Nigeria dou­bles GDP and ex­poses state

Daily Trust - - INTERVIEW -

To savvy in­vestors it has long been ob­vi­ous that the Nige­rian econ­omy was big­ger than of­fi­cially recorded. But very few, if any, an­a­lysts were ex­pect­ing gross do­mes­tic prod­uct to nearly dou­ble to $510bn when the govern­ment an­nounced re­vised cal­cu­la­tions for 2013 meant to cap­ture more ac­cu­rately the ac­tiv­ity driv­ing growth.

The new fig­ures, re­leased on Sun­day af­ter a lengthy re­view en­dorsed by the In­ter­na­tional Mon­e­tary Fund, place Nigeria well ahead of South Africa as the con­ti­nent’s largest econ­omy and within reach of the world’s top 20.

The sta­tis­ti­cal mis­match has been al­most as great as the mixed mes­sages that Nigeria has been send­ing about the state of the na­tion. It first be­came ap­par­ent as far back as 2001, when the big in­ter­na­tional play­ers in tele­coms de­clined to bid for mo­bile phone li­cences, hav­ing deemed Nigeria too poor for the risk.

They es­ti­mated then that only 5m-10m Nige­ri­ans could af­ford a phone. African com­pa­nies picked up that num­ber of sub­scribers in the first few weeks of busi­ness and, to­gether with more re­cent en­trants from In­dia and the UAE, now share a mar­ket of 110m in a pop­u­la­tion of 170m.

As well as un­der­es­ti­mat­ing the for­mal econ­omy “in par­tic­u­lar the growth of ser­vices, up a stag­ger­ing 240 per cent on the old fig­ures” the data largely ig­nored the in­for­mal sec­tor. Be­fore Chi­nese im­ports be­gan to de­stroy their trade, cob­blers in the east­ern town of Aba were pro­duc­ing some 60m shoes an­nu­ally, many for ex­port to other African mar­kets. Like the na­tional film in­dus­try, known as Nol­ly­wood, this kind of ac­tiv­ity was sta­tis­ti­cally in­vis­i­ble.

The new fig­ures high­light the ex­tent of eco­nomic ex­pan­sion over the past two decades, and cap­ture a much wider range of ac­tiv­ity than pre­vi­ously recorded. What they do not do is al­ter the messy re­al­ity of to­day.

Af­ter all, as many scep­tics have been point­ing out on so­cial me­dia, Nigeria is now a $510bn econ­omy whose en­tire na­tional grid de­liv­ers about as much elec­tric­ity as a mid­sized Euro­pean city; whose roads and ports are chron­i­cally clogged, and whose pub­lic ed­u­ca­tion sys­tem and health ser­vices are in dire straits.

Fix all, or even some, of these and it is not dif­fi­cult to imag­ine Nigeria’s econ­omy quickly doubling in size again.

What also emerges from the new sta­tis­tics is the weak­ness of the state. This partly ex­plains the con­flict­ing sig­nals emerg­ing from what is now Africa’s leading econ­omy as well as its top oil pro­ducer and most pop­u­lous na­tion.

Only two weeks ago, Stan­dard & Poor’s down­graded Nigeria’s sov­er­eign rat­ing in the midst of a scan­dal over al­legedly miss­ing oil rev­enues, de­clin­ing for­eign re­serves and pres­sure on the naira. Shortly af­ter­wards, World Bank pres­i­dent Jim Yong Kim noted that Nigeria was one of five coun­tries that be­tween them are home to two-thirds of the world’s pop­u­la­tion liv­ing in ex­treme poverty. Yet none of this bad news stopped po­ten­tial in­vestors from Africa and fur­ther afield flock­ing re­cently to a se­ries of in­vest­ment con­fer­ences in La­gos “a city that, in the not so dis­tant past, scared off all but the hardi­est of trav­ellers. In an en­vi­ron­ment with so much pent-up de­mand the op­por­tu­nity is great.

On the bright side, the new fig­ures re­duce pub­lic debt-toGDP from 19 per cent to 11 per cent, po­ten­tially open­ing the way to greater bor­row­ing. But they also mag­nify two more wor­ry­ing trends: the govern­ment’s con­tin­u­ing de­pen­dence on oil for rev­enues, and the un­even way in which the spoils of growth have been dis­trib­uted. With non-oil tax rev­enues of just 4.5 per cent, Nigeria’s fis­cal base is nar­row, to put it mildly.

Mean­while, that 60 per cent of the pop­u­la­tion are liv­ing in ex­treme poverty in an econ­omy much larger than pre­vi­ously thought demon­strates the un­equal con­cen­tra­tion of wealth and ex­plains why so few Nige­ri­ans were un­cork­ing cham­pagne when the coun­try vaulted into Africa’s top econ­omy slot on Sun­day.

The statis­ti­cians have given a clearer and more com­plex pic­ture of where eco­nomic ac­tiv­ity lies. The ques­tion now is whether govern­ment can tax it. On this rests Nigeria’s abil­ity to cre­ate a more ac­count­able govern­ment and a fairer and more sta­ble so­ci­ety. (FT)

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.