Nigeria requires enhanced rule of law and widened tax base, says John Hawksworth
WHAT do you think of the programme for the 9th Section On Business Law Conference?
It is going to be a great event and I am highly optimistic that it would be very engaging and rewarding for all the participants. I’m sure the conference would generate a lot of discourse among industry players and the government.
If you were to attend other sessions at this year’s Section On Business Law Conference which session would be your first choice?
It looks like a very full and engaging programme. The sessions on Chinese funding of Africa’s growth and on making it easier to do business in Nigeria both look very interesting to me.
Please could you let out a brief preview of what you will be speaking about at the 9th Annual Nigerian Bar Association Section On Business Law Conference?
I will describe some of the mega-trends that will influence the development of the global economy over the next few decades, including demographics, natural resource scarcity, technological change and the shift in economic power to China, India and other leading emerging economies. I will then discuss the many opportunities this creates for Nigeria, but also the challenges to be overcomed to realise this great potential.
What exactly is PwC’s World in 2050 report?
Since 2006, we have periodically published a report setting out long-term GDP projections to 2050 for the world’s leading economies. We initially focused on just 17 economies, but have now expanded this to 32, including Nigeria, South Africa and Egypt in Africa. The reports also discuss some of the key issues arising from these global growth trends, such as the need for institutional reform or the challenges of climate change. They link into a broader programme of PwC research on the mega-trends driving business and the economy over the coming decades.
Can you tell us in a few words what this report projects for Nigeria?
Our projections suggest that Nigeria could break into the top 10 economies in the world, ranked by GDP, by 2050 if it can follow appropriate growth-friendly policies. But fulfilling this potential will not be automatic, it requires sustained investments in infrastructure, education and industrial development, as well as enhanced political stability and rule of law as earlier mentioned.
A lot has been said about China’s growing investment portfolio in Africa. What do you think drives this? Is it sustainable?
Much of this investment has been driven by China’s ravenous appetite for natural resources, including oil and gas, metals and other minerals.
It is also aimed at getting access for Chinese goods to fast-growing African consumer markets, not least in Nigeria.
In return, China has made valuable investments in areas like transport infrastructure. I think this investment will continue, but it needs to be on terms that support development of more diversified domestic economies in Nigeria and other African countries.
The nature of the Chinese investment may also change as its economy shifts away from a focus on low-cost manufactured exports towards higher valued products and domestic-led consumer growth that may be less resource-intensive.
With crude oil prices dropping what would be your advice to oil producing countries like Nigeria?
In the short term, this clearly poses some challenges for Nigeria, but there is also an opportunity if it provides a stimulus to take faster action to diversify Nigeria’s exports and government revenues away from their current heavy reliance on oil and gas.
This would make the economy less sensitive to global commodity price shocks and could create more skilled jobs in areas like manufacturing and business and financial services. This would make growth more stable and sustainable in the long run.
Do you think population growth will provide a significant demographic dividend for Nigeria in the coming decades?
Of the 32 leading economies in our latest World in 2050 study, Nigeria had by far the fastest projected growth rate of its working age population according to the United Nations. This is in marked contrast to the declining working age populations expected in Europe, Japan and even China after 2020.
Potentially this could be a positive factor for Nigeria, but only if it can create worthwhile jobs for the millions of young people coming into the labour force every year.
This reinforces the need for the investments in skills and education to equip them to do these jobs, but it also requires further economic diversification to areas other than oil and gas, which is a relatively capital intensive sector that employs comparatively few local people.
The new growth areas will be sectors like manufacturing of processed food products, business and financial services, healthcare and retailing.
If you were to list three things that in your opinion may improve the Nigerian economy, what would they be?
Nigeria needs increased investment in growth-supporting infrastructure, particularly the energy supply network and the roads, railways and airports. They need to support industrialisation. Secondly, a strong focus on education at all levels, which has been a key feature of the success of the Asian economies over the past 50 years. And thirdly, an institutional reform aimed at combating corruption, enhancing the rule of law and widening the tax base away from oil and gas revenues.
What do you enjoy about visiting Lagos?
I was in Lagos previously in 2008 when we were helping the Lagos State Government to enhance their public finance modelling capability. So it will be interesting to see how the city has developed since then. I spend a lot of time looking at reports and statistics, but sometimes it is only when you visit a place that you get a real sense for how a country is developing. That is particularly true in fast growing economies like China and Nigeria.
Tell us a bit about yourself and your background? What do you do for PwC?
I am chief economist in the UK firm of PwC, based in London. I lead our macroeconomic research and thought leadership programme covering not just the UK but also the global economy more generally. I have an MPhil degree in Economics from Oxford University, where I was also briefly a college lecturer. Since leaving academia, I have over 25 years of experience as an economics consultant in the UK and overseas, working with a wide range of blue chip companies and governments, as well as international institutions such as the World Bank and the European Commission. I am also a regular commentator on economic issues in the UK media.
I am a lead author of many reports on long-term global economic trends, including our regular World in 2050 series of reports since 2006 and the original Low Carbon Economy Index report in 2009.
More recently, I have led our megatrends work on the global economic power shift, including the development of PwC’s new ESCAPE Index.
I also played an important supporting role in our work on the sharing economy. My other recent thought leadership work includes the PwC Good Growth Index. I
have also carried out economic consultancy assignments for a wide range of public and private sector organisations both in the UK and overseas over the past 25 years.
Clients include several UK government departments, the World Bank, the European Commission and government ministries in Turkey and Ukraine.