Nigeria, one-third larger than Texas and the most populous country in Africa
Its GDP has recently overtaken that of South Africa.
The country is gradually transitioning from military to civilian rule, although with violence in northern part of the country. 75% in north and 50% in rest of the country is unbanked.
Current population is 170 million (7th most populous country in World). Per capita income is 3000 USD ( India is at 1500 USD)
Fertility rate is 6 births per woman.
It is on track to be 3rd most populous country of the world by 2050 after China and India overtaking USA.
Jumia.com, Konga.com are equivalents of flipkart.com, growing rapidly.
Nigeria gained independence in 1960 and joined the Commonwealth. Most of the history has been marked by Army rule. In 80s Nigeria was considered outstanding democracy. In 90s UN categorised human rights and political problems as terrifying.
Boko Haram (literally translates to “Western education is sinful.”) were peaceful for initial seven years from 2002 – 2009, in July of 2009 when the uprising turned violent and deadly. Problems with morale and organisation of Army are grave to dominate over Boko Haram even as at 2014, government is seeking western help to upskill army.
1/3rd of Nigerias 36 states are governed by Sharia Law.
95% of Nigerias export and 75% of Government revenues depend on oil. (Oil price in 2014 down by 35%). This will have negligible impact on social life of most citizens, as most of the money is stolen.
Nigeria, like most of Indian states suffers from “resource curse” despite being oil rich, with only a small minority being rich while 75% of the country lives in extreme poverty.
For over two decades Nigeria has been repressed and mostly unfree as the states intrudes heavily into private sector development.
Top Individual tax rate is 24% while corporate tax rate is 30% ( much better than Bangladesh’s 42%)
Nigeria is amongst the countries which have “decades of catching up to look forward to” and part of Next 11 (http://en.wikipedia.org/wiki/Next_Eleven) and 3G (Global Growth Generators) countries (http://en.wikipedia.org/wiki/3G_%28countries%29 ).
Market Cap to GDP ratio (vital for long term investing) is more than attractive at 12% (115% US, 85% India)
Agriculture contributes 40%, while services 30% to the economy.
Nigeria has grown as fastest pace in the world post 2008 ( only after China, but before India) but terrorist attacks ( another persons freedom fighter) have shaken the country. Security is a risk. GDP has grown every year over 6% since 2003 !
Nigeria needs a few breaks such as this 30 Billion USD investment (Nigeria needs a few breaks) and its own equivalent of India’s Narendra Modi!
I am usually astounded to read some mid cap annual reports with statements like “We cannot rely on national grid, we need to generate our own electricity”. Capital is really scarce and it could earn 20% returns on equity for prolonged periods.
Opportunities for value investors are hard to ignore even though equity markets may have to cross mountain of misery and hills of headache ( not just Peter Lynch’s Wall of Worry).
SOURCE: Long Term Equities – Read entire story here.