[SPECIAL REPORT]
Construction and infrastructure projects are perfect avenues
for making use of the country’s large population, it is by no
means the only industry which stands to benefi t from the
sheer size of potential labour and customers on offer.
for assistance. As such, the AfDB is not only helping design
bankable projects to be undertaken through public-private-
partnerships (PPPs) but is also exposing these projects to a
whole new set of potential investors. Via the route of AfDB
assistance (and not AfDB or World Bank reliance), the risks
to investors are lowered while the government of Nigeria
simultaneously avoids spending money it may not have. In
this manner, the ERGP overcomes the problem of inducing
growth and development in the absence of significant
government led spending. These kinds of undertakings, if
successfully implemented, will achieve both the expansion
of the tax base while simultaneously expanding economic
growth away from its dependence on oil, thereby increasing
the resilience of the economy to external shocks, especially
in the oil and gas sector.
Nation-Based Growth
The nation’s economic growth will be driven by the nation
itself — that is to say, the Nigerian people. The supply of
natural wealth is fi nite, but — in a practical sense — the supply
of people is not. Although construction and infrastructure
projects are perfect avenues for making use of the country’s
large population, it is by no means the only industry which
stands to benefi t from the sheer size of potential labour and
customers on off er. With an estimated population nearing 200
million, and which is set to exceed 300 million by 2040 by
some accounts, the potential for retail expansion is signifi cant.
At present, according to data from the UN, Nigeria has the
29th smallest household Spending-to-GDP ratio out of the 123
countries with readily available data. With 39 percent of its
GDP derived from household spending, Nigeria underperforms
richer nations with smaller populations — of the 30 nations
with higher GDPs, 1 24 states have higher household spending
as a component of its GDP. 2 This indicates the great potential
of economic growth presented to Nigeria were it to improve
household spending, which would also have the added benefi t
of improving living standards.
Of course, such an expansion in household spending
will be accompanied by an expansion in the state’s retail
and services sector. In fact, a number of large players have
begun stepping into Nigeria in order to take advantage of the
considerable potential on off er: big brands such as SABMiller
(now a part of ABinBev), Guinness, Coca-Cola, Unilever,
Toyota, MTN, Airtel, Shoprite, GlaxoSmithKline, Etisalat,
and others have all entered the market with considerable
success. Such brands, however, also look at Nigeria’s local
population as an advantage since Nigeria’s geographic
location provides access to regional markets beyond Naija,
such as Ghana and Cote d’Ivoire to Nigeria’s west, which can
provide additional markets for businesses located in Nigeria.
Additionally, Nigeria’s access to major maritime shipping
lanes in the Atlantic provides the potential for expansion of
markets further abroad, such as in Southern Africa, North
America, Western Europe, and South America — all of
which are regions with which Nigeria already conducts trade.
Nigeria’s ports are currently experiencing stable year-on-year
growth in terms of tonnage throughput, with the Nigerian
Maritime Administration and Safety Agency projecting
growth to remain stable over the next 10 years.
Barring another oil shock, Nigeria’s economy is anticipated
to grow steadily. Plans to diversify the economy are necessary
to strengthen and make the economy more resilient and it
can be achieved if the government ardently and eff ectively
implements the ERGP. Its largest asset, its population, is vital
for driving the country’s economic growth and, therefore,
investing in their people through jobs creation, improved
educational attainment, and skills initiatives is necessary for
driving economic growth from the ground up. In leveraging
its geographic location with regards to maritime trade, Nigeria
is set to benefi t from the development of its ports in order to
eff ectively improve its maritime freight industry — another
sector with the potential to signifi cantly contribute to the
country’s economic growth and lessen its dependence on oil.
References:
1
as per the IMF’s estimates for 2017
2
of the six nations with smaller ratios are either oil-
dependent – like Saudi Arabia and the United Arab Emirates
– or are developing nations faced with large populations (such
as Nigeria), like Mexico and Turkey
* *The author is a Research Assistant at SADC Research
Centre
** The author is a Ph.D. Candidate, University of Cape
Town, South Africa and an independent researcher and
analyst
Nigeria-India• 2018 • 13