The World in 2050
Will the shift in global economic power continue? PwC 29
This is in contrast to the generally strong performance of leading emerging markets on GDP growth,
communications technology, rising education levels and increased average life expectancy. This suggests that
making these deeper institutional advances will take a long time, even if short term macroeconomic imbalances
can be addressed.
Of course, these issues do not just apply to the E7, but also to emerging economies more generally, not least in
Africa, which has huge potential but also faces significant challenges to realise them. For example, in the case of
South Africa, it has great opportunities such as a growing middle class population, an increasingly educated
population (which could lead to a more productive workforce), a growing tourism industry and a relatively
strong finance sector. However, it also faces major challenges, such as increasing labour market restrictions,
rising income inequality, and power shortages due to a slow build-up of new capacity to meet increased energy
demand.
Other African countries face similar kinds of opportunities and challenges, as illustrated by the discussion of
Nigeria in Box 6 below.
Box 6: Commentary on long-term growth projections for Nigeria
Over the past decade, Nigeria has boasted superior economic growth
and, with the right reforms and
investments, Nigeria could become one of the world’s leading economies by 2030, with further progress by
2050. Nigeria’s potential advantages for future growth include a large consumer market, a strategic geographic
location, and a young and highly entrepreneurial population.
In April 2014, the Nigerian National Bureau of Statistics released the numbers for Nigeria’s GDP rebasing,
which had not been conducted since 1990. Since the previous study, it is estimated that the Nigerian economy
has grown by 90%, with a national GDP of around US$510 billion in 2013. This makes Nigeria Africa’s largest
economy, overtaking South Africa, and the 20
th
largest economy in the world according to IMF estimates
for 2014.
According to our long term projections, Nigeria could sustain average growth of around 5-6% per annum in the
long run, following projected growth of around 6-7% in the rest of this decade, assuming broadly growth-
friendly policies are pursued. While foreign investment has in absolute terms long been focused on the oil
sector, portfolios are becoming increasingly diversified, moving towards the power, agriculture and mining
areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West.
The World Bank’s 2014 'Doing business in Nigeria’ report recorded 34 significant improvements in the ease of
doing business since 2010. The Federal Government’s focus on infrastructure development (e.g. power, roads,
and rail) is expected to support further growth of the economy. Other transformation programs include power
sector reform and the Pension Reform Act 2014.
There is clear upside potential for five major sectors of the Nigerian economy:
Retail and wholesale trade. Based on an expanding consumer class in Nigeria, retail and wholesale
spending could rise strongly over the next few decades. This could make this the largest sector of the
economy in the longer term and provides a particularly good opportunity for producers of fast-moving
consumer items such as juices, which could grow by more than 10% per year up to 2030.
Agriculture. The sector, which is now the largest at 22% of GDP, could more than double in size by 2030.
This would require raising yields through greater use of fertilizer, seeds, and mechanized implements,
shifting the crop mix to more valuable crops and increasing the amount of land under cultivation.
Infrastructure. On average, the value of a nation’s core infrastructure—roads, railways, ports, airports,
the electrical system—is about 70% of GDP; in Nigeria, core infrastructure is estimated to be only around
35% – 40% of GDP. Its road network lags well behind other emerging economies such as China and even
India. On a per capita basis, Nigeria has one-third the residential buildings of Indonesia and one-sixth of
the commercial space. Between core infrastructure and real estate, total infrastructure investments in
Nigeria could be as high as US$1.5trillion between 2014 and 2030.
World Bank: Ease of Doing Business Report, 2014