Nigeria currently stands 41st in international GDP rankings, according to the IMF World Economic Outlook Database – its largely oil-driven economy pegged at $165 billion. This marks a fourfold increase over ten years from just $36 billion in 19971. Progressive policies undertaken in the years following the installation of a democratically elected government in 1999 takes the credit for this remarkable increment. The Nigerian Economic Policy, 1999-2003, is specifically to praise for incorporating far-reaching measures that have helped enable Nigerians with access to technology and education.
A vigorous disinvestment programme involving public sector units in oil marketing, communications and port operations boosted private sector participation and led to the creation of jobs and ancillary businesses. The spirit of economic reforms was further evident when oil prices were deregulated in 2003 and four national refineries were privatised. However, these and other initiatives have not succeeded entirely, and Nigeria remains “information poor” in the context of utilising computing power in the industrial process. Further, and although digital networks have come up in recent times, the communications infrastructure continues to suffer massive deficits.
For average Nigerians, what has improved in recent times is access to technology, and a new breed of emerging entrepreneurs are harnessing the power of the Internet to start model ventures and strike global partnerships. While their contribution as foreign-exchange earners is minor in terms of the Nigerian economy, the significance of their innovation, in the context of Nigeria’s past economic stagnation, can hardly bee overlooked. What is optimistic for the government and Nigerians in general is that such stories of successful Nigerian enterprises are starting to gain in frequency. Even though the rate of progress has been slow, the country is decidedly on the right track as far as promoting business development goes.
Nigeria is currently the United States’ largest trading partner in sub-Saharan Africa. In 2008, the USA imported Nigerian goods (predominantly oil) worth $38 million. The figure is up from $32.7 million in 2007 and indicates a growing US dependence on Nigerian oil, which currently accounts for almost 11% of its import requirement.
The ‘Nigerian Paradox’ is a frequently cited economic phenomenon that describes the condition of sweeping poverty and abysmal human development indices in a country of abundant natural recourses that earns billions in annual petrodollar revenue. The economic decline of Africa’s most populous nation began right after the oil boom of the 1970s, when political corruption and non-inclusive policies plunged the vast majority of Nigerians into degrading poverty. Subsequent decades of civil and political unrest and the continuation of outdated policies made Nigeria a virtual untouchable for international investors. Over the years, the deteriorating security situation was paralleled by a simultaneous decline in infrastructure that killed existing businesses and made the emergence of new ones impossible. The corresponding human toll was even more disturbing as the country plunged into decrepit poverty and economic despair.
Because of the deep fissures in its history, Nigeria’s emergence from a disturbing past has not been smooth. The recent reversal of some of its fortunes has come at a steep price and the country continues to lag behind in vital indicators. A historic overdependence on oil skewered agriculture and local industries and created massive economic imbalances that are still far from being corrected. Rampant unemployment and inflation have created a climate of youth unrest that precipitated in violent militancy in the oil-rich but volatile Niger Delta region, together with rising levels of organised crime. Severe infrastructure deficiencies – especially in power, roads and communications – widened the rural-urban divide and provoked large scale migration into towns. Official indifference and inhibitive policies spawned a gigantic informal economy that continues to grow and operate outside the ambit of government regulation despite furious policy redirections in recent years.
Surprisingly, this unorganised sector currently contributes 65% of Nigeria’s GDP and accounts for 90% of all new jobs.
There have been a number of improvements fostering business growth. They include:
* Entrepreneurs have more control over their lives and have obtained social and financial security for their families.
* The Nigerian government has now made it possible for Nigerian products to be shipped to Europe and the United States.
* Entrepreneurs in Nigeria are being offered tax incentives in order to promote further enterprise development.
* Modern technology is making its way into Nigerian culture, taking the country closer to self-sufficiency in the technology sector. However, it is an ongoing process that that banks heavily on government aid.
Established in December 1999, The Small and Medium Enterprises Equity Investment Scheme (SMEEIS) instructed all Nigeria’s banks to put aside 10% of their pre-tax profit for investment in small and medium sized enterprises. This was to present an opportunity for those looking to break into a business of their own. Sadly, as of 2006, only 26% of this funding had been used.
The Nigerian Small and Medium Scale Industries Development Agency (SMEDAN) is another important player in the country’s efforts to boost entrepreneurial spirit. Although it’s still a rather young organization, it is making a positive difference.
Skills and Ideas Development Initiatives (SKIDI) is an NGO that is helping entrepreneurs realize their dreams in Nigeria so that they can obtain the freedom that they desire. There is a specific focus on rural and suburban Africa, especially since rural areas have seen more poverty. The poverty rate in Nigerian rural areas stood at 40% in 2001, compared to the 35% in urban areas where more businesses are prevalent.
Bridging that gap happens to be just one of the many challenges on Nigeria’s road to prosperity.