Outlook on Nigeria: For Nigeria to realize the Vision 2020 and become the 20th largest economy, it must grow at least 9.5% annually within the next eleven years, 2010 included. It is currently ranked 44th ($174b (nominal), 2009) and chasing Belgium which is 20th ($471b, 2009), according to IMF. Making that jump will require a compounded interest of 298% by 2020 which will translate to 171% percentage growth in the GDP. This analysis assumes that the GDP of the 20th economy will remain constant in 2020. For a nation that has averaged about 5.5% in growth, in the last seven years, it does mean that it needs a new growth engine.
Yet, while one can dismiss the bold vision of Nigeria’s government, it is important to note that in 1999, the GDP was $34.8b. A combination of policies and massive ICT investment, the nation moved from 105th position in global GDP ranking to 44th today. Though the ICT market is still one of the fastest growing ones in the world, the FDI has slowed down.
Now, Nigeria needs another engine to drive growth. Our analysis shows that a 50%* penetration rate of creative semiconductors and microelectronics will produce a compounded interest of 300% in the next ten years and make Vision 2020 a reality. This will create excess of one million direct and indirect jobs. The study shows that microelectronics will accelerate Nigeria’s overall growth since most ICT products will then be made in Nigeria, if MNCs build plants, over mere distribution and sale of their electronics and ICT products. When we benchmarked with Asia, we noticed that Nigeria has advantages in currency, wage, regulations, and other factors for oursourcing. The clustering effect and ability to develop technology districts, anywhere without regards to any raw material but knowledge, show that microelectronics will position Nigeria for greatness.
To make this possible, Fasmicro has a clear roadmap to help the Nigerian government (federal, state, or local) develop the industry through targeted policies and stimulations. We are proud of our four years of experience in a United States National Science Foundation committee, which has helped us master the act of crafting and implementing successful roadmaps.
*Our diffusion model is not the traditional home penetration model, rather one that focuses on SMEs. If there are hundred technical companies and fifty use microelectronics/semiconductor products creatively, we will assume a 50% penetration rate. If none uses creatively, all does sale and distribution, we assume 0% diffusion. We are looking for value creation either by using already created microelectronics related products or by actually developing new ones. That makes us assign a high value to a (potential) Lagos maker of Video Games and nothing to a firm that distributes video games.
We focus on value because a company that takes silica (sand), the starting material of semiconductors, and produces a microchip may be transforming a N100 worth of sand to a value of N100,000 while the one that sells that end product makes only marginal gains (few hundreds of Naira). That high value creation is our focus in this diffusion model and not the use of the products by end consumers. Practically, Zinox Computers (Lagos) gets a high score from us because they create value while most computer distribution firms in Ikeja Computer Village get zero in our model.
