It may be difficult for some to remember just how terrible a state Nigeria was in prior to the return to democracy some 22 years ago.
An international pariah, Nigeria was ruled by military leaders between 1983 and 1999 (16 unbroken years), who did little to unleash the growth potential in different sectors of the economy.
That all changed in 1999 as the then civilian President Olusegun Obasanjo, embarked on a series of reforms that supercharged the Nigerian economy.
Despite some challenges, analysts and economists are in agreement that the country has made tremendous progress since 1999, when it returned to civilian rule.
In that time period the Nigerian economy has expanded more than tenfold to over $400 billion and is now the largest on the African continent.
Thousands of new indigenous firms have emerged since then, expanding in sectors like Telecoms, Aviation, Financial Services, Fintech, Cement, Agriculture, Services, Power and Oil and Gas, providing employment, innovation and paying taxes used to provide services and infrastructure for the country.
Obasanjo’s telecommunications reforms are still powering the Nigerian economy today. Neglected by the military due to their fears of empowering dissent through easy communications by Nigerians, the sector today is one of the fastest growing in the country.
Major behemoths like MTN Nigeria, Globacom and Airtel Africa have emerged with the market capitalisation of the 2 listed firms (MTN Nigeria and Airtel Africa), combined at over N6 trillion.
Information and Communications Technology (ICT), now makes up about 10 percent of Nigeria’s GDP from close to zero in 1999, while thousands of jobs have been created and facilitated by the sector.
Today it is a given that the richest man in Africa, Aliko Dangote must be a Nigerian.
It was not always so back in the day as it was only the advent of democracy that enabled Dangote to be confident in making the investments in Cement, Sugar, Flour and today Refining that has continued to power the Nigerian economy and created tremendous returns for shareholders.
Key economic successes since 1999
A perilous state in 1999, with real incomes having fallen since 1979, an unsustainable budget deficit and debt to GDP ratio and high inflation, Nigeria was really on the edge before the return to democracy.
The country has however experiences exponential economic growth since 1999: from a GDP base of $36 billion in 1999 which ranked Nigeria as the fifth largest economy in Africa, to a $448 billion economy in 2020, the largest in Africa by a significant margin and over 1,100% growth in dollar terms over a 21-year time period.
Nigeria’s debt profile today compares very favorably compared to where it was in 1999 when Nigeria’s external and internal debt profile represented 87 percent of GDP as compared to 29 percent in 2020.
Nigeria’s debt hangover was so bad that the House of Representatives even mulled not paying back the debts during Obasanjo’s tenure.
Obasanjo however engineered a debt payoff/ forgiveness program under the finance Minister Ngozi Okojo-Iweala, which significantly reduced Nigeria’s debt paving the way for macro-economic stability.
Improvements in monetary policy, combined with the consolidation process in the banking sector under Central Bank of Nigeria (CBN) Governor Chukwuma Soludo have led to a considerably stronger banking sector.
The CBN Act of 2007 instituted the CBN’s operational independence which enabled its leadership to swiftly and effectively resolve the 2009 banking crisis.
The oil price benchmark in the budget (instituted by Okonjo-Iweala), combined with a budget deficit ceiling of 3 percent and the privatization of state assets all contributed to significant improvements during the period.
An impressive Foreign Direct Investment (FDI) profile could be regarded as one of the clear benefits of the return to democracy in Nigeria.
FDI has grown tremendously and the Nigerian economy has continued to show the capacity to attract investment despite currently adverse security conditions in some parts of the country.
Before 1999 many firms balked at investing in Nigeria, outside of the oil and gas sectors. Today investments are rife in various sectors like Fintech, Telecoms, Insurance, hospitality and hotels, food processing and Agriculture.
Large foreign (including Chinese, American and South African firms) and Nigerian firms are involved with major investments in free trade zones and other parts of the country.
The service sector as a result has grown from 32 percent of GDP in 1999 to 57 percent in 2019, fundamentally altering the structure and improving the sustainability of the economy.
The biggest economic success story of the last 21 years, a key driver of growth and a platform for future development has been telecommunications.
From a GDP contribution of $5 million in 1999 telecoms delivered $47 billion by 2018 at an average annual rate of 61.4 percent.
The growth and development of cities like Lagos, Abuja, Port Harcourt, Kano, Onitsha, Awka, Kaduna, Uyo and other major state capitals have also been facilitated by the return of democracy.
Challenges and opportunities
 Despite the successes, there are areas where the next generation of Nigerian democratic leaders must tackle. Insecurity in the country is increasingly alarming and all efforts must be made to arrest the situation.
Nigeria continues to trade the goods and services produced in other countries, with trade contributing over 15 percent of GDP in 2019.
Value addition from domestic processing remains insufficient and industrial policy must be addressed in order to reduce the economies vulnerability to oil prices and create employment.
The unemployment rate which recently touched a high above 30 percent is a major cause for concern. Power and rail infrastructure are fundamentally important and without both, an industrial renaissance will not happen. Investment opportunities remain to fill this gap even as modest progress has been made.
Unmet housing needs must be addressed, and represents a strong investment opportunity, with a world bank estimated funding gap of $384 billion to build the over 17 million units that are required.
High unemployment and a skills shortage mean that Nigeria must prioritise education, not only to drive up income across the board, but to reduce the inequality gap and deliver a future for a growing population.