By Amy Jadesimi
Ask most people what they think of Nigeria and the answer will likely include references to oil, population and corruption. Perhaps now Boko Haram. And yet there is a flux of young Nigerians, like me, returning home – excited by the opportunity. Why?
A quick look at the statistics goes some way to explaining. According to PwC’s recent research, Lagos ranks third out of Africa’s 20 biggest cities in its ability to attract foreign direct investment and its growing middle-class. And in 2013, Nigeria surpassed South Africa as the continent’s largest economy after a statistical revision revealed national GDP to be around $509 billion, trumping South Africa’s $372 billion. So stunned was the international community that the data was in turn verified by the International Monetary Fund, the World Bank and the African Development Bank.
So there is clearly an opportunity to be grasped. But it’s not just the size of the opportunity in Nigeria that is drawing us home, rather it’s the way in which that change is happening. Lagos, Africa’s most populous city, is still dangerous, challenging and clogged with traffic. But it is also exciting, enterprising and increasingly empowering. And following the recent elections, this sense of hope and optimism is growing further.
How is Nigeria changing?
While issues with infrastructure, particularly power, still hurt Nigeria’s appeal as a place to conduct business, McKinsey points out that Nigeria has taken some major steps to grow its economy through diversification – a move that the new Government is expected to continue. For example, major growth has occurred in telecoms (contributing now around 8.6% to GDP) and entertainment, most notably the film industry where Nollywood as it is known is thriving. Diversification has brought real opportunity to SMEs and entrepreneurs, sparking creativity and action across the different sectors.
And Nigeria is no longer a petro-economy. The rebalancing of major economic sectors has knocked the shares of natural resources and agriculture from 32.4% and 34.6% in 2010 to 14.4% and 21.6% respectively in 2014. In its place have come consumer goods – with McKinsey predicting an annual increase of 8% every year to become the largest sector of the economy, worth almost $1.4 trillion by 2030. Nestlé, Unilever, Procter & Gamble and SAB Miller all have set production expansion targets for Nigeria.
But beyond diversification, there has been a further really critical key to change: opening the Nigerian market up to the Nigerians themselves.
Local content driving local growth
Both the Local Content Act in 2010 and ensuing reforms in the banking sector have been really significant drivers of growth. For the first time, Nigerians have had access to capital that has enabled businesses to finance and borrow and in turn purchase assets and equipment. And for the first time, Nigerian companies are winning contracts that would have previously gone to companies overseas.
The Nigerian Local Content Act passed in 2010 is creating thousands of new jobs because the local demand, triggered by the minimum thresholds prescribe by the Act for the use of local services and materials, is for the first time being met by competent private Nigerian companies.
As these Nigerian companies develop the expertise to manufacture and add value within their own borders, the costs of operating in Nigeria are falling. For those companies that see the value of investing long-term in West Africa, local content is a very good thing.
This has resulted in an ongoing boom in private-sector investors developing new fabrication yards, steel plants, and engineering school across the country to ensure that in-country capacity can meet the new local demand created, meaning in turn job creation and an uplift in training to develop Nigeria’s skills and domestic labour force.
Tipping point?
With policies therefore now in place to facilitate growth, both private and public sector leadership is needed to drive it. Many Nigerians are stepping up to the task and as a result, the diaspora has reached a tipping point with the sheer number of non-resident Nigerians seeking to come back to settle here. And that is changing the business environment locally.
The excitement around the sustainability of Nigeria’s current economic development and growth is rooted in the fact that this movement is being initiated, driven and maintained by indigenous private sector investments. This is the first time in Nigeria’s history that its own people have had this level of control and involvement in the economy.
But to maintain positive momentum, collaboration between indigenous businesses, leaders and other stakeholders will be key. I will be doing all I can to support. Success will ensure that the long-term economic impact is felt across all sectors of the local economy, lifting millions out of poverty while continuing to provide strong returns for those investing in Nigeria and West Africa.
Culled from Leadership