from the Financial Times..
[Ed. note: Below are excerpts from a very informative, full-page article.]
July 7, 2013
By Xan Rice
The west African state’s prospects are threatened by Islamist insurgency, corruption and divisive politics.
Twenty years ago few Nigerians had heard of instant noodles. “People thought we were trying to get them to eat worms,” says Deepak Singhal, managing director of Dufil Prima Foods, the first company to manufacture the cheap snack locally, in 1996. Today, noodles are a $600m-a-year business in Nigeria and are among the country’s most popular foods. Children eat them for breakfast, roadside vendors serve them with fried eggs or sardines and after a long day at work an adult can tuck into Dufil’s 210g Hungry Man pack, the largest block of instant noodles produced commercially anywhere in the world.
The company, which has a 70 per cent share of the local market, estimates that one in two Nigerians have tasted its Indomie brand of noodles and that up to 15m people eat them regularly. In 2012 alone, Dufil sold 1.6bn packets of noodles for between 35 naira ($0.22) and 95 naira ($0.59). That is more than was consumed in any country outside Asia bar the US, Brazil and Russia.
Already by far the most populous country on the continent, with close to 170m people, Nigeria continues to grow at an astonishing rate. According to the UN’s latest forecast, by mid-century there will be more Nigerians – 440m – than Americans, and by 2100 the west African state could be the second most populous country on earth. The economy is also expanding quickly, and should grow at 7 per cent this year, as it has done for most of the past decade.
“There’s a lot more interest in Nigeria now from frontier specialists and emerging market funds,” says Graham Stock, chief strategist at Insparo Asset Management, which focuses on Africa and the Middle East. “[There are] not many places in the world that are growing at 7 per cent and can be reasonably expected to maintain that for some years.”
That, of course, is assuming all goes well. Nigeria still has many challenges and risks. An Islamist insurgency in the north has claimed thousands of lives and hit the economy there. Corruption remains endemic, and the politics divisive and poisonous. Industrial-scale oil theft is preventing the government making rainy day savings, leaving it exposed to a drop in the price of crude. While the infrastructure is slowly improving, it is still poor and a big impediment to business.
The ports are congested and the road network dilapidated, increasing transport costs. The power shortage is chronic. Bangladesh, which has a similar-size population and less than half the gross domestic product of Nigeria, produces almost twice the amount of electricity per capita.
The population explosion may be good for business but it brings challenges for the government, which has to keep a lot more people happy. If rising income is the measure of contentment, then its policies need improving. Despite the growing economy, Nigeria’s poverty rate declined marginally from 64 per cent to 63 per cent between 2004 and 2010, according to the National Bureau of Statistics. Dufil’s own research backs this up. Mr Singhal says that while the banking and telecoms sectors have created “a bit of middle-class growth”, poverty levels remain high.
The youthful population – about 44 per cent are under 15 – is cited by economists as one reason why Nigeria, and other countries in sub-Saharan Africa, could enjoy competitive advantages over the rest of the world in the coming decades. But this will be an asset only if there are jobs to fill. In Nigeria, the official unemployment rate is 24 per cent and rising. Among those aged 15 to 24, it is 37 per cent, a statistic that worries people such as Ngozi Okonjo-Iweala, the finance minister. “We need to grow our GDP at 8 to 10 per cent in order to solve the unemployment problem facing us in the country,” she said last month.
Link the the full-page commentary: http://www.ft.com/intl/cms/s/0/6a900674-d9b3-11e2-98fa-00144feab7de.html#axzz2YZNa23c