The planned rebasing of Nigeria’s Gross Domestic Product (GDP) is expected to raise Lagos State to Africa's 13th biggest economy by 2014, a report assessing the respective economies of the 36 states of the federation has shown.
In its latest report titled, “Nigeria Unveiled: Thirty Six Shades of Nigeria” Renaissance Capital (RenCap), an investment and financial advisory firm, also said that with a per capita income of approximately $4,000, which is more than double the national average of $1,700, the wealthiest people in Nigeria reside in the Federal Capital Territory (FCT).
Abuja’s per capita income is equivalent to that of Tunisia and Ukraine.
With a per capita income of $2,900, Abuja is followed by Lagos with second wealthiest residents in the country, which puts it at par with Morocco and Sri Lanka.
The report showed that while much has been written in recent years about Nigeria’s rising economic significance, very little is known about the country’s 36 states.
It said Lagos State’s economy would be equivalent to the Ghanaian economy post-GDP rebasing, adding that the heart of Nigeria’s $284 billion GDP economy is clearly in Lagos.
Rencap said: “We base our analysis on states’ internally generated revenue, which make up 15 per cent of state government revenue, and consumption data, as proxies for state income.
“Lagos State produces about 12 per cent of Nigeria’s GDP, which is equivalent to $32 billion by 2013 ending. Post rebasing, which we now expect in early 2014, we estimate a 40 per cent upward revision in the country's national income.
“By our estimates, the Lagos State economy will become Africa's 13th biggest economy in 2014 at approximately $45 billion – equivalent to that of Ghana.”
According to the report, Nigeria’s second wealthiest state is in the north. “ Kano State is Nigeria’s second wealthiest economy, with an economy of $17 billion, by our estimates, which is equivalent in size to Botswana’s economy.
“Kano State is the anchor state of poorer northern Nigeria. Historically, Kano State has been a commercial and agricultural state. In pre-colonial times, Kano city, the state capital, served as the southernmost point of the famous trans-Sahara trade routes.
“Kano State has produced some of Nigeria’s most influential and wealthiest people, including Africa’s richest man, Aliko Dangote. Interestingly, Dangote’s great grandfather, Alhassan Dantata was the wealthiest man in West Africa during the colonial period.
“Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi’s grandfather held the influential position of Emir of Kano,” the report said.
The RenCap report further showed that Jigawa, which is bordered by the Republic of Niger to the north, is home to Nigeria’s poorest people, with average per capita income of $850, which puts it at par with that of Zimbabwe.
“We believe the state’s low per capita income partially reflects its very low rate of urbanisation. Nine out of 10 people in Jigawa State live in rural areas.”
In terms of demographics, the report stated that the populations of Kano and Lagos State – Nigeria’s most populous states – are equivalent to that of Portugal.
“Kano and Lagos are each home to 7 per cent of the country’s 170 million population, implying that each has a population of an estimated 10 million people,” the investment firm said in the report.
The report also delved into other areas of the north-south divide showing that there is a notable difference between both regions in terms of household sizes.
“Nigeria’s (richer) south-west states have smaller household sizes than its (poorer) northern counterparts. As is true globally, middle-class families tend to have fewer children, and invest more in each individual child.
“The states with the biggest household sizes are the two northern, neighbouring states of Bauchi and Gombi, where households are, on average, made up of over seven people.
“Lagos is among the states with the smallest household sizes – (4.9 people). Given that Lagos State is the most densely populated state in Nigeria, and its average household size is relatively small, the implication is that property prices (per square metre) must be expensive compared with those in other states,” the report stated.
The report also showed that Lagos has the highest net primary school completion ratio in Nigeria at 70.6 per cent, adding that the south-west population is more likely to have completed primary school than its counterparts in northern Nigeria.
“The most educated workforce in coming years will also be apparent in the south and south-west, where at least 60 per cent of the children complete secondary school.
“We think education levels in the south and south west are likely to spur even faster growth, as we have seen in emerging markets globally.”
Focusing on the middle class, the report said consumer companies are likely to find the greatest opportunities in states with the greatest purchasing power such as Lagos, Abuja, Oyo, Osun, Kaduna and Nassarawa, as well as the Niger Delta states.
It also stated that there are opportunities for banks to expand services and employees into states with a combination of high income and high population density, adding that this would provide the footfall required for branch expansion.
According to the report, states with such opportunities include Anambra, Imo, Abia, Akwa Ibom, Rivers and Osun.
Continuing, it said: “Consumers are more likely to buy branded goods in the FCT, Lagos, Delta and Rivers States. This, we infer from these states’ relatively low food spend/total consumption expenditure, which implies relatively high discretionary income.
“We think these states may also drive air travel, and may prove to be higher value-added customers for telecoms companies.
“We believe food retailers have expansion opportunities in states beyond the southern region that are characterised by relatively high food spend, such as Nassarawa, Niger and Kaduna.”