Business The Good and Bad of Nigeria Becoming Africa's Biggest Economy

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LequteMan

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According to a report on an American news site- News Opinion, Nigeria, within the next few days will announce herself as the current largest economy in Africa, surpassing South Africa. The announcement should raise people’s brows but one will need to look carefully at the calculations. Nigeria is a booming market, and contains nearly one-fourth of the population of Sub-Saharan Africa. Its population is four times that of South Africa and its markets are more open to new investment than is South Africa.

However, while it is good to acknowledge the Nigerian market, the data will not reflect more troubling and worrisome facts about today's Nigeria. Despite growing investment, the nation still is only meeting 20 percent of its current electrical power needs. The lack of consistent power resources is the single-most important inhibitor of growth in Nigeria, as well as throughout Africa.

Nigeria also remains, to a considerable extent, a divided nation, of north and south, oil-producing states and non-oil producing states. Boko Haram and related groups remain a threat to the stability of the nation as well.

Most troubling is the gap between rich and poor, although this is not unique to Nigeria, but one painfully obvious throughout the world. However, it is especially extreme in Nigeria. While there is purportedly a growing middle class, it is still dwarfed by the millions in poverty, living on less than $2 a day.

It is important for Africa and the world that Nigeria's economy grows. Nigeria is the giant of West Africa and if it fails as a nation, so too will the region of West Africa, with all its resources and promise. There are many investors going into Nigeria now, especially from China, which is making major investments in construction in Abuja, the capital, as well as elsewhere in the country. One should be grateful for this investment.

Ironically, another major investor in the Nigerian economy is South Africa. South African businesses and banks view Nigeria as a major market for their country's interests and their investment is important to both the economies of South Africa and Nigeria. Politically, this may also have the effect of increased cooperation between the two nations.

There is also increasing investment in Nigeria from some key American companies. General Electric and Symbion Power are making major investments in the development of power plants, both as partner and competitors throughout the country. Procter & Gamble is making a major investment in manufacturing in Nigeria, as is Wal-Mart, and IT giants IBM, Microsoft and Oracle are also becoming more engaged in Nigeria. U.S. oil companies remain in Nigeria and still represent the major part of foreign investment for the country.

For now, it is not really important which country really has the largest economy on the continent. What is far more important is how that economy is going to benefit the whole of the population of Nigeria, and what that will mean to West Africa. As Nigeria goes, so too will West Africa.
 
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