Watch out South Africa, Nigeria is on the rise

This could potentially be a self-perpetuating cycle where the northern parts of Nigeria, because of the instability, fail to attract investments thereby further entrenching income inequalities and under-development compared to the oil rich south. This extremism is more than just religious pursuits to impose Sharia Law. Commenting on Boko Haram and their activities, professor of criminology at the University of Abuja, Femi Odekunle, says: “The government needs to address the social order issues which constitute economic and educational issues that are underlying the emergence and sustenance of Boko Haram.” As long as wealth and opportunities remain or are perceived to be concentrated in the southern states with the oil refineries, it is not immediately conceivable how the terror caused by militant groups in the north will abate. The costs of such insurgents on the economy are too dear, and could all but reverse strides made in developing Nigeria.

Corruption is the elephant in the room

Recently, Nigeria has made headlines with high profile cases of corruption. From allegations by former Central Bank governor Lamido Sanusi of $20bn being unaccounted for by the state, to senior government ministers being sacked, reportedly for corruption, clearly corruption is rampant in Nigeria. Transparency International’s Corruption Perceptions Index ranks Nigeria at 144 out of the 177 countries measured, underlining the extent to which corruption is endemic in the country.

Nigeria’s Finance Minister Dr Ngozi Okonjo-Iweala who, in her book Reforming the Unreformable: Lessons from Nigeria, dedicated an entire chapter to corruption, concedes that Nigeria indeed has a problem with corruption. However, she, like other members of President Goodluck Jonathan’s government, downplays corruption. Speaking to Christiane Amanpour, CNN’s chief international correspondent, Okonjo-Iweala says: “Nigeria does have a problem with corruption and so do many other countries, including developed countries.”

To be fair, corruption is not only peculiar to Nigeria, and notable strides have been made to try to stamp it out in the country. Yet, corruption could see incomes remain unevenly distributed in a country where the World Bank estimates that 67% of the population still live in poverty. Former executive chairman of Nigeria’s Economic and Financial Crimes Commission Nuhu Ribadu revealed that since independence in 1960, Nigeria has lost close to $380bn to corruption and mismanagement. Corruption then is the elephant in the room the country has to address if these statistics are anything to go by.

Structural economic issues

On a broader level, Nigeria’s economy is hampered by structural issues that threaten the growth it has been witnessing. Eighty percent of the country’s revenue comes from crude oil exports, which signifies an undiversified economy reliant on the oil and gas sectors that are susceptible to the caprices of fluctuating commodity prices. This speaks to the need to diversify the country’s economy.

Furthermore, growth in the Nigerian economy has been in less labour intensive sectors such as oil and gas, telecoms and banking. As a result, not everyone enjoys the growth of the economy as most people remain unemployed. Agriculture, which can potentially employ many people, needs to be modernised and more employment opportunities created.

Some 300,000 barrels of oil were reportedly lost per day in 2013 alone due to vandalism, production shut downs and theft. These are the sort of leakages that will need to be reined in, as the country endeavours to develop. The work does not stop there. Together with Afghanistan and Pakistan, Nigeria remains one of only three countries where polio is still present. Then there is the ‘paradox of plenty’, where an estimated 120m people do not have access to electricity in Nigeria which is the largest oil exporter on the continent. The clear implications being that investments have to be made in shoring up healthcare systems, ensuring efficient service delivery, upgrading key infrastructure in the country, propping up systems and ensuring growth and development is equal. Nigeria’s demographic structure presents opportunities for an economy driven by robust domestic demand. Yet this hinges upon a growing middle class whose spending will drive the economy.

Though South Africa will likely remain the bellwether economy in Africa for the foreseeable future due to its diversification, investments in infrastructure, its size and the systems it has in place, it is obvious that it has underwhelmed of late. With Nigeria’s national elections looming in 2015, it remains to be seen whether the new government will implement the much needed socio-economic reforms and consolidate its newfound position as Africa’s biggest economy.

Perry Munzwembiri is a student at the National University of Science and Technology in Zimbabwe.