Nigeria, poised for big growth, aims to be the next 'BRIC' country

Nigeria – the No. 3 supplier of US oil – says that by 2012 the country will be growing by 10 percent per year. Some economists agree.

Akintunde Akinleye/Reuters
A man rode a motorcycle with his children after attending prayers last week marking the end of the Muslim holy month of Ramadan, in Nigeria's northern city of Kano. Could Nigeria be the next 'BRIC' country?

When financiers gather around conference tables to chat about the world's fastest growing economies, they often speak of BRIC – Brazil, Russia, India, China.

Soon, that four may be five. Below the Sahara Desert, which has long loomed like a risk line for investors ("do not invest south of here"), Africa's most populous nation insists it is on the brink of joining BRIC, shoehorning its strident N (for Nigeria) between the software labs of India and China's sprawling smokestack farms.

Just listen to the finance ministry of the No. 3 supplier of US oil spout the numbers: By 2012, the ministry projects, Africa's second-biggest economy will be growing at a breakneck 10 percent per year, matching the economic speed that transformed Beijing from a city of bicycles to Buicks.

The electricity hurdle

One need caution that Finance Minister Olusegun Aganga's 10 percent prognosis relies on a whopping assumption: Electricity. To score that kind of globe-tilting economic performance, Nigeria must first clean out its Augean stable of an electric grid, whose customers receive power as inconsistently as they pay for it. The government is inviting foreign electric companies to buy up chunks of the grid, and consign flickering brownouts to a historical memory.

Nigeria's generator and diesel salesman, who wield political power with their import licenses, will certainly dash that notion wheresoever they can.

Meanwhile, an even more skeptical observer might ask, doesn't Aganga’s 10 percent forecast belong to the species of miracle number that politicians flutter like flags in the run-up to an election?

Yes, definitely, but economists think he's right. Strategist David Aserkoff at Exotix investment bank projects 7.5 percent growth for the current uncertain year in Nigerian politics.

If the country's accidental president and probable two-termer Goodluck Jonathan can quash the diesel salesmen, Aserkoff says he envisions growth revving northward to even 12 percent.

"10 or 12 percent growth," he says, "would be doing a China."

Plus, if Nigeria does grow at that rate, you'll find much less China in the nation's market stalls. "You'll see Nigerian light manufacturing and retail expanding. More stuff you buy on the street will say 'Made in Nigeria.' "

Beyond oil

The prospect of a Nigerian boom is one more goad for investors to reappraise a continent that is still more bound to images of crisis than opportunity.

And Nigeria's growth is about more than oil.

"If you look at where [current economic growth] is coming from, it's coming from agriculture, from small scale construction, from distribution and retail trade," says Gregory Kronsten, an economist at CSL Stockbrokers Limited, a brokerage firm based in Nigeria. "These are not sectors which enjoy much access to credit. So there's a secondary assumption that if banks start lending to the real economy, plus the power problems are fixed, double digit growth is plausible."

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