The Catch-Up Game: Nigeria Closing Up on SA on Per Capita GDP Level

A quick look at the World Bank data on GDP per capita, which measures the average wealth per person, across selected countries reveals a strong catch-up game between Nigeria and South Africa. In 1990, an average South African was 10x richer than an average Nigerian. 23 years after (in 2013), an average South African, still richer than an average Nigerian, but only by a multiple of 2. The reduction in wealth gap was driven by tremendous growth of 9x in GDP per capita in Nigeria, compared to just 2x growth in South Africa between 1990 and 2013. It has taken Nigeria an average of 5 years to double GDP per capita over the last 2 decades.

With the spate of reforms and growth projections, we have reasons to believe that this growth performance is repeatable in the next two decades and has a fundamental economic implication on consumer purchasing power and consumption mix. Rising income level suggests that Nigerians are gradually shifting the need basket towards housing and luxury goods, as they earn more income adequate enough to meet basic needs of food and clothing. Housing is the last basic need, which typically precedes consumption of luxury goods. This income evolution is a solid driver of demand in key sectors such as consumer discretionary, health care, foods, high quality real estate and of course energy. These sectors provide a solid basis for the activation of alternative asset development and potential harvest of outsized returns.

GDP Per capita



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