(Updates fourth and fifth paragraphs to account for new GDP figures.)
In the past year, I've visited Nigeria three times -- more than I've traveled to any other country except the U.S. I mentioned this to an audience on my most recent trip, saying I wasn't sure what it meant: Am I a leading, coincident or lagging indicator? Maybe I was just there for the power outages -- they shield me from the latest news about Manchester United. (Don't ask.)
Of course I aspire to be a leading indicator -- and I'm hopeful Nigeria and much of the rest of Africa will demonstrate my farsightedness. It's hardly a sure thing, but Nigeria really does have the potential to be a spectacular economic success.
I laid out some reasons for this hope when I nominated the country as one of the "Next 11" emerging economies -- countries with lots of people and untapped economic promise, capable of following the path cut by the BRIC nations (Brazil, Russia, India and China). More recently, I've drawn particular attention to four of the 11, the MINT countries: Mexico, Indonesia, Nigeria and Turkey.
This weekend Nigeria rebased its figures for gross domestic product, adding in previously uncounted industries such as telecoms and information technology. On this new basis, the country's GDP was roughly $500 billion in 2013 -- making Nigeria's economy the biggest in Africa.
True, even on this new measure, Nigeria accounts for only around 0.5 percent of global GDP. The whole of Africa has an annual output of only perhaps $2 trillion, comparable to India or Russia. But the region is growing well and its potential is impressive. Nigeria's government has set the goal of becoming one of the world’s 20 biggest economies by 2020. I think that's too soon to be likely, but I think Nigeria could be one of the top 15 by 2050.
In this scenario, remembering that Nigeria by then will be home to roughly 20 percent of Africa's people, the country's growth would power the whole continent. By the middle of this century, Africa's economy would be close to 10 times bigger than it is today. That kind of growth would lift a huge number of Africans out of dire poverty and introduce them to the prosperity that other regions take for granted.
It can be done, but it shouldn't be assumed. African policy makers should be asking whether the recent improvement in the region's economy and the rising interest of foreign investors is thanks to them, or thanks to a decade of strong commodity prices and staggeringly supportive monetary policies in the U.S. and other advanced economies, causing investors to search far and wide for decent returns. The external environment has already turned less friendly. China's growth is slowing, commodity prices have eased, and the U.S. Federal Reserve is scaling back its bond purchases. For Africa, as for other developing economies, this puts the focus back on domestic policy.
Investors, contrary to what you may have heard, distinguish between countries that rise to such challenges and those that don't. The recent strength of financial markets in India and Indonesia reflects, in part, a recognition of those countries' efforts to deal with worsening external imbalances and rising inflation.
After many years of very strong performances, Nigeria's stock markets have been weak lately. This may be nothing more than a correction, but the feud between the government and Lamido Sanusi, the well-regarded governor of the Central Bank of Nigeria, sure hasn't helped. (Sanusi was suspended after he made allegations of mismanagement and misconduct at the state-owned oil company, where billions of dollars in revenues appear to have gone missing. Just this week a court awarded him damages in a harassment suit he brought against the government.)
In the longer term, demography is likely to dominate -- along with three other factors: first, the ease with which modern technologies (such as mobile telecoms) can be brought to bear; second, the willingness of ambitious young Africans to travel abroad for education in elite universities in Europe and the U.S., then return to seek opportunities at home; and third, the striking energy, ingenuity and creativity that so many Africans -- not just the well-traveled -- bring to their work.
These things, vital as they may be, need the backing of better governance. Here's a modest suggestion for African ministers, officials and heads of business: Turn up to meetings on time. That kind of thing isn't hard and makes a good impression.
Next, find ways to make economic policy institutions more independent, transparent and honest. This goes double for central banks. Make it a priority to promote trade with neighboring countries and with the rest of the region, rather than letting old animosities hold this back. International trade is one of the best ways to succeed, and the continent can easily make big wins here. And finally -- maybe most important of all -- promote better basic education. A well-educated elite isn't enough.
I do some work for Teach for All, a network of social enterprises that aims to widen educational opportunity. At the recent Nigerian Economic Summit, a Teach for Nigeria initiative was announced. That was good to hear. No nation or region can achieve its potential if its children are denied a decent education. Don't worry too much about commodity prices. They won't decide Africa's future.
(Jim O'Neill, former chairman of Goldman Sachs Asset Management, is a Bloomberg View columnist.)
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