E-Financial
McKinsey Says Nigeria’s Top-20 Global Economy Quest Possible in 2030
In spite Nigeria been Africa’s most populous country and its largest economy, yet it is little understood outside the region – and its rapid economic development has been overshadowed by global coverage of recent terrorism incidents.
However, a new report from the McKinsey Global Institute (MGI) looks beyond the country’s immediate challenges to its longer-term potential.
The report, “Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy”, finds that with the right reforms and investments, Nigeria can become one of the world’s leading economies by 2030.
The report shows that Nigeria has the potential to expand its economy by roughly 7 percent per year through 2030, potentially 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.
Its consumer class could number 160 million people by 2030, and 70 million citizens could be lifted out of poverty.
“Nigeria has extraordinary advantages for future growth, including a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population,” said Reinaldo Fiorini, director and location manager of McKinsey’s Nigeria office.
The findings are based on analysis of five major sectors:
On Trade, it shows that consumption could more than triple, rising to $1.4 trillion a year in 2030, making trade the largest sector of the economy.
Agriculture entails the sector, currently the country’s largest, could more than double to $263 billion by 2030.
Infrastructure- Total infrastructure investments could reach $1.5 trillion through 2030.
While manufacturing shows that if Nigeria reaches its full potential, manufacturing could have a four-fold increase in output by 2030, to $144 billion a year.
In oil and gas, with the right reforms, the GDP contribution of the oil and gas sector could rise to $108 billion per year from $73 billion now; natural gas output could grow by 6 percent a year, adding $13 billion to GDP by 2030.
However, the report emphasizes that Nigeria will need to take concerted action on several fronts if it is to achieve its full potential for growth and translate economic progress into rising living standards and poverty reduction.
These include improving delivery of government services; re-prioritizing public spending towards programs that drive development; attracting fresh investment; and capitalizing on global trends such as rising demand for resources and the spread of the digital economy.
“Nigeria could potentially triple its GDP by 2030,” said Acha Leke, a director in McKinsey’s Nigeria office. “This adds up to a huge opportunity for inclusive growth that should not be missed.”
The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions.
The partners of McKinsey & Company fund MGI’s research; it is not commissioned by any business, government, or other institution.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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