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Nigeria is the biggest economy in sub Saharan Africa, and poised to become the biggest in Africa and one of the 20 biggest economies by 2020.
Nigeria has the potential to be among one of the top ten economies in the world. With abundant human, mineral and natural resources, Nigeria is an economic miracle waiting to happen.
There are a lot of factors that make Nigeria lag behind her peers. Most of the factors revolve round governance. With a debilitating 30+ years of repressive military rule, Nigeria had no focus and vision. This has changed somewhat with the return to democracy in May 29, 1999. However, with the way the military rushed out of the scene, the regime that emerged was pseudo military. With a series of flawed elections and a disconnection between leadership and the grassroots, the enabling environment for economic rebirth has not exactly been created.
Basic infrastructure is in a state of steady decline. The power situation is getting progressively worse due to sabotage of gas pipelines feeding Nigeria's power stations as a spin off of the crisis in the Niger Delta. The basic issues of the Niger Delta has been left largely unaddressed, leading to spiraling discontent and descent to militancy and criminal tendencies.
After 8 years of civilian rule, the police force still has a military tendency, with attendant large scale abuse of human rights. The crime rate, though not the highest in the world, could be drastically reduced by a well equipped and motivated police force. The rule of law has not exactly been enthroned, and the speed of justice dispensation has just recently got up to speed. A couple of years ago, it may take up to 5 years to get justice.
The above, combined by corruption makes Nigeria a hostile place to invest, compared to other investment destinations.
However, it is not all gloom. There have been giant strides in many sectors, especially in the financial sector and telecoms. The banking consolidation of 2005 weeded out weak banks from the system and deepened the financial sector. Nigerian banks now run world class operations. Telephone lines in Nigeria jumped from less than half a million in mid 2001 to above 25 million by year end 2006. The Nigerian Stock Exchange is in full boom, with money pouring in from new indigenous investors, foreign investors, pension funds and institutional investors. The index has almost doubled in the last couple of years.
Inflation rate has been reined in to a single digit and exchange rates have stabilized, with a near convergence of official and black market rates.
Agriculture has been revived in the last eight years, further boosted by Zimbabwean farmers on the run from Mugabe, who have made Nigeria their new home. Non oil income has increased from less than ten percent eight years ago to close to 20 per cent. Nigeria is a net exporter of Cassava, in addition to the traditional Cocoa and other cash crops.
Investing in Nigeria takes the bold and the daring. Those that have ventured have enjoyed returns higher than their operations elsewhere. The Indians and Chinese who are used to third world conditions are becoming a force to be reckoned with in the Nigerian economy, although their level of market penetration has been slowed down by quality issues.
Democracy, the rule of law and zero tolerance for corruption is gradually being institutionalized in Nigerian. With a all round acceptance of the fact that the last April 2007 elections was an example of how not to conduct credible elections, Nigeria is on the way to putting its act together. The giant of Africa is stirring from decade’s long deep slumber. It is a long walk to freedom.
With genuine reforms of the police, power sector and justice system, drafting of a people's constitution and resolution of the Niger Delta crisis through justice and equity, by channeling tax payers money into providing world class basic infrastructure and public transportation systems, Nigeria will be on her way to becoming an investor's paradise. For investors, the early birds will smile all the way to the bank. A wait and see attitude may spell a fatal miscalculation. Vodacom is yet to recover from the decision to watch as MTN bulldoze through uncharted territory and claim the leadership trophy as Africa's leading telecoms company. For those that can see beyond the bad press, Nigeria is the place to be, before the gold rush commences.
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