• Saturday, March 02, 2024
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BusinessDay

Nigeria must diversify economy, build infrastructure to uphold MINT rating

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Analysts have keenly reacted to the recent inclusion of Nigeria in the MINTs, touted as new economic frontiers, capable of surprising the world in growth and development, in the next 20 years.

Jim O’Neill, former Goldman Sachs economist, had categorised four promising economies-Mexico, Indonesia, Nigeria and Turkey- as MINT, being an acronym for these four countries with great growth potentials, having enormous demographic, geographic and emerging markets advantages.

In the words of O’Neill, ‘’The BRIC countries are already closely watched. The group I’m studying for this project deserves no less attention. Mexico, Indonesia, Nigeria and Turkey, all have very favourable demographics for at least the next 20 years, and their economic prospects are interesting,’’ he said recently, in his column for Bloomberg.

Given this inclusion in the elite group, analysts from different fields of endeavour have suggested what Nigeria needs to do to consolidate its position in this group, in order to make the acronym globally acceptable, just like the BRICS.

“We accept the argument that Nigeria cannot follow the East Asian ‘weak’ currency model, until it has the electricity and transport infrastructure to support export-orientated manufacturing. We do expect electricity output to double from 4GW in 2011 to 8GW in 2015; assuming this continues to grow, we think the East Asian model might then become viable,” said Charles Robertson, global chief economist at Renaissance Capital, on the need or otherwise, for naira stability for Nigeria to remain on its growth trajectory and fulfill its role as a MINT country.

Nigeria’s Gross Domestic Product is set to move upwards from $272 billion to $405 billion when the National Bureau of Statistics completes its rebasing this quarter.

The country has a demographic advantage, being populated by 168.8 million people, according to the World Bank.

The African Development Bank’s research, which had put the country’s middle-class at 26 percent of the population in 2011, has been overtaken by the World Bank, and Euromonitor International reports that the stated the figure had grown to 28 percent by the last quarter of 2013.

More so, research by Nobert Edomah of Sneider Electric, said 70 per cent of the population in the country was below 30 years.

Though all these are indications of a large consumer base  for the fast moving consumer goods(FMCG) sector and were reasons behind the country’s inclusion in MINT, analysts say the budgetary process must be tinkered with to provide inclusive growth and employment for the 23.9 per cent unemployed population.

‘’Our capital budget does not achieve 60 per cent implementation due to late passage.  We have repeatedly drawn the attention of all three tiers of government on the need for the extant practice of timely crafting, presentation, debate, passage and signing of their annual budgets,’’ said Mohammed Badaru Abubakar, president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture(NACCIMA), in a document made available to BusinessDay.

“Late passage dislocates proper planning for business operators whose business plans are often directly dependent on policies and provisions of annual budgets,’’ he added.

Stakeholders are equally insistent that to consolidate the country’s position, there is need to be less natural resource- dependent and diversify the economy, being that crude oil forms over 80 per cent of the country’s revenue but has had a dip in fortunes, owing to oil theft in the creeks and the discovery of alternatives (such as shale gas) by Nigeria’s trading partners.

‘’Our economy is the least diversified among these (MINT) economies. The fact is that if there is a collapse of oil prices, Nigeria will fall out. We need to increase productivity of our economy ,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry(LCCI) in an interview with BusinessDay.

‘’You can upgrade productive capacity by creating enabling environment in the form of infrastructure and quality of institutions like regulatory, political, legal and monetary,’’ he concluded.