Nigeria, perhaps for all the wrong reasons, has been much more visible in the Western media as of late. Nigeria experienced an early Ebola fear that never spread beyond a handful of cases. Nigeria is consistently ranked as one of the most corrupt places in the world, often in the same class as Russia, and Iran.
Nigeria, being one of the largest oil producers in the world at 2.5 million barrels a day, has suffered from the 50 percent decline in oil prices. When 90 percent of your export revenues and 50 percent of your fiscal budget is based on oil, a price drop less significant than this will have dramatic effects.
Nigeria, is front and center in the world War on Terror because of the horrific acts of the home grown Boko Haram organization, now affiliated with ISIS.
And Nigeria, experienced a hotly contested presidential election that had to be postponed because of terror concerns. This combined with the fact that elections in Africa are frequently accompanied by social unrest and sometimes undemocratic transfers of power. But despite all of this there is a silver lining that is, and has been discounted by the press, policy makers and the international business community.
Nigeria is arguably where China and India were 15 to 20 years ago.
Last year, Nigeria surpassed South Africa as the largest economy in Africa. This is not simply an accounting ranking of economies. This is significant for Nigeria and all of West Africa because the region and the continent needs economic engines. Nigeria can be and will be that engine.
In 35 years, Nigeria will have a population that is projected to exceed that of the United States. Already, Nigeria has a labor force of over 73 million and an expanding middle-class despite all of the problems listed above. This expanding middle-class is the key to a growing economy, and a more stable and mature political system. Nigeria is arguably where China and India were 15 to 20 years ago.
Baron Rothschild is reported to have said that you don’t make money until there is blood in the streets. This does not apply to Nigeria literally, but figuratively, Nigeria is on the verge of an economic expansion that has largely been the result of oil wealth and the political maturation process.
It is significant that the recent election and change in power from Goodluck Jonathan of Muhammadu Buhari has taken place without bloodshed or military intervention.
Democratic change of power is not the norm. This simple act of turning over power to person receiving the most votes of the population is itself a revolutionary event that signals that Nigeria is further along on the political and economic maturation process than the world recognizes.
The decline in oil prices is unfortunate, but in some respects it provides Nigeria’s leadership with an opportunity to overcome the “curse of natural resource wealth”. Before oil became “the industry”, Nigeria had a diversified agricultural economy. Since the oil boom, related industries have popped up and are well positioned to make Nigeria a much more balanced economy with strengths in housing, technology, automotive, transportation, telecommunications, clothing, consumer durables and all of the things an expanding middle-class demand. Wise economic management can make this a reality.
It also should be noted that this transition of power also occurred when the Jonathan administration was largely responsible for a real effort to increase financial transparency and accountability.
On this front, Ngozi Okonjo-Iweala, Ph.D. deserves recognition. Dr. Okonjo-Iweala a Harvard educated, MIT trained economist and former leader at the World Bank brought a management style and an understanding of the importance of transparency and accountability to long-term economic growth. The new Buhari administration would be wise to continue in this direction.
Too often we look at short-term developments without focusing on the long-term. The great English economist John Maynard Keynes commented that “in the long-run we are all dead”. Despite this, the long-run focus is the appropriate focus for Nigeria and for us here in the West, and that long-run for Nigeria looks good from where I sit.
Fred McKinney, Ph.D. is Managing Director, MBE Programs at Dartmouth's Tuck School of Business.