Nigeria is one of the world’s fastest growing economies. From 2009 to 2011 the West African nation had an average growth rate of 7.5%, compared to world growth of 2.8%. Part of this has to do with the investment inflows into the country seen in the past few years. In a recent report by Standard Bank, EM10 and Africa: Nigeria – potent opportunities, daunting challenges, research analysts Simon Freemantle and Jeremy Stevens outlined five trends powering Nigeria’s appeal to investors.
Nigeria is Africa’s most populous nation with 160 million people. This number is expected to expand to 400 million by 2050.
“This swift growth means that Nigeria’s population is exceptionally youthful: Nigeria’s median age is 18, compared to a world average of 29 (and a US average of 37),” states the report. “Over 40% of Nigeria’s population is younger than 14, and almost 65% younger than 24.”
This “population bulge” creates opportunities, one being the emergence of a robust consumer base. Rising incomes in Nigeria suggest a maturation of its middle class.
“Domestic demand is rising on the back of steady increases in private and public investment,” notes the report. “Total consumer spending in Nigeria in 2010 was estimated to be US$115bn (in 2010 constant prices), and is expected to increase to $167bn by 2020. According to Euromonitor, annual disposable income in Nigeria in 2011 totalled $119bn.”
The research also points out that another potential gain from Nigeria’s fast-rising youthful population “lies in the realisation of a ‘demographic dividend’ – implied by a bulge in the country’s workforce in relation to dependents younger than 14 and older than 65”.
Around 54% of the population are in the working-age bracket of 16 to 64 years. “As such, Nigeria’s workforce dwarfs African peers South Africa (32 million), Kenya (22 million), and Egypt (51 million). By 2050, 60% of Nigeria’s population will be of working age, totalling upwards of 240 million people,” says the report. “Leveraged effectively, this working age bulge could inspire investment and provide profound support to Nigeria’s industrialisation.”
Like the rest of Africa, Nigeria is urbanising at a rapid pace. According to Standard Bank’s research, Nigeria’s urbanisation rate stands at about 48%, which suggests that almost 80 million Nigerians live in the country’s cities and this is estimated to increase to 160 million by 2030.
“By conservative estimates, the population of Lagos stands at around 12 million people – up from 300,000 in 1950 (and making it one of Africa’s three largest cities – including Cairo and Kinshasa),” notes the report. “By 2020, Lagos will (again, conservatively) have a population of around 20 million people. In all, Nigeria has 14 cities with populations of more than 750,000 people, the most of any African country.”
Nigeria’s urbanisation, while not without its problems as cities become increasingly crowded; has the potential to be a robust catalyst of change in the country.