With the right reforms and investment, Nigeria had the potential to raise its gross domestic product (GDP) by 7.1% a year through to 2030, to more than $1.6-trillion, which could make the country a top 20 global economy, a new report by the McKinsey Global Institute (MGI) has shown.

Should the country achieve this growth rate, Nigeria’s GDP could be higher than that of the Netherlands, Thailand and Malaysia by 2030.

The MGI said new data released this year showed that the African country’s economy was far more diverse than initially understood.

While the nation’s rich oil reserves remained a critical source of government income and exports, the entire resources sector currently made up only 14% of Nigeria’s GDP, with the agriculture and trade sectors being larger and faster growing.

The MGI added that it was also not generally recognised that Nigerian productivity, which remained low, had been growing recently and now contributed more to GDP growth than the expanding population did.

“What people overlook is Nigeria’s extraordinary advantages for future growth, including a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population,” MGI Lagos office director and location manager Reinaldo Fiorini added.

The MGI based its future scenario for Nigeria on an analysis of the five major sectors of the country’s economy – trade, agriculture, infrastructure, manufacturing and oil and gas.

Based on an expanding consumer class in Nigeria, MGI projected that consumption could more than triple, rising from $388-billion a year presently to $1.4-trillion a year in 2030, a yearly increase of about 8%.

“This would make trade the largest sector of the economy and provides a particularly good opportunity for [manufacturers] of packaged foods and fast-moving consumer items such as juices,” the MGI said.

Further, the institute noted that improvements on several fronts could help raise the volume and value of Nigerian agricultural production over the next 15 years. It was estimated that this sector, which was currently the largest, contributing 22% of GDP, could more than double from $112-billion a year in 2013, to $263-billion by 2030.

Meanwhile, Nigeria also had significant potential for infrastructure investment, which could potentially reach $1.5-trillion between 2014 and 2030. This would result in the implementation of infrastructure being a major contributor to GDP, as well as an enabler of growth across the economy.

In addition, based on current trends, the Nigerian manufacturing industry, which had grown by 13% a year between 2010 and 2013, could yield a four-fold increase in manufacturing output by 2030, to $114-billion a year, the MGI highlighted.

Further, while the oil and gas industry was only expected to grow by 2.3% a year at best, its success was still vital to the Nigerian economy, the institute said.

“With the right reforms, liquids production could increase from 2.35-million barrels a day on average to a new high of 3.13-million barrels a day by 2030, contributing $22-billion to GDP by 2030,” the MGI said, adding that natural gas output could grow by as much as 6% a year, adding $13-billion to GDP by 2030.

“In total, the oil and gas sector has the potential to contribute $108-billion a year by 2030, up from $73-billion in 2013. However, this assumes that the sector is successful in dealing with current obstacles such as security and can attract fresh investment,” the MGI said.

Nigeria also had the ability to capitalise on several favourable trends such as rising demand from emerging economies, growing global demand for resources, and the spread of the digital economy.

It also had a young and rapidly growing population and an advantageous geographic location in West Africa, which enabled trade within the continent and with Europe and North and South America, the institute said. 

“By capitalising on its strengths and positioning itself to take advantage of emerging global trends, Nigeria could potentially triple its GDP by 2030. This adds up to a huge opportunity for inclusive growth that should not be missed,” MGI Nigeria director Acha Leke said.