‘Business as usual’ no longer applies in Nigeria. Africa’s most populous nation is on the move, setting its economy on the path to sustainable growth, improving its governance and combating corruption and poverty
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hink
Nigeria and you have to think big. The most populous nation on the African
continent, Nigeria is home to an estimated 140 million people –
a fifth of Africa’s population. It is also Africa’s largest
oil-producing nation, and the eighth largest in the world, with an output
of around 2.4 million barrels per day.
Record high international prices have resulted in a surge in Nigeria’s oil revenues. Crude oil earnings are expected to increase by 27 per cent to $37.7 billion (£21 billion) this year, according to the Organisation of Petroleum Exporting Countries (OPEC). Next year they are forecast to rise to more than $41 billion.
However, despite its enormous oil resources, Nigeria is far from being ‘oil-rich’. The second largest economy in sub-Saharan Africa is one of the world’s poorest countries, with 70 per cent of its population – more than 90 million people – living on less than a dollar a day.
Divided among Nigeria’s huge population, even the present high in oil revenues, represents just 75 cents per day per person.
According to Finance Minister Ngozi Okonjo-Iweala, Nigeria's oil has served as “a giant mask to hide the genuine poverty of our vast country”.
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The country faces huge challenges in terms of health, education and basic infrastructure. More than 80,000 Nigerian children die every month before they reach the age of five – 30 per cent of them from malaria, which kills at least one million of the population annually. The prevalence of HIV/AIDS is above 6 per cent and rising. Less than 50 per cent of the rural population have access to safe water. Around 40 per cent of young children do not attend primary school.
Nigeria is, nevertheless, a country of huge potential, the economic powerhouse of the West African region, with human and natural resources on a large scale. One of the biggest markets in Africa in its own right, it provides considerable scope for development in agriculture, manufacturing, mining and services such as telecommunications and tourism.
While none of Nigeria’s problems can be solved quickly, major advances have been made since the country returned to democracy under President Olusegun Obasanjo in 1999 after more than a decade of corrupt military dictatorship.
One of the biggest triumphs for the government came as recently as July when the Paris Club of creditor nations agreed to cancel 60 per cent of Nigeria’s external debt. At $31 billion (£17 billion), it was the largest external debt in Africa, with a debt servicing charge of more than $2 billion (£1.1 billion) per annum. The remaining 40 per cent is to be ‘bought back’ by Nigeria through a discount window, using its oil windfalls.
The Paris Club representatives were impressed by the wide range of economic and structural reforms introduced by the government, whose National Economic Empowerment and Development Strategy (NEEDS) has the support of the International Monetary Fund (IMF) and the World Bank.
Through NEEDS, the government aims to build a competitive, broad-based, less oil-dependent economy. The role of the state is being reduced and growth of the non-oil private sector encouraged through privatisation, deregulation, liberalisation and increased inflows of foreign investment. In parallel with the federal initiative, the individual state governments are preparing their own State Economic Empowerment and Development Strategies (SEEDS).
According to Dr Okonjo-Iweala, the main objectives of the reforms are “to reduce poverty and create wealth by relying on the private sector to grow the economy and provide jobs and on the public sector to provide an enabling environment.”
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Taking the long-term view, the Governor of the Central Bank of Nigeria (CBN), Charles Soludo, says the strategy could transform the country’s fortunes to the extent that within two decades Nigeria could become “the China of Africa”.
NEEDS also involves improving the way that government works. A leading force in the African Union’s New Economic Partnership for African Development (Nepad), Nigeria is focusing on good governance and making determined efforts to improve macroeconomic management, transparency and accountability. In the President’s words, it is no longer a case of “business as usual”.
A crucial part of the reform process is a determined crackdown on corruption being spearheaded by anti-corruption agencies such as the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC), established by the government. Hundreds have been jailed and even high-profile public figures are not immune. Several government ministers have been sacked and a police chief arrested.
In the meantime, for the first time in decades, Nigeria has been meeting and even exceeding its national macroeconomic targets. GDP, which was targeted to grow by 5 per cent in 2004, actually increased by 6 per cent. The rate of inflation fell to 10 per cent from 23.8 per cent in 2003. External reserves more than doubled from $7.4 billion (£4.1 billion) in 2003 to $16.9 billion (£9.4 billion) in 2004, reaching $24.5billion (£13.6 billion) in April this year. Real GDP is projected to grow by 7 per cent on the basis of higher crude oil and gas production, and non-oil GDP by 5 per cent.
According to the IMF, which sent a mission to the country earlier this year, Nigeria has created a window of opportunity to lay the foundation for faster growth, poverty reduction and achieving its Millennium Development Goals.
NIGERIA At a glance
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Location: West Africa, bordering the Gulf of Guinea
Area: 356,669 square miles
Neighbouring countries: Benin, Cameroon, Chad, Niger
Population: 140 million est.
Capital city: Abuja.
Commercial centre: Lagos
Head of State: President Olusegun Obasanjo
Religions: Muslim 50%, Christian 40%, indigenous 10%
Climate: equatorial in south, tropical in centre, arid in north
Official language: English
Money: naira
GDP, real growth rate: 6.2% (2004)
Workforce: 55.6 million
Main exports: petroleum, petroleum products (97%), cocoa and rubber
Main imports: machinery, chemicals, transport equipment, manufactured goods, food and live animals
Date of Independence: October 1, 1960 (from Britain)
Source: CIA World Factbook
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