* Investors attracted to Nigeria's growth, debt profile
* Gap between rich and poor rising, feeding insecurity
* Reforms to breach infrastructure gap too slow
By Joe Brock
LAGOS, March 1 Roaring growth and fiscal
stability are drawing investment to Nigeria, but it won't
trigger the prosperity needed to lift millions out of poverty
until the government reforms infrastructure and agriculture.
Africa's second largest economy and top oil producer has low
debt by international standards and projected growth of around 7
percent for the next four years - a magnet drawing in both
foreign direct and portfolio investors.
Oil production continues to attract large inflows. Shares in
banks and in firms selling consumer goods to the continent's
most populous nation are outperforming emerging market peers.
Yet investors remain reluctant to put funds into long term
job-creating areas like agriculture or manufacturing until
President Goodluck Jonathan makes good on promises to reform
things like power, roads and the food industry.
"Investors will only begin to care once it becomes
attractive to invest in those sectors so the government has to
do their bit first," Renaissance Capital's Sub-Saharan Africa
Economist Yvonne Mhango said at a conference last month.
"Transforming power and agriculture are long-term
challenges," she said, adding that agriculture could attract
foreign investors at the earliest "by the end of the decade if
all reforms go to plan."
Planned agricultural reforms include direct subsidies for
fertiliser handouts to farmers, free mobile phones and some more
protectionist measures like higher taxes on food imports.
Efforts to fix crumbling roads could have the greatest impact.
Agriculture employs around 60 percent of Nigeria's 170
million people, according to the statistics bureau, and makes up
45 percent of GDP, compared with just 15 percent for oil.
Yet it is in a mess. Poor roads mean a lot of produce rots
before reaching domestic markets.
FDI ON A HIGH
Nigeria's foreign direct investment (FDI) is projected to
continue rising, from $5.8 billion in 2011 to $6.8 billion for
last year, once the figures are in, the International Monetary
Fund says. The IMF projects FDI to grow to $7.3 billion this
year, $8.7 billion next and $9.6 billion in 2015.
Yet much of this investment remains focused on oil and gas,
which has never been very good at spreading wealth beyond a
corrupt political elite.
"For a qualitative shift in FDI to occur, the authorities
will need to speed up the implementation of structural reforms,"
Standard Bank's Samir Gadio said, citing state fuel subsidies
and infrastructure as areas that were being reformed too slowly.
Economists have praised tight monetary policy from Central
Bank Governor Lamido Sanusi and austerity measures implemented
by former World Bank director Ngozi Okonjo-Iweala.
Foreign exchange reserves are at a 4-year high and Nigeria's
excess crude account, which saves oil earnings over a benchmark
price, has $8 billion in it, more than double when Jonathan took
office. Credit rating agencies upgraded Nigeria last year and
fixed income investment has soared since Nigerian bonds were
included in JP Morgan's emerging market sovereign bond
index last year, pushing T-bill yields down almost 5 percent.
Stocks are up almost 18 percent this year.
Despite a decade of fast growth, official figures suggested
last year that absolute poverty was worsening, with 60.9 percent
of Nigerians - around 100 million people - only able to afford
the bare essentials of food, clothing and shelter in 2010,
compared with 54.7 percent in 2004.
The World Bank's Vice President for Africa Makhtar Diop late
last year said poverty had fallen as low as 46 percent, which
could mean official statistics may be too pessimistic.
Either way, until investment gets refocused into areas that
create jobs, poverty in Nigeria will remain stubbornly high.
Official unemployment is 23 percent and youth unemployment
is more than double that, fuelling anger and unrest.
"I hear in Lagos they are building skyscrapers and the fat
cats are getting richer. That's nice for them," says a
frustrated Dauda Yahaya, 33, who runs a small grilled fish
restaurant in the northern city Kaduna.
"All I need is for government to provide me with electricity
and banks to lend me some small capital but it's impossible. I
am someone who could give people jobs but no one is helping."