Investors keep close watch on Nigeria’s expected GDP rebasing exercise September 2, 2013 | Filed under: main story | Posted by: Editor In an interview with BusinessDay earlier this year, Stephen Atkinson, the group head, Corporate Affairs at Standard Chartered Bank plc, could hardly conceal his excitement at the potential of the Nigerian market. “Ten years ago we made $13 million in revenues here, but we are now well over $250 million in revenues,” said Atkinson who was on his first trip to Nigeria, then. “We are looking to get bigger in Nigeria, it is clearly a growth market for us, and it is our largest African business,” he said. Investors from Standard Chartered to Shoprite, aware of the economic potential of Nigeria are keenly awaiting the release of rebased Gross Domestic Product GDP figures, expected to be announced on December 10, according to the National Bureau of Statistics (NBS). The old time series (1990) on which the current GDP numbers are based on understates economic activity, as it fails to reflect changes in output and consumption, such as telecoms, financial services and internet usage. “We would be very surprised if recent and pending investment decisions are taken on the basis of the 1990 national accounts,” said FBN capital research analysts led by Gregory Kronsten, in a note released Friday. “The new GDP series will, however, be tracked by potential investors, such as suppliers of consumer goods and services.” Nigeria’s current GDP-which is based on the old series-is estimated by Renaissance Capital at $273 billion or $1,654 per head at year-end 2012. To get an understanding of how much economic activity is understated by the current figures, preliminary estimates from the GDP rebasing done by the NBS, show that the latest personal consumption figures for Nigeria is larger than the current estimated GDP. This was disclosed by Yemi Kale, the head of the NBS in a visit to BusinessDay’s office. Personal consumption figures usually make up between 60 – 70 percent of GDP, when calculated by expenditure. Nigeria’s economy is Africa’s second biggest, behind South Africa, and is projected to produce 14 percent of Africa’s GDP in 2013. It expanded six fold between 2000 and 2012 with an average growth rate of 8.3 percent for the period as new industries such as telecommunications helped to boost growth. Income per head in 2000 which was $378 dollars will increase by 357 percent to $1,731 by 2013, while Net Foreign Direct Investment (FDI) of $1.1 billion will grow to $6.1 billion this year. A 40 percent adjustment to GDP by the NBS, which analysts regard as the minimum, would move GDP to $382 billion and GDP per head to $2,200, pushing Nigeria to middle income status. Nigeria is on course to a $673 billion GDP by 2020, according to Charles Robertson, economist and head of macro strategy at Renaissance Capital, which should further attract capital to the country. The NSE, the main stock market index in Nigeria is up 33.3 percent year to date, compared to a 10.06 percent gain in the FTSE/JSE all share index, South Africa’s main stock index. The South African rand has fallen 18 percent against the dollar this year, compared with a 4 percent retreat by the naira per dollar. “There is growing appetite to invest in Nigeria. Globally investors now see the opportunity,” Robertson said. A couple of powerful trends are driving growth, which include a young and growing population, rising real income and urbanisation, new industries, privatisation as Government interferes less with business and an increase in overall Government spending on infrastructure due to elevated oil prices. A private equity firm which invested in, and has since exited the Ikeja Shopping Mall has identified one million households within an eight kilometre radius with combined annual spending power of up to $18 billion. Many more malls and retail outlets are under construction or on the drawing board across Nigeria, as retailers target the country due to its growth potential. Nigeria can become as big a retail market for South Africa’s Shoprite as its home base, according to Shoprite chief executive Whitey Basson. “The seven Shoprite stores in Nigeria sold more Moet & Chandon champagne than all the liquor shops in South Africa last year,” Basson said in a conference call last week. At least seven Nigerian cities have a population of more than one million, while industry research indicates that up to six million Nigerians spend a range of between $10 and $20 per day. By: PATRICK ATUANYA
Posted on: Mon, 02 Sep 2013 13:14:10 +0000
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