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Nigeria to be among world’s top 20 economies by 2030 – McKinsey

By BusinessNews Staff on July 27, 2014

Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current population of France and Germany, according to McKinsey & Co, a global management consulting firm.

Nigeria, Africa’s biggest economy, may expand about 7.1 per cent a year through 2030, boosting Gross Domestic Product (GDP) to $1.6 trillion, possibly pushing it above Netherlands, Thailand and Malaysia, the New York-based company said in a report yesterday.

About 60 per cent of Nigeria’s estimated population of 273 million by then may live in households earning more than $7,500 a year, fuelling a consumer boom, McKinsey further said.

“Nigeria has a very positive outlook,” co-author of the report, Acha Leke, said in an interview on Bloomberg TV Africa.
“The most important thing that needs to be done to get it there is execution” of government policies.

As Africa’s largest oil producer with a population of about 170 million, Nigeria has consistently posted annual growth rates in excess of four per cent over the past decade.
That’s spurred foreign investors such as Unilever Plc, Nestle and Shoprite Holdings Limited to expand operations despite an upsurge in violence by militants in the North.
Based on McKinsey’s growth estimates for the economy, annual sales in consumer goods could more than triple to $1.4 trillion by 2030 from $388 billion currently, it said.

The country’s retail and wholesale trade industry would probably become the largest contributor to Nigerian growth by then and 35 million households are expected to earn more than $7,500 a year, according to the report.

While oil accounts for 70 per cent of government revenue and most of Nigeria’s export earnings, its share of the economy has waned.

After the statistics office overhauled its GDP data in April, oil’s contribution to economic growth between 2010 and 2013 was 5.1 per cent, compared with 14 per cent for manufacturing and 20 percent for trade, according to McKinsey.

The Nigerian Stock Exchange All-share Index has gained 2.9 per cent this year, adding to its 47 per cent surge in 2013. The naira has dropped 1.1 percent against the dollar since January.

McKinsey’s estimate of Nigeria’s growth potential comes with significant caveats. The government needs to address poverty, lower the cost of basic services, such as housing and energy, expand electricity supply and boost productivity in farming, according to the report.
“If execution doesn’t happen, there’s actually a big risk for the country, even from a security stability perspective, to create jobs and lift millions of people out of poverty.
“That has to be a big focus, to grow in a way that is inclusive,” Leke said.

Life expectancy in the country is 54 years, eight years lower than in Ghana and 20 years below Brazil, according to McKinsey.

However, the Managing Director of Lagos-based Centre for Public Policy Alternatives, Folarin Gbadebo-Smith, said: “It’s a totally disconnected discussion between what we can be and what we will be. The outcome depends on what our government does.”

[This Day]

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