developing their economies slowly for years are now ready to make a great leap forward. Goldman Sachs Jim O’neil recently called them the ‘MINT’ countries. You would think that in Nigeria the US president would visit this gathering.
Ngozi Okonjo-Iweala, Coordinating Minister for the Economy and Minister of Finance of Nigeria, also at the conference and said ‘Africa represents our fastest-growing region in the world. If you want to be relevant, you need to be in this part of the world’.
To further entrench the economic growth focus – a record $68bn investment was pledged in this one meeting; In the meantime Twitter was awash with the Americans, Europeans and even the Pope talking about their dismay at the antics of Boko Haram.
While Boko Haram is well known in Nigeria from its beginnings in 2002 and its aim to cause a religious war is clear. It reached international notoriety last week when the western media took note of the hashtag #bringbackourgirls invented by the spectacularly talented human rights campaigner Oby ezekwesilli.
According to CNN, within days, over a million people on twitter had retweeted this tag demanding for action to be taken on Boko Haram’s latest atrocity.
What investors want
What is key for investors to understand is that we are talking about a terror group fed by one Nigerian state out of thirty six states – Borno state.
There is little doubt that Boko Haram has links to groups across the Sahel in Niger, Mali, Chad and Cameroun.
But while there have been attacks in Plateau, Yobe, Gombe and famously on the UN building in Abuja. The group has not yet hit Lagos – Nigeria’s commercial capital or Port Harcourt a city close to its oil wealth.
So it’s seen domestically as a local northern problem.
Hence for some Nigerian politicians its challenges seem to be an unwelcome distraction.
For Nigerians this is the core of the yawning gap between local and western media perceptions.
Contrary to international perceptions Goodluck Jonathan has tried to make a difference. He set up a conference of almost 500 eminent Nigerians to review the constitution, including the demands for sharia law by Boko Haram. And unusually for a Nigerian president he has even spoken publicly about the threats to the seat of government of Boko Haram.
The American and the British mustn’t ignore the economic imperative and must seek impartial local advice. This is important because Nigeria is clearly at a cross road and two very different almost parallel universes have appeared.
In one, the country is headed into an al queada style holy war to attack its Christian minorities and enslave its women.
And in another Nigeria it is going to take its share of the $68 billion in pledged investment and launch an uninterrupted decade or two of double digit growth doubling its economy in 5 years time, locking in an economy that is bigger than Indonesia’s trillion dollar economy.
So which of these parallel universes will be actualised ?
It depends on if we fully focus on either politics or economics.
The author Chidi Oti-Obihara – is a fixed income and derivatives consultant and founder of the NN2020 Group.
www.about.me/chidi_obihara
