Despite the challenges of insecurity, Nigeria's ongoing struggle with poverty and withheld investments by the international oil companies, IOCs, the oil and gas sector has the potential to contribute about $108 billion yearly by 2030, up from $73 billion in 2013, a McKinsey Report has stated.
The report, which was released recently stated that while the oil and gas sector is expected to grow by 2.3 percent annually, its success is still vital to the Nigerian economy.
According to the report, "with the right reforms, oil production could increase from 2.35 million barrels a day on average to a new high of 3.13 million barrels a day by 2030, contributing $22 billion to gross domestic product, GDP by 2030. Natural gas output could grow by as much as six percent per year, adding $13 billion to GDP by 2030.
"In total, the oil and gas sector has the potential to contribute $108 billion per year by 2030, up from $73 billion in 2013. However, this assumes that the sector is successful in dealing with current obstacles such as security and can attract fresh investment."
The report also said that Nigeria has the potential to expand its economy by about 7.1 percent annually through 2030, raising GDP to more than $1.6 trillion. This could make Nigeria a top 20 global economy with higher GDP than the Netherlands, Thailand, or Malaysia in 2030.
What's more, it added that a large consuming class is developing in Nigeria, with potentially as many as 160 million members by 2030, more than the current populations of France and Germany combined. This upside scenario is based on a bottom-up analysis of the potential for major sectors of the Nigerian economy, such as trade, agriculture, infrastructure and manufacturing.
According to McKinsey, based on an expanding consumer class in Nigeria, it is projected that consumption could more than triple, rising from current $388 billion/year to $1.4 trillion/year in 2030, an annual increase of about eight percent.
This would make trade the largest sector of the economy, and provides a particularly good opportunity for makers of packaged foods and fast-moving consumer items such as juices, which could grow by more than 10 percent yearly.
As regards agriculture, it stated that improvements on several fronts can help raise both the volume and value of Nigerian agricultural production in the next 15 years. The sector, which is now the largest at 22 percent of GDP, could more than double from $112 billion/year in 2013 to $263 billion by 2030.
It however said that this would require raising yields through greater use of fertiliser, seeds, and mechanised implements; shifting the crop mix to more valuable crops; increasing the amount of land under cultivation; reducing post-harvest losses; and raising more livestock and increasing the output of forestry and fisheries.
For infrastructure, the report stated that on the average, the value of a nation's core infrastructure - roads, railways, ports, airports, the electrical system is about 70 percent of GDP. Whereas in Nigeria, core infrastructure is estimated to be about 35 - 40 percent of GDP.
It has one-seventh the roads per kilometer as India. On a per capita basis, Nigeria has one-third the residential buildings of Indonesia and one-sixth of the commercial space. Between core infrastructure and real estate, total infrastructure investments in Nigeria could reach $1.5 trillion between 2014 and 2030. This would not only make infrastructure building a major contributor to GDP, but also an enabler of growth across the economy.
Also, it reported that manufacturing in Nigeria remains at a relatively early stage of development, contributing $35 billion, or about seven percent of GDP, in 2013. It has, however, achieved strong growth recently, with output rising by 13 percent per year from 2010 to 2013.