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Nigeria ranks among least performing economies

Nigeria ranks among least performing economies

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Ife Ogunfuwa

Nigeria and 10 other emerging countries have been ranked among the non-outperforming economies in a new report by McKinsey Global Institute, the research arm of McKinsey and Company.

Other non-outperforming economies as identified by McKinsey are Argentina, Brazil, Egypt, Mexico, Pakistan, Poland, Russia, Philippines, South Africa and Turkey.

The research published on Wednesday, examined the long-term economic track record of 71 developing economies and identified China and India as the leading outperformers.

These two economies, according to the report, accounted for almost two-thirds of the world’s Gross Domestic Product growth and more than half of new consumption over the past 15 years.

The study, which aims to identify outperforming countries that have experienced strong and sustained growth, identified other outperformers as Hong Kong, Indonesia, Malaysia, Singapore, South Korea and Thailand.

The report stated, “Collectively, the outperformers have been the engine for lifting almost one billion people out of extreme poverty, helping to meet a key United Nations Sustainable Development Goal.

“Indeed, rising prosperity in these countries has not just reduced poverty, but also enabled the emergence of a new wave of middle and affluent classes.”

Though the report recognised that Nigeria experienced strong periods of growth between 1965 and 2016, McKinsey said it did not make the cut because its growth was volatile and was followed by sharp downturns following the booms.

The research named 18 countries that not only showed exceptional average economic performance, but also demonstrated consistency by exceeding the benchmark growth rate in at least three-fourths of the 50 and 20 years, respectively.

In the sub-Saharan region, only Ethiopia was named among the recent outperformers out of the 15 countries examined.

Analysts attributed the poor performance in this region to poor infrastructure and lack of diversity in export.

“In general, connectedness to other regions is poor and exports from countries in sub-Saharan Africa lack diversity. For example, more than 90 per cent of goods exported from Nigeria and Angola are oil-related. Improving infrastructure and continuing to build out government effectiveness to attract foreign investment remain important opportunities for the region,” the report stated.

Unlike Nigeria, findings of the research showed that other resource-driven economies were ranked as outperforming countries because of their savings culture and huge investments.

It added, “Domestic savings in Azerbaijan, Kazakhstan and Turkmenistan average 56 per cent of the GDP, and investment rates average 33 per cent of GDP, compared with Nigeria’s 24 per cent savings rate and 16 per cent investment rate.

“Elevated savings and investment rates have given these economies an average capital contribution to annual GDP growth of 5.8 per cent, compared with Nigeria’s 2.8 per cent and Russia’s one per cent.”

According to analysts at McKinsey, the SSA can record sustained growth if there is manufacturing, exports and better governance is intensified.

“Most sub-Saharan economies still have large opportunities to generate employment and increase productivity in the manufacturing sector, as their current manufacturing share of employment is low,” it added.

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