Nigeria Seen by McKinsey Among World’s Top 20 Economies by 2030

Lagos

Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current populations of France and Germany, according to McKinsey & Co.

Africa’s biggest economy may expand about 7.1 percent a year through 2030, boosting gross domestic product to $1.6 trillion, possibly pushing it above Netherlands, Thailand and Malaysia, the New York-based company said in a report today. About 60 percent of Nigeria’s estimated population of 273 million by then may live in households earning more than $7,500 a year, fueling a consumer boom, McKinsey said.

“Nigeria is poised to become a major economic force,” McKinsey said in the report. “Nigeria has a huge endowment of resources, a growing consuming class, and rapidly growing trade and consumer sectors to propel growth.”

As Africa’s largest oil producer with a population of about 170 million, Nigeria has consistently posted growth rates in excess of 4 percent over the past decade. That’s spurred foreign investors such as Unilever Plc (ULVR), Nestle SA (NESN) and Shoprite Holdings Ltd. (SHP) to expand operations despite an upsurge in violence by militants in the north.

Based on McKinsey’s growth estimates for the economy, annual sales in consumer goods could more than triple to $1.4 trillion by 2030 from $388 billion currently, it said.

While oil accounts for 70 percent of government revenue and most of Nigeria’s export earnings, its share of the economy has waned. After the statistics office overhauled its GDP data in April, oil’s contribution to economic growth between 2010 and 2013 was 5.1 percent, compared with 14 percent for manufacturing and 20 percent for trade, according to McKinsey.

Reducing Poverty

“If Nigeria reaches its economic potential, the retail and wholesale trade industry could grow 7.1 percent per year,” according to the report. “By 2030, it would likely become the largest contributor to Nigerian GDP, surpassing the agriculture sector.”

In order to achieve its potential, Nigeria’s government needs to address poverty, lower the cost of basic services, such as housing and energy, expand electricity supply and boost productivity in farming, McKinsey said.

The most recent poverty survey by Nigeria’s statistics agency, published in 2012, showed that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004. Life expectancy is 54 years, eight years lower than in Ghana and 20 years below Brazil, according to McKinsey.