• Friday, June 14, 2024
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Four lessons for Nigeria as Vietnam’s GDP doubles in a decade

Four lessons for Nigeria as Vietnam’s GDP doubles in a decade

Vietnam’s industrial success has doubled its economic growth within 10 years bridging income gaps and lifting many out of poverty.

The Southeast Asian country which has a large young population and developing economy like Nigeria grew its Gross Domestic Product (GDP) by 104 per cent to $433 billion in 2023 from $212 billion in 2013, according to the International Monetary Fund.

But Nigeria’s GDP dropped by 37.5 per cent to $250 billion from $400 billion. Vietnam’s push to increase its economy and the wealth of its citizens offers lessons for Africa’s most populous nation, where 133 million people are living in multidimensional poverty.

The lessons, which are international integration, domestic liberalisation, infrastructure development, and skilled digital workforce are important for industrial growth.

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Unlike Nigeria, whose dependence on oil revenues has yet to improve the lives of its citizens, Vietnam has leveraged its non-oil resources (people). Last year, at least five multinationals announced plans to exit the country, a development that threatens its $1 trillion economy target by 2030.

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“Nigeria can grow its GDP significantly if it moves from consumption to production. There need to be policies to make a lot of local businesses move to production rather than rely on export,” Uchenna Uzo, professor of marketing at Lagos Business School said.

He said Agriculture is still Nigeria’s opportunity for growth because it is the way Africa’s biggest economy can be industrialised.

“Manufacturing and local production is the key thing that can set Nigeria apart,” Uzo said while adding that Nigeria can also attract diaspora investment if the infrastructure is right.

Israel Odubola, a Lagos-based analyst, said Vietnam’s diverse export is an advantage to the country as it exports quite a range of products from electronics to textile products to transportation products; footwear to machinery.

“The scale of Vietnam’s manufacturing exports is very huge. Also, entering into trade agreements with different countries also helps the countries widen their export market,” he said.

However, this is practically different for Nigeria as its manufacturing exports are significantly lower than manufacturing imports, he cited.

“Nigeria’s export base is still largely dominated by crude oil, with little proceeds from other export items. Low value addition coupled with constraints around high production costs, is not making Nigeria competitive in the international market,” Odubola said.

Nigeria is expected to become a $30-trillion economy in the next 26 years when the dependence on oil revenues has yet to improve the lives of its citizens.

Here are further details on the key lessons

International integration

Vietnam has established itself as a stable, rapidly developing, and high-growth destination for international business and foreign investment.

International integration is one of the initiatives put in place to drive Vietnam’s economic growth.

International integration has been one of the key drivers of Vietnam’s remarkable achievements in growth and poverty reduction over the past three decades, according to the World Bank.

“Over 17 years of being a member of the World Trade Organization (WTO), Vietnam has seen hallmark economic growth thanks to economic integration into the world, providing strong momentum for further development,” Vietnam Law and Legal Forum said in an article.

Vietnam’s international economic integration has fostered trade, and investment, as well as the country’s successful participation in globalisation and the re-shaping of regional and international supply chains.

The country has established itself as a manufacturing base of many multinationals, including hi-tech companies, and is gradually moving up on regional and global production chains.

Based on the principles of the World Trade Organisation, Vietnam has signed and implemented 16 free trade agreements with over 60 partners, which account for nearly 90 per cent of the global GDP. Most of these signings are with large economies.

Read also: 10 African countries struggling with Low GDP per Capita

Domestic liberalisation

Vietnam has been pursuing its far-reaching trade liberalisation program which has led to rapid economic growth and poverty reduction.

Vietnam’s growth came from economic reforms which opened its economy to foreign investors and opportunities for global trade. Globalisation and trade in Vietnam saw exponential growth and made their economy the fastest-growing economy.

The Borgen Project, in its report titled ‘Globalisation and trade in Vietnam: a success story’ said in Vietnam, electronics manufacturing has expanded, creating high-value goods and better-paid jobs.

“Companies like Samsung, Google, and Microsoft have moved their production into Vietnam and therefore created economic development in the country.

“In the workplace, Vietnam continues to prove itself to be a progressive model where women’s employment has stayed within 10 percent of men’s and, according to the World Economic Forum’s Inclusive Development Index, it has done a good job at creating inclusive and sustainable growth.”

Infrastructure development

Vietnam is one of the leading countries in Asia in terms of investment for infrastructure development, allocating 5.7 per cent of its GDP to projects in this field, according to Dang Giang, permanent representative of Vietnam to the United Nations (UN).

While addressing a high-level debate on promoting sustainable development through infrastructure connectivity as part of a ‘Sustainability Week’ held by the UN General Assembly (UNGA) in New York on April 18, Giang emphasised that building a modern and harmonious infrastructure system is one of the three strategic breakthroughs identified by the Vietnamese government for sustainable development.

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“So far, Vietnam has put into operation 1,729 km of expressways and aims to lift the total to 3,000 km by 2025,” he said, adding that Vietnam continues to develop infrastructure connectivity with neighbouring countries, including Laos, thus promoting regional and inter-regional connectivity.

Skilled digital workforce

Vietnam has recognised that its future lies beyond labour-intensive manufacturing hence it is partnering with the United States Agency for International Development (USAID) to facilitate the transition to a knowledge economy with technological innovation, entrepreneurship, SME digital transformation, and a highly-skilled digital workforce to sustain the accelerated growth of its digital economy and meet market demands.