Infrastructural development crucial to Nigeria’s long term success –BCG

Nigeria is a very wealthy country unfortunately the inability to translate this wealth into the wellbeing of the populace is mostly responsible for the stunted growth of the country’s economy. This was disclosed by the Boston Consulting Group (BCG) during an interactive session with the press recently.

In a new report titled ‘Unlocking Nigeria’s Potential: The Path to Well-Being’ which was released on Tuesday, infrastructure, education, health, governance, and civil society were identified as areas that require immediate attention. According to the report, “The most critical focus must be addressing Nigeria’s weak infrastructure – doing so will enable the country to make much-needed progress in the other key areas and diversify sources of foreign exchange.”

A co-author of the report and Senior Partner and Chairman of BCG’s Lagos office, Luis Gavito noted that “Economic pressure, including low oil prices, a possible recession, and a declining Naira, make it imperative that the country move quickly to address major gaps – and infrastructure should be priority one. Swift and disciplined action will allow Nigeria to fully harness its vast resources and potential, most notably its vibrant and entrepreneurial population.”

Despite being a major index for any economic development, the value of Nigeria’s infrastructure stock is only about 35 percent of GDP, compared with an average of about 70 percent for large economies. The reason for the shortfall according to the report is because Nigeria invested just US$664 per capita (adjusted for purchasing power parity) in infrastructure annually from 2009 to 2013, or 3 percent of GDP, compared with an average of US$3,060, of 5 percent of GDP, for several peer countries.

“Without decisive intervention, that gap is likely to widen,” the report said. Peer countries include Angola, Botswana, Cote d’Ivoire, Ghana, Kenya, Namibia, South Africa and Zambia.

“Nigeria must address major gaps, from the power generation, transmission and distribution network, to roads and railway, situation systems, and technology infrastructure. These issues have major ripple effects, including impacts on health and on the country’s ability to diversify its economy, expand its pool of tradable goods and create badly needed jobs,” said Wiebe Boer, Principal Consultant, BCG Lagos and co-author of the report.

There are five concrete actions, the report said, must be taken to address the infrastructure issues. One of them is the establishment of a body empowered to oversee and direct the entire life cycle of infrastructure investments. Second, identify ten high-priority infrastructure projects. Third, the government should embark on international road shows to line up private funding, including foreign direct investment, for those projects. Fourth, set up initiatives to ensure flawless execution of the ten projects in order to generate early wins. Finally, leverage momentum to launch a sustained infrastructure-building drive.

The analysis of the report is derived from BCG’s Sustainable Economic Development Assessment (SEDA), the firm’s globally recognized diagnostic tool for evaluating the relative well-being of countries around the world, and on interviews with Nigerian executives in sectors such as energy, banking, and telecommunications. Out of 149 countries, Nigeria ranks 142 in the SEDA data set when it comes to converting wealth –measured by the GDP per capita, into well-being. The country is just ahead of Libya and Angola and behind Swaziland and Pakistan.

Additionally, the report highlights comprehensive actions to improve governance, civil society, education, and health. the interventions focus on establishing clear priorities, developing detailed plans, monitoring execution, creating links between implementers and decision makers, communicating effectively to all stakeholders, and leveraging partnerships with public and private organisations.

The release of the report coincides with the opening of BCG’s Lagos office. The opening of the new office ensures that the company now have 85 offices worldwide and is now in 48 countries.

“Nigeria’s challenges are significant – but they are more than matched by the talent and entrepreneurial drive of its people. However, the Nigerian people need better infrastructure, health, education, and institutions to be able to translate their energy and drive into prosperous personal lives and a prosperous society. The opening of BCG’s office in Lagos in spite of the current economic climate reflects our confidence in Nigeria’s future and our commitment to playing a role in the country’s long term success,” said Hans-Paul Burkner, Global Chairman, BCG.

 

FRANK ELEANYA