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Africa's economic powerhouse is booming, but serious problems persist.
LAGOS, Nigeria — While the G20 leaders huddle in Seoul, what may soon be the world's fastest growing economy is a continent away in Nigeria.
The West African nation could be the world’s next emerging giant — or its next giant emergency.
Nigeria is "in a position to be a part of the G20," Secretary of State Hillary Clinton told reporters last year, "but the corruption reputation, it's a problem."
Her perspective is hardly novel. On a continent whose collective economy is now expanding faster than all but China and India, Nigeria has long loomed as a metaphor for Africa’s immense potential and its daunting problems.
“Nigeria is pivotal to the fortunes of sub-Saharan Africa,” said Razia Khan, an economist at Standard Chartered Bank. “It is the Africa story in a way no other economy can claim to be.”
But since May, when Nigeria's ailing president Umaru Yar'adua died in office, the continent’s second largest economy has tiptoed nearer to boom times — as well as catastrophe — than at any moment since its 1970s oil windfall, according to analysts.
Currently, Nigeria’s macroeconomic math augurs well.
The International Monetary Fund estimates the economy is growing at 7 percent annually, a burst of economic lightspeed that “represents serious inroads against poverty,” and will continue next year, according to the fund’s Deputy Director for Africa, Mark Plant.
Nigeria's Gross Domestic Product, at $353.2 billion, is the largest on the continent and with 155 million people, it is Africa's most populous nation.
Nigeria's mobile phone industry is Africa’s fastest growing, while internet access — three out of 10 Nigerians have it — soars beyond rates anywhere else below the Sahara. Nigeria's film industry has achieved significant growth, too.
Then there’s cement: The country’s kilns are churning hundreds of millions of dollars of the stuff to supply West Africa’s construction boom.
Plus, Nigeria’s auspiciously named President Goodluck Jonathan boasts a electricity reform “roadmap” he says will reduce the country’s infamous blackouts to a historical memory — a reform that, by itself, could further gas growth to 10 percent annually, according to the Finance Ministry.
That kind of double-digit surge could make Nigeria the world's fastest growing major economy, China and India included — which means the ministry’s forecast raises as many eyebrows as expectations.
“Of this 10 percent growth, where’s it going to come from?” asked Jenny Kehl, global development professor at Rutgers University, and a self-identified skeptic of Nigeria’s new hype.
Beyond cement, the country’s feeble manufacturing base suffers intractable snags like gridlocked ports and threadbare roads. That’s why Nigeria’s rise would likely mimic India’s, rather than industrial China’s, said Andrew Alli, CEO of the African Finance Corporation.
Meanwhile, the Nigerian financial system is still convalescing from 2008’s near-total collapse of lending and there has been a chronic credit crunch for the small businesses and farmers fueling Nigeria’s current 7 percent expansion.
“The banks grew hugely until 2008 without lending to small businesses, they fell apart in 2008 and 2009 without lending to small businesses, and are recovering in 2010 without lending to small businesses,” said economist David Asserkoff. “That’s unlikely to change in the next two to three years.”
Even Nigeria's infamous oil sector, besieged by rebels and new regulations, is somehow producing near capacity, Kehl notes.
“Growth is going to have to come from foreign investment,” she said “But politics in Nigeria is volatile. Political stability is more important to investors than economic stability.”
If that’s true, then the bankrollers of Nigerian growth have a full newsfeed of headlines to fret over, starting with the January through March pogroms between Muslims and Christians that kill hundreds.