NIGERIA: Jim O'Neill, former Chief Economist and Head of Asset Management at Goldman Sachs has come up with the MINT acronym to represent Mexico, Indonesia, Nigeria and Turkey as the next top economies of the world, tipped for global greatness

Record ID: 236420

  • Title: NIGERIA: Jim O'Neill, former Chief Economist and Head of Asset Management at Goldman Sachs has come up with the MINT acronym to represent Mexico, Indonesia, Nigeria and Turkey as the next top economies of the world, tipped for global greatness
  • Date: 17th March 2014
  • Summary: LAGOS, NIGERIA (FILE) (REUTERS) VARIOUS OF MODELS ON RUNWAY GUESTS CLAPPING
  • Embargoed: 1st April 2014 13:00
  • Keywords:
  • Location: Nigeria
  • Country: Nigeria
  • Topics: Industry
  • Reuters ID: LVADA01BCVSEJC1ZKI41ZNQYIYFJ
  • Story Text: At 170 million people, Nigeria is the most populous country in Africa and the seventh largest in the world. For some, the west African nation's consumers are seen as fueling an engine of prosperity, for others, they create a crisis of poverty and unrest.
    For former Goldman Sachs economist, Jim O'Neil, who created the BRIC family of Brazil, Russia, India and China, Nigeria presents the next big thing for fund managers alongside Mexico, Indonesia and Turkey to form MINT.
    Both the BRIC and MINT groupings focus on demographics; countries which are going to grow rapidly by the middle of the century, due to their young populations.
    This is an attraction of frontier economies, those which are at an earlier stage of development than established emerging markets.
    Nigeria's stock market has been an extreme outperformer, doubling in value last year. It has a huge potential consumer market buying luxury brands and expensive properties and GDP growth is over 6 percent, far outstripping the stagnant economies in developed countries.
    Investors are keen to tap into Nigeria's potential emerging market.
    Hubert Danso, the vice chairman of Africa Investors Group believes that Nigeria's population puts it in MINT condition, compared to other economic players on the continent like South Africa.

    "I think absolutely. I think Nigeria is at the forefront at least in the minds of the global investment community we are seeing now where the Nigerian economy in many respects is hot on the tails and in some peoples minds, ahead of the viability, the future viability of Nigeria versus South Africa if I can call it that. We always believe that there is much more strength in numbers so the more we can work together across the continent we think that is a very good thing," Danso said.
    The urban music scene in Nigeria is one of the most vibrant on the continent, producing some of the most bankable artists according to a recent poll by African music television outlet, Channel O and Forbes Magazine.
    The Fashion industry is inspiring global style trends while its movie industry rivals Hollywood and Bollywood in quantity.
    Nigeria is at an earlier stage in the development cycle than other MINT countries. According to IMF estimates, its per capita gross domestic product (GDP) was about 2,800 US dollars last year measured by purchasing power parity.
    That compares with around 5,000 US dollars for Indonesia and more than 15,000 US dollars for Mexico and Turkey.
    But Henry Boyo, a Nigerian economist worries that there are still many challenges to real growth.

    "Anybody who tells you that we will become BRIC, MINT or by any means or whatever, I think we should recognise that the person is not saying anything new, but you should at the same time wonder whether it can become a reality without being.... that concept being underpinned," he said.

    "A successful economic platform can only be created when you have a monetary framework that is underpinning it to be a disciplined and responsive monetary framework. In other words, we should not have a system whereby I for example, savings attracting 3 percent, savings deposits are attracting 3 percent and the banks are lending at 20-something percent. You can't grow significantly," he added.
    A recent Standard Bank study questioned Nigeria's potential as a mass consumer market. It showed that in some of the urban centers seen as promising, like Lagos, household incomes are far below the threshold for a retail boom.
    Despite holding the world's ninth largest gas reserves, Nigeria only produces a tenth of the amount of electricity as South Africa for a population three times the size.
    Corruption is rife and Islamic extremism is adding to the political instability. Investors are presently wary of political risk in Nigeria before the next year's elections and amid uncertainty over whether President Goodluck Jonathan will run.
    Even as Nigeria is hailed for its MINT status, analysts say such realities give way to acronym anxiety and need to be addressed.

    "The key fundamental sector is obviously power and that's where you are are going to get the multiplier effect, that's where all of these associated and allied industries will be able to deliver more competitiveness internally and it will enhance an increased global competitiveness," Hubert Danso said.
    Meanwhile, analysts say the appeal of acronym investment - putting money into small groupings of markets like BRIC and MINT, is fading. Fund managers say such groupings do not take into account different stages of development of the countries involved and risk sidelining other promising markets. The groupings have also frequently suffered from disappointing performances of their listed companies, the main target of foreign investors.
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