Nigeria: MINTed beyond the BRICs?

Bayo Adekanmbi

Introduction

This paper explores and evaluates the relevance and importance of Nigeria’s inclusion

within the acronym MINT, which represents four nations that have been identified by Jim

O’Neil of Goldman Sachs as being those most likely to reach developed nation status in the

next decade. Insights and trend on national classification, Nigeria’s potential and essence of

the ongoing GDP rebasing were review in broader academic and macroeconomic context.

The concept of national classification: rationale, basis and relevance

There are numerous methods of classifying countries and of categorising them in terms of

their socio-economic positions and these include classification by factors such as the extent

of or lack of potential to grow economically, the anticipated pace of that growth, the

potential to dominate a region etc. Some are done in a static manner, reflecting the position

that the nation holds now, for example the World Bank (2014) categorises nations based on

their gross national income (GNI) per capita and there are four categories, namely low

income ($1,035 or less), middle income ($1,036 - £4,085), upper middle income ($4,086 -

$12,615) and high income ($12,616 and higher).

The United Nations uses slightly more sophisticated criteria for their classification of

nations, for example those that are least developed, those that are landlocked developing

countries, small island developing states, transition countries, developed regions and

developing regions (Pasquali and Aridas 2012). The OECD has two classification groups

based on “maximum repayment terms and maximum weighted life,” with a smaller group of

31 developed nations in one category and 184 less developed nations in the second (OECD

2011) as well as two further sets of classifications, one which lists nations that are and are

not eligible for “tied aid and partially united aid” and a third categorisation, which lists one

group of nations that are high income OECD countries and another which contains high

income euro area countries (OECD 2011).

The classification of nations is not a new phenomenon and the various ones used sprang

from a now less used system of classification which highlighted first world countries

(advanced nations), second world countries (the former Soviet Union and its allies), third

world countries (poor and non aligned nations) and fourth world groups (that could either

refer to nations that were in extreme poverty or to stateless groups such as Aboriginal

groups) (Pasquali and Aridas 2012). Another more recent trend is to classify nations by

potential or in terms of some common characteristic regarding the likelihood of growth or

even of decline.

Thus, we have nations that are (or have been) perceived as having the potential to be

regional or even world economic super powers (BRIC – Brazil, Russia, India and China or

even BRICS, which includes South Africa), those who may form a following wave of less

dominant but nonetheless potentially strong future developed nations, for example CIVETS

(Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) (Allen 2011) and PIGS

(Portugal, Italy, Greece and Spain – Ireland constitutes a second ‘I’). Each of the nations

within the groups are considered to have commonalities, for example BRIC countries are

believed to have the resources and populations to rival the US, CIVETS nations all have

young populations, diverse economies and “sophisticated financial systems” (Allen 2011)

while PIGS are all peripheral members of the euro whose economies are not aligned with

those of the core euro nations and have therefore suffered from not being able to conduct

their own monetary policies.

Further groups include MIKT (or MIST), which includes Mexico, Indonesia, South Korea and

Turkey, VISTA (Vietnam, Indonesia, South Africa, Turkey and Argentina) and Next Eleven

(Bangladesh, Egypt, Indonesia, Iran, Mexico, Pakistan, the Philippines, Turkey, South Korea

and Vietnam). Apart from the fact that some nations appear in more than one group and

that at least two of the acronyms were first articulated by one person (Mr Jim O’Neil of

Goldman Sachs), one question that rises is what the underlying rationale and reason for

these groupings are? In a general sense, the rationale is based in the potential for economic

growth in the classified nations (others than PIGS) when compared with, for example, the

five currently richest nations (the US, the UK, Germany, Japan and France), whose potential

was severely undermined due to the financial crisis and its aftermath (Sledzik 2011).

Support for such a belief comes from a noted macroeconomic theory developed by Solow

(2000) in which it was argued that provided certain conditions were met such as sufficient

capital accumulation, a sufficient pool of labour and stable institutions and politics, a less

developed nation de facto had the means to grow quicker than a developed one and

ultimately convergence would occur. Yet further support can be found from the field of

international relations and international political economy theory, which holds that it is in

the interests of nations that are less developed to trade and do business with each other

rather than with those that are more advanced (because they will be exploit their advanced

positions) (Jackson and Sorenson 2010). Therefore, it is argued, those developing and

emerging nations with similar potential and with similar resources should be grouped

together and their progress accordingly analysed.

The evolution and the confusion of national classification: “the big lie, or the big ploy?”

However, there may be some ways in which the rationalisation and classification of

countries into blocs of economic optimism does not add up, indeed that there may be more

sinister and self-interested reasons for the acronyms. One point in this regard is that, led by

O’Neil at Goldman Sachs, the now numerous groupings have been initiated by staff at

investment banks and these institutions have an interest in tempting investors towards

potential opportunities away from the traditional ones in which they invest their money. As

Suryodiningrat (2014) puts it, “despite the weight of research and intellect behind them,

these catchy phrases were largely marketing ploys, presentational tools to ease investors

into parting with their money in lands they were unaccustomed to.”

Using Indonesia and an example of a commonly cited member of these selected nations,

Suryodiningrat (2014) notes that there are a number of reasons why that nation is unlikely

to be a beacon of growth, and cites one in particular. This is that while it has appropriate

levels of procreation and while most of its population is potentially economically active, it

lacks education, to the degree that this factor alone would limit its growth potential. To

substantiate this point, Suryodiningrat (2014) notes that Indonesia is currently last in a list of

50 countries with regard to the standards at its universities, that its students were placed

second to last among 65 countries in their abilities in maths, science and reading and that

there is relatively little room for improvements via further investment in education as this

sector already consumes in excess of 20 per cent of the state budget, with teacher salaries

accounting for most of it. This is hardly a scenario for exponential future growth.

BRIC and then BRICS

It is now nearly 13 years since the acronym BRIC was articulated by O’Neil and it is easy to

see why Brazil, Russia, India and China (later South Africa) were separated from other

emerging nations. Based on their sheer size, demographics and endowment with natural

resources, these nations have the advantages that the United States has had since it

became one federated entity and the political and institutional reasons which may have

hindered their previous development have now, it can be argued, been largely removed.

The potential of the four BRIC nations can be shown by the estimate that they have a

combined population of approximately 2.8 billion people, cover more than a quarter of the

land mass of the world and already account for more than 25 per cent of the World’s GDP

(Global Sherpa 2014).

Between 2000 and 2008 the global share of output of the BRIC nations rose from 16 to 22

percent, they accounted for 30 per cent of world economic growth in that period and China,

India and Brazil more than doubled their spending on research and development between

2002 and 2007 (Global Sherpa 2014). In recent years, however, the sustainability of such

growth has been brought into question, with Brazil falling to an estimated real GDP growth

of 0.9 per cent in 2012, Russia to 1.8 per cent in the same year and India to a little over 4 per

cent. Reasons cited for this include that Brazil (and to an extent Russia) have become

increasingly prone to ‘Dutch Disease,’ a phenomenon which means that an over-reliance on

commodities (oil and gas) can lead to inflated currency exchange rates and wages, which in

turn has a negative impact on other sectors of the economy, particularly manufacturing

(Badkar 2013). Attempts at boosting the economy by cutting interest rates have led to the

unwished for return of inflation, a traditional problem with the Brazilian economy.

Apart from its dependency on oil, gas and other commodities, Russia’s corporate sector is

still “dominated by state-run companies” (Badkar 2013) and it has still to deal with this as

well as other institutional and structural problems. In a similar sense, India has not dealt

with the overbearing role of the state, very restrictive labour laws and has widening “fiscal

and current account deficits” (Badkar 2013). Although China has dipped slightly in terms of

economic growth, it is still around the 7 per cent mark and the general view is that it is

succeeding in transforming from an export led to a domestic consumption based economy.

Thus, it can be suggested that the BRIC nations, with the likely exception of China, have

failed to live up to the requirements and the incremental changes and reforms that are

necessary for the levels of sustained growth to become economic super powers. This leads

to a consideration of a more recently coined acronym, namely MINT.

The emergence of MINT

Bearing in mind the frailties that exist within the nation (discussed above), the inclusion of

Indonesia within MINT suggests that it may, indeed, be another term that is useful as a

marketing tool aimed at investors by investment banks but not necessarily a guide to

excessive economic growth and convergence with advanced countries. However, while

Turkey may have too many weaknesses with regard to inflation, a deficit problem and a

weak currency, there are aspects of the economies of Mexico and particularly Nigeria which

may be signals for genuine optimism (Wright 2014).

Three key points are made by Wright (2014) concerning the Mexican economy, namely that

it has benefitted from “market friendly reforms,” is in a very good geographical position and

is an increasingly attractive alternative to Brazil. Apart from the prospects of being Africa’s

largest economy following a forthcoming GDP re-basing (see below for a more

comprehensive discussion of this), Nigeria has managed consistent average GDP growth

since 2000 of more nearly 7 per cent and is currently going through reforms, led by a

capable finance minister and central bank governor, which are only likely to enhance this

position (Wright 2014).

Other writers, however, strike notes of caution concerning the potential of Nigeria to

consistently outperform other emerging countries by focusing on the levels of wealth

inequality that continue to exist, for example that “more than 60 per cent of the population

exist on less than $1 a day” and question the extent to which the extended wealth would

actually “trickle down to the lower reaches of Nigerian society” (Chisholm 2014).

Will Nigeria ever rise to MINT Expectations?

There are clearly differing views on the prospects for MINT nations and it is relevant to note

how the person who initiated the enthusiasm for BRIC and now MINT, Jim O’Neil, explains

the position he has taken. One important aspect of this view is the playing down of the

problem of corruption and political unrest, with the point being made that every country

suffers from this and with other problems in one form or another. This point is expanded

upon with examples from numerous nations, for example that 500 municipal lawmakers in

China stepped down in 2013 over election fraud, that South Korea has to contend with its

nuclear armed neighbour, North Korea, and that the UK is facing the prospect of Scottish

secession; that India has to deal with corruption as well as with the constant prospect of

conflict with Pakistan and that Turkey has demonstrated economic resilience despite

corruption scandals, the most recent in 2013 involving members of the government

(Elenwoke 2014).

The remainder of the prognosis provided by O’Neil and explicated by Elenwoke (2014)

effectively deals with selected comparisons and ‘why not’s,’ for example if India can elect a

successful president from a minority group (Manmohan Singh), why can’t fragmented

Nigeria? If other countries can successfully develop their R & D capabilities, why not

Nigeria? If other nations can harness the productive capabilities of their populations, why

not Nigeria? In another consideration of the opinions of O’Neil, Ohu (2014) adds one which

suggests that Nigeria, along with Mexico and Indonesia, will benefit greatly in the future

because they are all large commodity exporters. The biggest hurdle that O’Neil identified is

the fact of not having an effective power grid, which means that businesses in Nigeria have

to generate their own power. However, optimism is even expressed in this direction as

“Nigeria is now privatizing both the generation and distribution of power” (Ohu 2014).

In contrast to these optimistic views, other writers note several enduring aspects of Nigeria

which may continue to limit its potential to make the leap forward implicit in the MINT

concept. Ndibe (2014) agrees that the people of Nigeria are “extremely bright” and that the

country is “full of industrious men and women.” However, while this is and has been an

enduring strength, it does not change a belief that the way that the country is led has not

fundamentally changed and therefore, unless or until there is a change in that direction, the

economy and the mass of people in Nigeria will continue to languish – “the ‘N’ in Mr O’Neil’s

MINT will become yet another mirage unless Nigerians find a way to reverse the toxic

culture that validates corruption and venerates mediocrity” (Ndibe 2014).

Although striking a somewhat more optimistic tone, Chiakwelu (2014) also cites a number of

key necessities if Nigeria is to become a leading economic nation. These include corruption,

self-doubt and “spending over-reaching” as well as a challenge that the government must

face with regard to the youth of the nation, who must be “trained educated and fed” if they

are not to become delinquent, idle and disruptive and thereby turn the dream into another

round of demise and destruction from within. Political instability and a clear and successful

economic diversification policy that moves the nation further away from oil dependency

(Chiakwelu 2014) are also key requirements in the essential but often elusively defined mix

that will enable sustained and speedy development.

This mixture of views, perhaps reflective of lived experiences through periods of hope and

apparently inevitable despair, cannot be conclusive, as most if not all opinions of human

behaviour and societal ambitions cannot be conclusive. One aspect of the present potential

of the Nigerian can, however, be more objectively evaluated, namely the rebasing of

national GDP.

What will national GDP rebasing do?

The rebasing of the economy of Nigeria from a base year of 1990 to the use of 2010 (as the

base) may at first sight seem like a not particularly exciting exercise in updating financial and

growth records. However, such a view would overlook some very important consequences.

As we know, it is impossible to measure the value of every product or service created by a

nation or to estimate the precise values of imports and exports; therefore, indices are used

and representative samples from surveys are taken from these indices of the sectors of the

economy. If they are based in 1990, important new sectors are not represented, for

example telecommunications and film-making (This Day Live 2014). Conversely, sectors such

as agriculture, if the base year is 1990, are over-represented while the service sector, which

has grown considerably in proportional terms since 1990, is significantly under-represented.

These misalignments can, and probably have, led to policy makers making “unrealistic

projections” (This Day Live 2014). With regard to country classification, furthermore, Nigeria

may be inappropriately categorised, for example as a low income country (organisations

such as the World Bank, using a wider range of measures, for instance, classifies Nigeria as a

lower middle income nation). The extent to which Nigeria is oil-dependent is also likely to be

seen to be exaggerated when the base year is revised to 2010, to the extent that it may be

lower than the estimated 14.7 per cent of GDP in 2013 (Uzor 2013).

Alongside the likelihood that the rebasing of Nigeria’s GDP will show that Nigeria has been

Africa’s largest economy since it is believed to have overtaken South Africa in 2012 or 2013

(Wright 2014), the points made above may suggest that this practical exercise could be

more convincing even than the optimistic statements of Mr O’Neil in showing that Nigeria is

rightfully a member of MINT within the intrinsic meaning of the acronym, rather than in its

marketing-based superficiality. However, it is still important to consider the fundamental

issues that must be addressed for the obvious economic momentum that Nigeria currently

has to be maintained.

The fundamental issues with the Nigerian economy must be addressed in order for MINT expectations to be realised

Much is made in articles about a trip made by Mr O’Neil to MINT nations in the course of

making a documentary for the BBC, and while his optimistic views concerning the nations

takes up much of the reporting, a considerable amount is devoted to why Indonesia was left

out of his original BRIC acronym. O’Neil defends his original prognosis by suggesting that

Indonesia was not economically ready a decade or so ago but is now – hence its inclusion in

MINT (Boesler 2013). Despite this, it could be sardonically suggested that BRIC sounds

better than BRIIC but fits better in MINT, the point being that even if this is a little unfair on

Mr O’Neil’s capacity to predict the future economic performance of nations, there is a

slightly theatrical air to the creation of nicely rounded acronyms to describe groups of

countries.

However, taken loosely, such categorisations do highlight the fact of a changing world, and

one where some emerging nations are able to grow at the relative expense of those that

developed in an earlier phase of economic history, China being one good example (This Day

Live 2014a). With regard to Nigeria, the potential of the country has never been in doubt

but it is the institutional and political aspects that are perceived as being the drawbacks and

therefore commentators rationally seek fundamental changes in these areas, often (as has

been noted) finding them lacking. However, it is possible that such commentators are taking

an all or nothing approach and overlooking the fact that since democracy, and since

fundamental reforms to the Central Bank, there has been a consistent path of high levels of

economic growth, regardless of these obstacles.

The evidence that this may continue can be seen in the levels of FDI that have risen from $1

billion in 1990 to $8.9 billion in 2011 (Clark 2013) and that these levels are continuing to rise

despite forthcoming elections in 2015 (This Day Live 2014b). However, these are known’s

but what is unknown is the extent to which such impetus can be maintained in order that

Nigeria can avoid spinning itself “in circles, going nowhere fast” (Di Louie 2013).

Conclusion

Investors in stock markets cannot predict the future price of shares based on past

performances only and, in the same way, neither investment bank marketers nor serious

economic analysts can predict the future performance of nations. However, investors can

and do usually base their investments of the past and on future predictions. In this sense,

and provided the present impetus is maintained and fundamental reforms continued,

Nigeria is indeed a worthy member of MINT.

Bayo Adekanmbi is an end-to-end Strategy, Analytics and Marketing professional. He is

General Manager, Business Intelligence at MTN Nigeria, where he leads strategic knowledge

management, enterprise-wide customer/business analytics and commercial strategy

development. He had also sojourned in the “soft” side of Marketing, having worked as

Global Brand Strategist with MTN Group in South Africa and as Executive Strategy Director

with a leading communications consulting group in Nigeria. Bayo is a Chartered Marketer of

South Africa (CMSA), a certified SAS Data Programmer/Statistical Analyst and an alumnus of

the University of Reading Postgraduate School, UK, where he graduated with Distinction.

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