The skyscrapers that dot the financial district of Lagos (Nigeria’s financial capital) partly tell the story of the nation’s rising economic prominence as Renaissance Capital’s new report titled – Nigeria unveiled- paints a more complete picture of an economy moving at two speeds.
Data from the report reveals the stark regional disparity with a thriving South with rising income, lower unemployment and better educated citizens and a much poorer, less educated and struggling North.
Seven of the ten largest state economies are in Southern Nigeria, while the population living in Southern Nigeria is more likely to have completed primary school than its counterparts in northern Nigeria, according to the report.
Lagos State has the highest net primary school completion ratio in Nigeria, at 70.6 percent, while less than 10 percent of the populations in Adamawa, Taraba, Yobe and Bauchi in particular have completed primary school.
The same trends persist in secondary school attendance rates.
“The north-south divide in Nigeria’s school attendance rate highlights a glaring regional inequality in education attainment. Northern Nigeria’s poor education indicators are a deterrent to investors seeking skilled labour,” said the report.
“We think education levels in the South and South West are likely to spur even faster growth, as we have seen in emerging markets globally.”
The Nigerian economy expanded at an average of 7.2 percent per year for the past four years, according to International Monetary Fund (IMF) estimates.
In the same period, the size of the Nigerian economy has risen by 60 percent to become the second largest in Africa as nominal gross domestic product (GDP) rose to $273 bn at year end 2012 from $169bn in 2009.
Income per head is expected to hit $1,731 in 2013, up 7.1 percent from the 2011 level of $1,615.
The Northern States income per head of $1,414 is however lower than the national average, as most of the economic activity is taking place in the South.
Nigeria’s borrowers with operations mostly in the South of the country have led the way in Africa’s syndicated loan market in 2013, with more than $10 billion of deals signed or in the market, a sign of the booming economy south of the Niger River.
Indorama Eleme took an $800 million project finance loan in mid-February to fund a $1.2 billion green field fertiliser project, and oil and exploration company Neconde Energy marked its debut in the market with a $470 million corporate deal in early April.
Meanwhile, the Dangote group has negotiated loans of $4.25
billion from banks to build a refinery, which would be located in the southwest of Nigeria and able to process 400,000 barrels of crude a day, according to Sani Dangote, vice president of the Dangote Group, in an interview on April 17.
Most financial services institutions are concentrated in the South, according to the data, with Lagos State alone home to over a quarter of Nigeria’s financial and insurance sector workforce.
“Outside Lagos State, banking penetration rates are low, especially in the northeast of the country,” said the report.
Lagos State residents have the highest electricity supply per capita in the country, at 163 watts per capita, while Power supply per capita in the north-east states is particularly dire, at less than 20 watts per capita.
Borno State, which is home to the militant group Boko Haram, has the lowest per capita power supply in the country at seven watts.
The working-age population is also concentrated in the south, according to the data.
Southern states are more urbanised, with higher income households that have fewer children, and 55 percent or more of the population is of working age.
In the north, it is less than 50 percent.
“Households in Nigeria’s southern states are better educated and have smaller household sizes,” concludes the report.
“It is regions like this that are developing the necessary skills that we believe will position them at the forefront economically in Nigeria, and Africa, to start taking jobs from China.”
PATRICK ATUANYA
