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Again, Nigeria Tipped To Be Economic Giant

Posted: Apr 8, 2016 at 3:00 am   /   by   /   comments (0)



*Classified In New Emerging Markets Group, NIMPTS


Nigeria has once again been classified in a new emerging markets group comprising it (Nigeria), Indonesia, Mexico, the Philippines and Turkey, NIMPTS.

The NIMPTS are tipped to be economic giants of the future, thus providing exciting growth opportunities for consumer goods manufacturers, according to Euromonitor International, authors of the new study, ‘New Emerging Markets: Nigeria, Indonesia, Mexico, the Philippines, and Turkey’.

According to Euromonitor International, with growing economies, rising incomes and young, expanding populations these five emerging markets offer a wealth of opportunities for marketers facing stagnant demand elsewhere.

This is the third classification of emerging or frontier economies with huge potential having Nigeria in the mix.

Jim O’Neil of Goldman Sachs had coined the N-11 group of fast growing economies comprising Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea and Vietnam after which Fidelity Investments, a Boston-based asset management firm coined the MINT, which has Mexico, Indonesia, Nigeria, and Turkey as members.

Commenting further on the characteristics of the NIMPTS, Euromonitor International says: “They are far from homogenous, each with its own advantages and drawbacks…(they) have entered a rapid growth phase and therefore provide exciting growth opportunities for manufacturers of a wide range of consumer goods and services.”

The report said that the NIMPTS markets have a number of points in common but also display some stark differences. For instance, their economies are very different in size, with Mexico’s GDP being more than four times that of the Philippines in 2013. All five economies performed well over the review period.

Indonesia and Nigeria showed the strongest real GDP growth between 2008 and 2013, averaging 6 percent, followed closely by the Philippines (5 percent), according to the report.

Decelerating GDP in Nigeria for the out-gone year at 2.22 percent may suggest the Euromonitor classification on the GDP criterion.

A negative factor among the NIMPTS is they are all characterised by varying degrees of political instability. All five countries have suffered for several years from a combination of ethnic tensions, anti-government protests, drug-related violence and national insurgencies.

“These markets offer promising long-term potential for investors, though each has a number of hurdles to overcome to make them more attractive in the short term. These include poor infrastructure, high levels of corruption and huge informal sectors.

“Widespread poverty and income disparity are also features of all five markets, creating a huge wealth gap between rich and poor. Nevertheless, a new middle class is expanding, due to social reforms and wealth created by economic progress trickling down to reach more consumers. While smaller than their BRICS counterparts (Brazil, Russia, India, China, South Africa), the NIMPTS countries have similar levels of purchasing power on a per capita basis. In 2013, Mexico and Turkey recorded the highest per household disposable incomes of the five markets, at US$32,282 and US$29,818, respectively, while Indonesia ranked lowest with a per household disposable income of US$8,044. Indonesia made by far the fastest progress over the review period, as economic growth, low unemployment and high commodity prices led to a progressive rise in earnings and boosted consumer confidence.

In terms of class structure, most NIMPTS consumers are still classified as social classes D and E (with gross incomes of up to 100 percent of the average). Combined, these two classes represented more than 60 percent of populations aged 15+ years in all five markets. Unemployment levels vary substantially between the NIMPTS markets, from just 5 percent in Mexico to 23 percent in Nigeria.

However, what all five have in common is very large informal sectors, which distorts employment figures and makes for low wages and poor job security. The female employment rate is fairly low in all markets, ranging from just 29 percent in Turkey to 53 percent in Indonesia. This is partly for religious and cultural reasons, as greater prominence is given to the female roles of homemaking and motherhood in these countries.

The NIMPTS, the report observes, are all major suppliers of workers to other parts of the world. This has caused a brain drain in some cases, as many educated citizens seek better opportunities in developed markets. Mexico and the Philippines are the largest labour-exporting countries in the world. As a result, remittances have long been a major form of support for private consumption in these markets, totalling US$28.4 billion in the Philippines and US$24.2 billion in Mexico in 2014. These five markets have large populations, ranging from 75.6 million in Turkey to 247.2 million in Indonesia.

They all experienced population growth over the review period, with Nigeria’s increasing at the highest rate of 13 percent. A notable commonality among the NIMPTS is that they all have relatively youthful demographics.