Nigeria currently ranks 41st in the international GDP rankings, according to the IMF’s World Economic Outlook database: its economy, largely fueled by oil, is estimated at $165 billion. This marks a fourfold increase in ten years from just $36 billion in 19971. Progressive policies undertaken in the years after a democratically elected government was installed in 1999 claim credit for this remarkable increase. Nigeria’s Economic Policy, 1999-2003, is specifically to be commended for incorporating far-reaching measures that have helped enable Nigerians to have access to technology and education.

A vigorous divestment program involving public sector units in oil marketing, communications, and port operations boosted private sector participation and led to the creation of jobs and ancillary businesses. The spirit of the economic reforms became even more evident when oil prices were liberalized in 2003 and four national refineries were privatized. However, these and other initiatives have not been entirely successful, and Nigeria remains “information poor” in the context of the use of computing power in the industrial process. In addition, and although digital networks have emerged in recent times, the communications infrastructure continues to suffer from massive deficits.

For average Nigerians, what has improved in recent times is access to technology, and a new generation of start-up entrepreneurs are harnessing the power of the Internet to start model companies and achieve global partnerships. While their contribution as foreign exchange earners is minor in terms of the Nigerian economy, the importance of their innovation can hardly be overstated, in the context of Nigeria’s past economic stagnation. What is optimistic for the government and Nigerians in general is that such stories of Nigerian business successes are beginning to gain frequency. Although the pace of progress has been slow, the country is definitely on the right track when it comes to promoting business development.

Nigeria is currently the United States’ largest trading partner in sub-Saharan Africa. In 2008, the US imported $38 million worth of Nigerian products (mainly oil). The figure is up from $32.7 million in 2007 and indicates a growing US dependence on Nigerian oil, which currently accounts for almost 11% of its import needs.

The paradox

The ‘Nigerian paradox’ is an oft-cited economic phenomenon that describes the condition of extreme poverty and abysmal rates of human development in a country of abundant natural resources that earns billions in annual income in petrodollars. The economic decline of Africa’s most populous nation began just after the oil boom of the 1970s, when political corruption and non-inclusive policies plunged the vast majority of Nigerians into abject poverty. Subsequent decades of civil and political unrest and the continuation of outdated policies made Nigeria a virtual untouchable for international investors. Over the years, the deteriorating security situation was paralleled by a simultaneous decline in infrastructure that killed existing businesses and made it impossible for new ones to emerge. The corresponding human cost was even more ominous as the country plunged into decrepit poverty and economic despair.

Because of the deep fissures in its history, Nigeria’s exit from a troubling past has not been an easy one. The recent turnaround in some of its fortunes has come at a high price, and the country continues to lag behind in vital indicators. A historic overdependence on oil has cut through local agriculture and industries and created massive economic imbalances that are still far from being corrected. Rampant unemployment and inflation have created a climate of youthful unrest that has precipitated violent militancy in the oil-rich but volatile Niger Delta region, along with rising levels of organized crime. Severe infrastructure deficiencies, especially in energy, roads, and communications, widened the rural-urban divide and caused large-scale migration to the cities. Official indifference and inhibitory policies have spawned a gigantic informal economy that continues to grow and operate outside the realm of government regulation despite furious policy reorientations in recent years.

Remarkably, this unorganized sector currently contributes 65% of Nigeria’s GDP and accounts for 90% of all new jobs.

The best

There have been a number of enhancements that encourage business growth. They include:

* Entrepreneurs have more control over their lives and have gained social and financial security for their families.

* The Nigerian government has now made it possible for Nigerian products to be shipped to Europe and the United States.

* Nigerian entrepreneurs are offered tax incentives to promote further business development.

* Modern technology is making its way into Nigerian culture, bringing the country closer to self-sufficiency in the technology sector. However, it is an ongoing process that is highly dependent on government assistance.

Opportunities

Established in December 1999, the Small and Medium Enterprise Capital Investment Scheme (SMEEIS) instructed all banks in Nigeria to set aside 10% of their pre-tax profits to invest in small and medium-sized enterprises. This was to present an opportunity for those looking to go into their own business. Unfortunately, as of 2006, only 26% of this funding had been used.

The Small and Medium Scale Industries Development Agency of Nigeria (SMEDAN) is another important player in the country’s efforts to boost entrepreneurship. Although it is still a fairly young organization, it is making a positive difference.

Skills and Ideas Development Initiatives (SKIDI) is an NGO that helps entrepreneurs realize their dreams in Nigeria so they can gain the freedom they desire. There is a specific focus on rural and suburban Africa, especially as rural areas have seen more poverty. The poverty rate in rural areas of Nigeria was 40% in 2001, compared to 35% in urban areas where more business is prevalent.

Closing that gap is just one of many challenges on Nigeria’s path to prosperity.