NIGERIA, though a rich natural-resource country, has high rates of poverty and income inequality. With a large population of 174m and a current GDP of $580bn, Africa’s largest sub-Saharan economy falls in the lower middle income group, according to the World Bank.

Its per capita income based on purchasing power parity is $2710. Over 60pc of the population lives below the poverty line of $1.00 per day. Health care is poor and costly, resulting in many deaths from curable diseases. Education is unaffordable for many.

The Nigerian economy is growing at an average of 7pc annually, accounting now for 35pc of sub-Saharan Africa’s GDP, with low fiscal deficit and public debt. Nigeria’s total public debt stock, according to the Debt Management Office, stood at about $67.73bn as of December 2014. External debts reached an all-time high of $9.711bn in the fourth quarter of 2014.

The government has been implementing far-reaching transformational policies aimed at diversifying economic base and achieving sustained, inclusive economic growth over the last three years. It has achieved several important milestones in its economic transformation agenda. But hit hard by a steep drop in oil prices and political uncertainty, the country’s GDP growth slowed to 6.2pc in 2014 from 6.5pc in 2013. The finance ministry now sees the economy growing 5.5pc this year. Oil accounts for the bulk of government revenue in Nigeria, but global crude prices have almost halved over the last six months.

Mobilising more non-oil revenue is critical to Nigeria’s future growth. According to the IMF report, oil revenue will be down 2pc in 2015. The Fund projects Nigeria’s 2015 economic growth at 4.8pc, down markedly from last year’s 6.2pc. Inflation is seen rising to 11.5pc in 2015 from 8pc in 2014. The oil turmoil has seen the naira lose more than 20pc against the dollar since the middle of 2014.

However, increasing demand for cocoa is seen as the new opening for economic diversification. Cocoa scarcity has provided Nigeria with an opportunity to raise its farm exports.

While Nigeria produced 240,000 tonnes of cocoa last cocoa season, its minister of agriculture hopes production to jump to 800,000 tonnes per annum in the next couple of years, to generate revenue of about $2.3bn from cocoa.

Ethiopia

ETHIOPIA is the second-most populous country and fifth biggest economy in sub-Saharan Africa and yet it is one of the world’s poorest countries. With a population of 94.1m, growing at an annual rate of 2.6pc, its GDP per capita income is $1380 based on purchasing power parity.

According to the World Bank, its current gross national income of $47.5bn categorised Ethiopia amongst the low income group. The government hopes to attain middle income status by 2025.The economy experienced strong and broad based growth , averaging 10.9pc per year during 2004/05 - 2012/13 compared to the regional average of 5.3pc.

Expansion of the services and agriculture accounted for most of this growth, while manufacturing sector performance was relatively modest. The country is running a grand five-year Growth and Transformation Plan (GTP) 2010-2015 which focuses on strengthening the manufacturing sector with a view to transform Ethiopia into an industrial hub in the region.

Ethiopia has increased production of sugar, textiles, leather products and cement in recent years. Although the country has geological potential for the discovery of new, sizeable oil, gas and mineral deposits, most of its extractive industry is still in its infancy and not the key drivers of the country’s growth. Currently, there is one large-scale gold mine in operation. Gold makes close to 100pc of mining exports and most of it, about two third, comes from artisanal mining.

Economic growth over the past one decade reduced poverty, in both urban and rural areas--- by 33pc since 2000. From 56pc of the population living below the poverty line in 2000, the ratio came down to 38.7pc by 2004-2005 and then slipped further to 29.6pc in 2009-2010.

The target is to reduce this further to 22.2pc by 2014-2015. According to the IMF, Ethiopia’s recent macroeconomic performance continues to be strong, with robust economic growth supported by higher agricultural production, and large public sector and foreign direct investments.

The 2014/15 budget has targeted fiscal deficit at 3pc of GDP and monetary policy is geared toward maintaining inflation in single digits. The public debt to GDP ratio is expected to rise, owing to investment projects under the GTP. The GTP, which will expire in 2015, forecasts an 11.2pc growth. Ethiopia is amongst the fastest growing non-oil economies in the world but still relies heavily on foreign aid. The IMF projects GDP growth at 8.5pc for 2014-2015.

Ethiopia is building the largest hydro-electric dam in Africa. The $5bn Grand Renaissance Dam is being funded entirely by the government and its people, without any foreign investment. While 20pc of the project is to be financed from bond offerings to Ethiopians, the remaining 80pc is to come from tax collection.

The 170 meter tall dam is on track for a 2017 opening, with 40pc of the work already completed. When operational, the project will generate around 6,000MW of electricity for both domestic use and exports. The World Bank estimates Ethiopia could earn $1bn a year from electricity exports. So far, Ethiopians at home and abroad have contributed about $350m.

Published in Dawn, Economic & Business March 16th , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play