At the turn of the century, Nigeria was a pariah nation. Two decades leading to this period, the country suffered one of the worst episodes of economic decline since record began. During the time, the dreams at independence in 1960 and the oil wealth of the 1970s had vanished, replaced with stagnation, huge external debt, high inflation and political instability.
However, since 1999, there has been tremendous progress. We have had four successive elections, translating to 14 years unbroken democratic rule, and the country’s per capita income has nearly trebled, from $970 to $2,600. In 2005, we had a historic debt forgiveness deal that brought our foreign debt lower than $4 billion from $36 billion, and our current debt/GDP ratio at 18 percent is one of the lowest in the world. We have moved from double-digit inflation rate to single-digit, and attracted foreign direct investment totalling over $20 billion in the last three years, 10 percent of the entire African continent FDI.
With political stability and improved economic conditions, our foreign and diplomatic performance has improved also in the last few years, especially now with the focus on economic-based diplomacy. In the last decade, we have renewed our leadership role on the continent and provided both military and political support to neighbours in times of crisis. Our growing economic strength as an emerging economy, with Nigeria poised to overcome South Africa as the largest economy on the continent if medium economic outlook remains the same, has meant increasing focus and attention on our economic prospects. But what makes Nigeria the heart of Africa is our inherent features of everything Africa – number of ethnic groups, multiple religion, a proud people, natural resources, unique hospitality, and of course the most populous black nation on earth.
It is in this context that Nigeria will host the next World Economic Forum (WEF) on Africa, the 24th edition, between May 7 and 9, 2014. This will be the first time that the summit would come to West Africa and presents an unprecedented opportunity to host the global business community and showcase Nigeria’s rich and enduring culture and hospitality. The summit in West Africa also reflects the growing pan-African shift at the Forum. Cape Town, South Africa, has hosted 17 out of the 23 held conferences, but the 2014 edition in Abuja will follow the recent tradition of one WEF Africa conference in South Africa, followed by another edition in another country in Africa the following year – Tanzania hosted in 2010, and Ethiopia in 2012.
Following from last year’s theme “Shaping Africa’s Transformation” in Addis Ababa that explored how the economic changes taking place on the continent can be made to work better for Africans in terms of jobs creation and economic diversification, Cape Town has built on it by looking at how to “deliver the Africa promise”. The theme’s focus on how to deliver the African promise is not misplaced. Despite the chorus of an enormous potential for the continent and longest stretch of above population rate growth average of 5 percent in the last decade, Africa is largely dependent on commodities, requires significant expansion and improvement in infrastructure, and experiencing long-term and structural unemployment problem. Having largely achieved the necessary macroeconomic stability and a reasonable measure of growth on the back of macroeconomic, structural and political reforms, the more difficult work of diversifying the economies of Africa and building the required infrastructure must be done to be able to sustain growth.
I hope the Abuja summit will build on this pivotal moment of the forum. From Nigeria’s perspective, our infrastructure expansion and renewal will require us to continue the fiscal direction that has shifted 8 percent of national expenditure to infrastructure in the last two years. Also important is to think of how we provide integrated solutions to our socio-economic problems. For instance, while unemployment and inequality are not the cause of the security problems in the north-eastern part of the country, they are always the greatest ally of any form of extremism. And most importantly, while we have enjoyed significant economic expansion over the last ten years at the back of reforms, supported by improved terms of trade during the period, we have not managed to reduce poverty and unemployment at a speed we are comfortable with, both as a government and a nation.
So as part of the summit next year, which I hope will focus on the nexus between economic growth and employment, there are three critical areas I believe should underpin this wider discussion. First is agriculture. The common agriculture problems in Africa include low yields, large uncultivable land estimated at 60 percent of arable land on the continent, and a concentration of small holder farmers rather than large commercial farmers. The ability of the forum to build on the success and discussion that have already commenced through the Grow Africa initiative so African economies can overcome these critical challenges is critical.
The second issue is infrastructure. Without significant investment in infrastructure, Africa will never fulfil its great economic potential. This is the case because the greatest impediment to growing the 12 percent intra-African trade is infrastructure. Associated with this also is the cost of doing business that makes African businesses uncompetitive. But while government must continue to play a central and critical role in the provision of infrastructure across transport, communications, and energy sectors, it is becoming increasingly important to identify critical gaps preventing the significant attraction of private sector capital and participation. Some have argued that most of the constraints are institutional and not necessarily capital or finance, but specifics are required.
The third dimension I hope the forum will benefit Nigeria is in relation to the ongoing development of our solid minerals sector. While considerable work and action plans have been developed over the years, we have not crossed the threshold to attracting significant private sector participation and investment. If anything, the contacts and side discussions I had on this issue while in Cape Town confirm that the forum has considerable knowledge of the industry and there exists huge interest in the development of Nigeria’s minerals. The forum in Nigeria next year should provide a platform to crystallise the action plans we already have.
From a broader African perspective, the ongoing discussion on integration will continue next year. It was agreed that the 12 percent intra-African trade is unacceptable. Logistics remain critical as most Africans have realised it is easier to travel, trade, and communicate from each country to outside the continent than within the continent. The existing structure of infrastructure built on the continent for the purpose of trade with colonial masters has not changed in the last 40 years. But it is also realised that integration should facilitate diversification of African economies, otherwise it is of limited benefits. Changing the current structure of production on the continent has become more urgent than it has ever been as the economies remain fragile and vulnerable to significant changes in the terms of trade that have supported the reforms and growth of the last decade.
Then finally, the recent focus on job creation for youths in Nigeria and the continent is not overemphasised. It is recognised that the bulging youth numbers can either be a blessing or a curse depending on how they are prepared for the dynamics of the global economy. For now, though, I look forward to the Forum coming to the heart of Africa.
Okiti is a Special Assistant to the Chief Economic Adviser to the President.