Nigeria has grown her economy about 100 times the size it was in 1960. Thanks to the re-basing of the economy, from the US$4bn GDP in 1960, by 2016 the GDP was some US$402bn. Has the “Giant of Africa” not done well? Before we pop the champagne though, let’s get a frame of reference. How well has her rival, South Africa, done? In 1960, South Africa’s GDP was US$7.2bn and by 2016 it had grown to some US$296bn. On the face of it therefore, Nigeria has done extremely well? But, if Nigeria has done so much better than South Africa, why do Nigerians feel so much poorer on average than South Africans?
Let’s broaden the field a little more to add Singapore into the mix. Nigerian leaders admire Lee Kwan Yew and in his famous book, From Third World to First, he makes some reference to Nigeria in the 1960s and how well or not she has turned out on certain dimensions. So, where was Singapore in 1960? Her GDP was a mere US$0.7bn, which had grown impressively to US$296bn by 2016, on a par with South Africa’s GDP. So, if her GDP is less than Nigeria’s but equal to South Africa’s why are Singaporeans now “First World”, South Africans said to be living in an “Emerging Economy” and Nigerians classified as belonging to a “Frontier Market”?
Definitions abound at the ‘University of Google:’First World economies are assumed to be capitalist, industrialised and developed, amongst other things. Emerging Economies are considered to be moving rapidly towards Frist World status by reason of steady growth, development and industrialization while Frontier Markets are described as a type of developing country that is more developed than the least developed, but still too small to be generally considered Emerging Economies. By now, it should be clear to us that raw GDP numbers often quoted at us, are not sufficient to describe how wealthy the citizens of a country should feel as a result. But having said that, South Korea with a GDP of US$4bn was perhaps the closer one to Nigeria’s in 1960 and should be a more acceptable frame of reference. By 2016, the GDP of South Korea had grown to US$1.4tr and we should not have to debate whether or not South Koreans should feel much less poor than Nigerians.
Perhaps a better measure is GDP per Capita (or per head of population). This is perhaps more telling. In 1960, Nigeria’s GDP per capita was US$93, South Africa’s was US$435, Singapore’s US$428 and South Korea’s, US$158. By 2016 the figures were Nigeria US$2,200, South Africa US$5,300, Singapore US$53,000 (competing with that of the United States) and South Korea, US$27,500. By this measure, it is clearer why Singaporeans should feel First World. The difference comes when the raw GDP is spread over the population, which for Singapore with its 5.6 million people in 2016 (up from 1.6 million in 1960) gives a better impact per person than South Africa with the same GDP in 2016 but a population of 56 million people. So, is population a main differentiator? Yes, but not the only one.
Nigeria’s population has grown from 43 million in 1960 to 186 million in 2016 while South Korea grew from 25 million to 51 million in the same period. It is tempting to conclude that once you limit the population growth, everyone would feel much wealthier. But South Korea and South Africa have similar population sizes today yet South Korea is much wealthier simply because it grew its economy many multiples faster than its population rose. At the end of the day, a large, wealthy population is an asset to countries like the US and China and had Nigeria kept pace with its 1960 classmate, South Korea, and grown its economy similarly, its GDP per capita would have been between US$7,500 and US$8,000.
In Global Competitiveness Rankings, Nigeria is believed to be challenged by inadequate infrastructure, corruption, poor access to financing, political instability and inefficient government bureaucracy not just a large population (which really ought to be an asset). Could this be why development and industrialization are severely challenged too? Nigeria grew on average by more than 4% year-on-year between 2006 and 2014 inclusive. This growth was not inclusive (code for not felt by the ordinary people) because to them it was nothing more than accounting entries on the basis of oil sales. Nigeria is now turning the corner by de-emphasizing oil and emphasizing other sectors like agriculture, mining, ICT, services and so on.
Nigeria regularly gives the impression the success she is capable of is imminent, but onlookers are often frustrated by how long it appears to be taking for this success to materialise. At the just concluded Africa CEO Forum in Abidjan, during the debate moderated by The Africa Report, the Executive Secretary of the Nigeria Investment Promotion Council, Ms. Yewande Sadiku was asked, “Has Nigeria turned a corner away from oil towards diversification of her economy?” It was a very memorable response she gave: “Nigeria is turning a very gentle corner away from oil, not a sharp corner. You won’t see the changes overnight but we’re on the right track.”
Indications that we are on the right track could be characterized by greater investments in infrastructure (preferably by the private sector); greater effort to prevent corruption by strengthening business and public integrity; the consequent attractiveness of Nigerian firms/Nigeria to international capital (e.g. via private equity firms); smooth political transitions continuing in 2019 and beyond (preferably with governments having a higher ratio of professionals to politicians than we have had); and, a reduction in government red tape (e.g by further improving on our Ease of Doing Business rankings). If I were to sum this up in one indicator, it would be that the average citizen is enabled raise his/her income sustainably, year-on-year, regardless of what part of the country s/he operates in.
What do you think? Has Nigeria turned a corner in the direction you are expecting?
Soji Apampa
