The
economic nerve centre of Africa shifted northward this year when Nigeria took
South Africa’s long-held position as the country with the continent’s largest
Gross Domestic Product (GDP). While GDP neither reflects the wealth
distribution nor accounts for the size of the population, it is a significant
indication of Nigeria’s emerging economic power. If these growing resources are
invested intelligently, the country can benefit and exceed the International
Money Fund’s estimated GDP growth of seven per cent this year.
Oil is the lifeblood of Nigeria’s US$510 billion
economy, which was rebased – or recalibrated to reflect a more accurate
economic picture – in April of this year. Pumping more than 2.5 million barrels
of oil a day makes the country the continent’s largest producer. Oil
constitutes 80 per cent of revenue and 95 per cent of export earnings,
according to statistics from Nigeria’s Finance Ministry. This can be a blessing
or a curse: it provides a large revenue stream in good times but also puts the
country at the mercy of cyclical prices. A drop in oil prices has the potential
of leaving a government with the choice between spending cuts impacting public
infrastructure or a damaging deficit.
The good news is that oil can be used to reduce a
country’s dependence on oil. By investing energy profits in projects in the
downstream oil sector and manufacturing, it is possible to diversify sources of
revenue and brake oil’s dominance of the economy. Even more importantly,
investing in strong and successful manufacturing industries stops Nigeria from
exporting valuable resources overseas when they can be turned into something
more precious at home while providing jobs for Nigerians at the same time –
multiplying the benefit to the national economy.
Nigeria’s natural resources are not limited to
minerals. By adopting a development model that capitalises on all of Nigeria’s
assets – vast energy reserves, a large labour force, and a huge local customer
base – the country can be self-sufficient and prosperous.
At the recent World Economic Forum – Africa,
Olusegun Aganga, Nigeria’s Minister of Industry, Trade and Investment, said
that Africa must embrace industry in order to manufacture products with greater
value than the raw materials used to produce them. He said no country has ever
moved out of poverty without making this important step. His Excellency
President Goodluck Jonathan, the Nigerian President, said at the WEF that even
though manufacturing can create more jobs than the service sector, the Nigerian
economy is still dominated by service jobs. The President believes that the
growth of manufacturing has greater potential to create employment
opportunities than the country’s growing GDP.
The Dow Chemical Company recently co-chaired a
World Economic Forum Report in collaboration with Deloitte entitled, “The
Future of Manufacturing”, to identify crucial factors for success. Critical
areas highlighted in the report include human capital and talent development,
innovation and technology, as well as public policy to which can foster
collaboration between policy-makers and business leaders. The report says
resources must be used to develop a downstream sector – where petroleum
products can be turned into an even more valuable asset – and funneled into the
development of a strong, diverse and competitive manufacturing base for Nigeria
to continue to grow.
The Nigerian government made a good use of the
World Economic Forum – Africa to show the lucrative possibilities of investing
in the country, to enhance ties with trading nations, and to find new partners
for growth. And while these will all benefit the country, it is crucial that
Nigeria adopts a strategy targeted at all sectors of its vast population that
will build a diverse industrial base, increase the value of its natural
resources, and protect the national economy from the price fluctuations of a
single natural resource.
Tony Groosman, Is Managing Director, Dow Chemical
West Africa LLc
ABOUT DOW
VENTURES AFRICA- As part of its commitment to grow
its business in Africa, Dow Chemicals Company, a US-based chemical company, has
expanded its business to Ghana and other West African market.
Dow, which has been operating in Africa for about
55 years, sees Africa as a core to its future growth and business success.
The multinational company initially has operations
in the Ghanaian market during the 90s until it pulled out, relying rather on
intermediaries to distribute its product within the region.
Dow West Africa Managing Director, Mr Tony Groosman
said the American multinational moved out of Ghana due to unstable political
climate and difficulties in doing business.
However, he said Africa’s stable economic
environment makes it compelling to invest here.
“Now, those things have changed. The global economy
has changed, but also Africa has changed a lot in terms of political
stability,” Groosman said, adding that it gives companies like Dow the
confidence to invest.
With an annual sale of about $60 billion, the
company’s portfolios include generic formulae in industrial paint that tackles
blistering, poor scrub, resistance to heat, moist and fire. Its more than 500
products are manufactured at 197 sites in 36 countries across the globe
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