Nigeria Seen by Mckinsey in Worlds Top 20 Economies by 2030

Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current populations of France and Germany, according to McKinsey & Co.

Africa’s biggest economy may expand about 7.1 percent a year through 2030, boosting gross domestic product to $1.6 trillion, possibly pushing it above Netherlands, Thailand and Malaysia, the New York-based company said in a report today. About 60 percent of Nigeria’s estimated population of 273 million by then may live in households earning more than $7,500 a year, fueling a consumer boom, McKinsey said.

“Nigeria is poised to become a major economic force,” McKinsey said in the report. “Nigeria has a huge endowment of resources, a growing consuming class, and rapidly growing trade and consumer sectors to propel growth.”

As Africa’s largest oil producer with a population of about 170 million, Nigeria has consistently posted annual growth rates in excess of 4 percent over the past decade. That’s spurred foreign investors such as Unilever Plc (ULVR), Nestle SA (NESN) and Shoprite Holdings Ltd. (SHP) to expand operations despite an upsurge in violence by militants in the north.

Based on McKinsey’s growth estimates for the economy, annual sales in consumer goods could more than triple to $1.4 trillion by 2030 from $388 billion currently, it said.

The retail and wholesale trade industry will probably become the largest contributer to Nigerian growth by then and 35 million households are expected to earn more than $7,500 a year, according to the report.
Oil Contribution

While oil accounts for 70 percent of government revenue and most of Nigeria’s export earnings, its share of the economy has waned. After the statistics office overhauled its GDP data in April, oil’s contribution to economic growth between 2010 and 2013 was 5.1 percent, compared with 14 percent for manufacturing and 20 percent for trade, according to McKinsey.

“If Nigeria reaches its economic potential, the retail and wholesale trade industry could grow 7.1 percent per year,” according to the report. “By 2030, it would likely become the largest contributor to Nigerian GDP, surpassing the agriculture sector.”

The Nigerian Stock Exchange All-Share Index (NGSEINDX) has gained 2.9 percent this year, adding to its 47 percent surge in 2013. The naira has dropped 1.1 percent against the dollar since January.

In order to achieve its potential, Nigeria’s government needs to address poverty, lower the cost of basic services, such as housing and energy, expand electricity supply and boost productivity in farming, McKinsey said.

Acknowledgement: excerpts from bloomberg.com