Nigeria and India: Leveraging on the Economies
A prominent common theme that India and Nigeria share is the theme of demographics. Nigeria’s population is only about one seventh of India’s – it stands at 178 million to India’s 1.28 billion – but that figure still means that Nigeria has the seventh largest population in the world. It is by some distance the most populous country in Africa, and accounts for a sixth of the continent’s population. India is the second most populous country in the world. Such huge populations pose opportunities as well as challenges for governments. India and Nigeria both have federal systems of government. The chief ministers of India’s 29 states and the governors of Nigeria’s 36 states have considerable leeway to govern independently of the federal governments, and this has certainly diffused some political problems.
India is the world’s largest democracy with a population of over a billion. This large population base offers a large pool of skilled manpower across various sectors. With the advent of the new government last year, the Indian investor sentiment has been riding high. India’s GDP grew over 7 per cent01 in the last year. International Monetary Fund has projected that India will outpace China during the current fiscal year. The government also intends to bring down the fiscal deficit to 3.9 per cent02 of GDP in FY 2015-16. The government is backing its development agenda with a series of programs that are expected to set pace for the country’s growth. The government is confident that the reforms that it has on agenda may help grow the economy at even higher growth rates. India continues to remain amongst the fastest-growing economies. According to UNCTAD’s World Investment Report 2015, India ranks third among most prospective host economy for 2015 to 2017. There are several announcement of multi nationals making huge investments in India. With FDI now being allowed across sectors, potential for investments exists in sectors such as biotechnology, retail, real estate, roads and highways, power, telecommunications, civil aviation, special economic zones, healthcare among others.
Another aspect of India and Nigeria’s colonial history that remains relevant to their current economic and political environments is the fact that the colonising power, Britain, never made industrialisation a priority. In colonial times Nigeria and India were on opposite ends of the British Empire’s economic value chain: Nigeria served mainly as a source of raw materials, while India’s role was as a massive market for goods manufactured in the industrial cities of Northern England. But the outcome was the same: in both countries the secondary sector was neglected.
Divergent growth rates mean that the demographic challenges faced by India and Nigeria will become increasingly different in future. While even a low growth rate in a huge population means a fairly rapid increase in total population – India’s current growth rate of 1.3 percent adds more than 15 million people a year to its population – the narrowing of the base of the population pyramid implies a shrinking of the dependency ratio. India’s workers will have fewer children to support, proportionally, than will Nigeria’s.
Bilateral trade and investment
Economic, trade and investment relations between India and Nigeria have improved significantly following the end of military rule in Nigeria during 1998-99. The sharp decline in the US’s oil imports from Nigeria during especially 2012-13 resulted in India overtaking the States as the biggest buyer of Nigerian oil. In actual fact, media reports highlight that Nigeria represented India’s largest oil supplier during the month of May 2015, a position usually occupied by Saudi Arabia. According to the Nigerian National Bureau of Statistics (NBS), India was the African country’s main trading partner during 2015 Q1.
India’s imports from Nigeria have risen sharply from USD5.7 billion in 2006 to roughly USD15.7 billion in 2014, according to Trade Map. Crude oil accounts for more than 98 percent02 of India’s total imports from Nigeria. Meanwhile, Indian exports to Nigeria rose gradually during the 2006 to 2012 period, but have stabilised since then. India’s exports to Nigeria reached USD2.902 billion in 2014, according to Trade Map. Nigeria mainly imports vehicles, pharmaceutical products, machinery and electrical equipment from India. Nonetheless, mainly as a result of Indian demand for Nigerian crude oil, the Asian giant habitually records a fairly large bilateral trade deficit with Nigeria.
Both India and Nigeria have attracted healthy levels of foreign investment in recent years. According to the United Nations Conference on Trade and Development (UNCTAD), Nigeria’s inward FDI stock has increased gradually from USD31.2 billion in 2006 to USD82 billion in 2013. Foreign investment in India has increased at a faster rate in recent years. UNCTAD estimates that India’s inward FDI stock increased from USD70.9 billion in 2006 to USD226.7 billion in 2013.
The majority of India’s inward FDI usually flows from Mauritius and Singapore. Turning to outbound investments, Nigeria’s outward FDI stock has increased from USD0.6 billion02 in 2006 to USD8.6 billion02 in 2013. Again, the same picture for India reflects a steeper upward trend. India’s outward FDI stock increased from USD27 billion in 2006 to USD119.8 billion in 2013, according to UNCTAD.