6 March 2014

Nigeria, Africa's Growing Economic Powerhouse

Reports say Nigeria's economy is expected to grow strongly in 2014, with expansion continuing to be driven by high oil prices and robust domestic demand. This is likely to see the Africa's top oil-producing nation dethrone South Africa and become the continent's largest economy in terms of its GDP size. According to projections by economists, the rebasing may see Nigeria's GDP increase to between $384bn (about FCF 183.605 trillion) and $424bn (about FCFA 202.737 trillion), making it Africa's new economic powerhouse.

The International Monetary Fund (IMF) projects a 7.4% GDP growth rate for the country this 2014, up from an estimated 6.2% in 2013, despite the instability in the north of the country and oil theft, which act as a drag on the broader economy. Nigeria's economy has been reportedly advancing by an average of 7% a year, compared with South Africa's meagre 3% average. This is probably as a result of its existing fairly strong investment proposition, based on its large population (170 million people), substantial natural resources and strategic position. While foreign investment has in absolute terms long been focused on the oil sector, portfolios are becoming increasingly diversified, moving towards power, agriculture and mining, areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West. And this is where Nigeria is drawing its strength.

The new-found strength of Nigeria is certainly a wakeup call for Cameroon that has the West African country as its main trade partner in the continent. Most trade between Cameroon and Nigeria takes place along 10 major corridors, both inland and on the coast. Estimates show that Nigeria exports more than 213,000 metric tons of non-oil products to Cameroon. These include cosmetics, household plastics, oranges and other merchandise valued at 769 million USD (about FCFA 367.735 billion) annually. Of these, USD 176 million (about 84.175 billion) is estimated to be products made in Nigeria. Meanwhile, estimates also show that Cameroon exports about 160,000 metric tons of goods annually, with a value of 226 million USD (about FCFA 108.083 billion), of which USD 62 million (about 29,647 billion) comprises products made in Cameroon. Reports say this is more than forty times official estimates given that most of the goods pass through informal ways.

The country's growing economic strength coupled with the development of the Bamenda-Ekok-Enugu road corridor offer Cameroon a ready market for aluminum sheets, bush mango, Gnetum (Eru), bananas, plywood and other products that it has the potentials to produce aplenty. While the need for local processing imposes here, it goes without saying that in the face of this, anything short of optimal production by Cameroon would be synonymous with stifling the local economy.

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