This article is part two of a series examining parallels between BRIC countries (Brazil, Russia, India, China) and the "emerging markets" of the MINT community (Mexico, Indonesia, Nigeria, and Turkey). This article looks at parallels between "Africa's hope" of Nigeria and Russia.
There is little doubt that Nigeria is a strong African economy. Ranked second behind South Africa (and expected to rise past it by the end of 2014), the Nigerian economy is expected to grow by 7% in 2014. Considering that 1 million U.S. citizens use more power than all 170 million Nigerians, this economic strength is at the very least noteworthy.
As noted in part one of this series, Nigeria currently boasts a per capita income of $1,500, putting in on the same level of India. Given the heavy agricultural focus of the economy, this feat is laudable given the more technologically sophisticated market of India.
It really could go somewhere. It's a shame the country is so corrupt.
Ignoring the political instability due to jihadist groups such as Boko Haram, Nigeria is stifled by widespread corruption. Despite claims that a more active economy will decrease corruption and encourage transparency, citizens report increased levels of corruption in nearly every public apparatus.
This is not unique only to government agencies -- 41% of respondents in a recent survey see businesses as corrupt or extremely corrupt, with marginally fewer seeing non-governmental organizations operating in the country as corrupt or worse. Ranked at 144 of 177 in Transparency International's Global Corruption Barometer, Nigeria seems to be mired in endless bribery accusations and kickbacks.
Where have we heard that before?
Russia, the Eurasian BRIC, was lauded as the next huge market after the country liberalized in the late 20th century. Before the surge of the Asian market in the early 2000s, Russia was enjoying the greatest surge in middle class membership since its modern creation.
While the economy was more developed than Nigeria's, the Russian economy of the late 1990s was still focused on primary or secondary means of production. (That is, either natural resource extraction or refining natural materials to a secondary product.) There were concerns that the system itself was still somewhat hung-up on Soviet-esque corruption but that further wealth creation would expand government transparency and remove some of the institutional concerns.
That belief has been shown to be false, with increasing numbers of surveyed respondents anticipating similar or higher levels of corruption as time has moved forward. One third of respondents in 2003 expected corruption levels to get worse in the following three years. By 2005, that number had risen further to one half, and has stayed at this level to this day despite increasing economic conditions.
Allegations continue to be made by both non-governmental organizations and nations alike that Russia evidences corruption more clearly now than ever before. Allegations continue to be made regarding graft and nepotism in the ongoing Sochi Olympics, the judicial independence (from outside interference) ranks among the lowest in the world, and accountability is graded in the lowest fifth, barely ahead of Nigeria.
Is Nigeria on the same path?
While Russia has improved (barely), the level of corruption has immeasurably hampered growth that could have been otherwise utilized to expand sectors of the Russian economy. Anti-corruption efforts have been enacted since 2010, although few of these have shown as real impact as corruption indicators have remained in negative values. That said, even Russia is ostensibly fighting corruption (although its leader seems to be practicing it).
Nigeria does not even have the benefit of a proactive government. Given that 94% view political parties and government as extremely corrupt, this lack of action seems destined to continue. With the additional caveat that corrupt markets tend to have poor connections with less corrupt markets, this means that Nigeria's future trade partners are limited and will only become more limited as some corruption is invariably removed from other systems. (For example, China's recent set of reforms to fight corruption will likely lead to trade tensions between Nigeria and it.)
What this means long term is that the Nigerian economy may get stronger, but only as long as the "right" individuals in power continue to enrich themselves. As far as the MINT economies go, Nigeria does still have potential, but this requires the state to radically redefine how it approaches the market.
The other parts in the series: