Time is running out for Africa’s most populous nation, which has only managed to lift 4 percent of its population from poverty over the past two decades, to reconsider its growth agenda.
Emerging Markets (EM) from China to Vietnam have far outperformed Nigeria in that period, having seen poverty levels slide 60 percent and over a billion people taken out of poverty, according to global consulting firm, McKinsey & Company.
While Nigeria has stuttered, 11 recent outperformers like Ethiopia, India and Belarus have achieved 5 percent growth rate in the last 20 years, according to a report presented by Fiyinfolu Oladiran, a partner at McKinsey & Company, at the BusinessDay CEO Forum, Tuesday.
The presentation by McKinsey revealed Nigeria has everything to be a leading economy across the world, thanks to its young growing labour force, high adoption of technology and abundant natural resources. However, economic growth has not been sufficient enough to drive development as a vibrant labour force remains underutilised and uncompetitive while basic infrastructure continue to fall short of rising population.
“Despite relative improvement in the World Bank ranking, Nigeria is still a poor place to do business in,” Oladiran said.
Finding a way to drive productivity and most especially to grow large companies may hold the key to improved economic fortunes. According to Oladiran, large companies build ecosystem with robust value chain which will spill over to small businesses.
In Nigeria, only 42 companies measure up as large companies with a minimum of $500 million in annual revenue. That compares to 309 in South Africa.
Oladiran advised that Nigeria increase its share of large companies to boost economic growth.
Peter Tufano, dean of Saïd Business School at University of Oxford, England, said the best investment for Nigeria is to invest in human capital because in the next 30 years there would be opportunities for Africa in the global leadership space.
“Unlike some countries with an elderly working population that needs retraining, Nigeria’s young population gives it needed advantage,” said Tufano, who was the guest speaker at the CEO Forum.
From its extensive work with some of the most successful emerging markets, McKinsey recommended eight big moves that could result in a turnaround for Africa’s most populous nation.
The eight big moves include building a more able bureaucracy, improving capital productivity drastically, developing centres of competitiveness, leapfrogging the technology ecosystem, unlocking the full potential of the oil and gas sector, accelerate agriculture transition and address current and future mobility issues.
To foster a more efficient public service, Oladiran suggested the need to digitise priority processes through Public Private Partnerships (PPP) in the short run while in the long run adopt e-government for all public services within the next five years.
On improving human capital, he said there is need for private sector-driven reskilling programmes with a focus on Science, Technology, Engineering, and Mathematics (STEM) jobs on the short run while on the long run there is need for nationwide technical and vocational education and training programmes.
“There is need to increase availability of quality and affordable power at industrial hubs on the short run and special economic zones with time-bound objectives linked to national strategy on the long run,” Oladiran said.
To leapfrog the technology ecosystem, McKinsey & Company advised the government to scale up broadband through partnership with private sector on the short run while on the long run improve digital transformation of private companies.
In order to leverage on the power of parity, McKinsey & Company wants the government to spread the use of digital to raise financial inclusion and empower female entrepreneurs on the short run while on the long run raise women’s skill through education for the future world of work.
Regarding the full potential of the oil and gas sector, the government was advised to accelerate investments into the sector while at the same time diversifying government revenue from the sector on the short run. On the long run, the government was asked to expand infrastructure that can fast-track investment earnings from gas and petrochemicals.
McKinsey & Company also urged the government to prioritise high value crop value chains into national champion in the short run and on the long run drive full end-to-end private sector-led agricultural economy.
To address current and future mobility issues, it said the government must target investment through PPP and other methods on the short run while unlocking financing and delivery models on the long run to close an annual $100 billion infrastructure financing gap.
The government’s short- and long-term approach to economic growth will be decisive, with the World Bank predicting Nigeria to be home to a quarter of the world’s poorest by 2030.
Also at the BusinessDay CEO Forum, Vice President Yemi Osinbanjo said he was optimistic on Nigerian economy as he foresees it moving in a northward direction.
Osinbajo, who was represented by Louis Odion, senior technical assistant to the vice president on print, stated that the advent of technology holds huge opportunity for a country like Nigeria.
He assured that the current administration remains committed to working with the private sector for economic growth and development.
“Let me use this opportunity to reassure you that the Buhari-led administration is committed to working with the private sector,” Osinbajo said.
The annual event had in attendance government officials, investment bankers, policymakers, chief executive officers (CEOs), economists, researchers, analysts, academics, and private equity firms.