New hope of Nigeria joining the league of nations popularly referred to as the BRICs (Brazil, Russia, India and China) emerged on Monday, following a report quoting analysts as saying the nationâ€™s population would serve as its joker over rival and Africaâ€™s largest economy- South Africa.
The BRICs are some of the worldâ€™s fastest growing economies, to which according to Reuters, quoting Russiaâ€™s President Dmitry Medvedev, South Africa had â€œappliedâ€ to join in. Others eager to join the club include Turkey, Mexico and Indonesia, which investors typically eye as possible additions to the BRICs, having grabbed a chunk of emerging market investment in recent years due to their scale, growth and impact on the global economy.
But analyst and expert on the African economy, Razia Khan, who is head, Africa research at Standard Chartered told Reuters that Nigeriaâ€™s economy may overtake South Africaâ€™s by 2023. Factors that would work in Nigeriaâ€™s favour, she noted, is its huge population of 150 million people, 70 per cent of which live on a dollar per day is expected to work in its favour. This, she noted, is a demographic impact, noting that â€œin the next five years, Nigeria will add another 23 million people and South Africa will add another 2.8 million.â€
This will however be based on projections that Nigeria maintains a economic growth rate of 7 per cent and South Africa, 4 per cent on a purchasing power parity basis.
Goldman Sachs Asset Management Chairman Jim Oâ€™Neill, who coined the term BRIC nine years ago, told last weekâ€™s Reuters 2011 Investment Outlook Summit that South Africa, at a population of under 50 million people, is just too small to join the BRIC ranks.
â€œHow can South Africa be regarded as a big economy? And, by the way, they happen to be struggling as well.
â€œNigeria has shown some vague signs. If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is I think very interesting.
â€œItâ€™s 20 percent of Africaâ€™s population, which means it could be pretty powerful,â€ Oâ€™Neill said.
While South Africa is the larger economy, Nigeria is expected to catch up in the next few years. Recent policy changes, including the appointment as finance minister of former Goldman Sachs banker Olusegun Aganga, could present new possibilities, the report noted.
Nigeriaâ€™s population is already larger than Russiaâ€™s, and is estimated to double in another 20 years.
Acha Leke, a Lagos-based director at consultancy McKinsey, according to the report, is however cautiously optimistic on the power of population, noting that â€œdemographics is a double-edged sword- you have a massive, massive market, but you have a bunch of people to educate and create jobs for. This could be a great opportunity. It has to be carefully managed.â€
The Reuters report however noted the power of corruption to undo whatever population could achieve for Nigeria and indeed has a long way to go, coming 134th out of 178 countries in Transparency Internationalâ€™s 2010 Corruption Perceptions Index, compared with South Africaâ€™s 54th.
Corruption has stood in Nigeriaâ€™s way of achieving adequate power supply and other infrastructure shortages, besides the issue of political uncertainty, as the nation goes to the poll in April next year.