Jim O’Neill, the former chairman of Goldman Sachs Asset Management and the man that brought the world the now ubiquitous BRIC and MINTs emerging markets acronyms, sees opportunity in Nigeria – the “N” in MINTs.
“If you look at stuff like UN population projections, by 2050, Nigeria could be as big as the U.S. population-wise,” O’Neill told Reuters. “So if they got things right and the consumers really get income support, for a lot of consumer companies, Nigeria is a fantastic story.”
Just over a week ago, in a move expected for some time, Nigeria’s National Bureau of Statistics changed the base year for calculating the country’s GDP to 2010 from 1990. By the stroke of a pen and some paper-pushing, OPEC member Nigeria, classified as a frontier market, has now surpassed South Africa as Africa’s largest economy.
The Global X Nigeria Index ETF (NYSEArca: NGE), the lone Nigeria-specific ETF, is up 2.4% in the past week. NGE, which is just over a year old, does offer some exposure to the Nigerian consumer with an almost 20% allocation to consumer staples stocks. [Top Single-Country ETFs]
O’Neill acknowledged to Reuters that Nigeria does face myriad challenges. As Africa’s largest oil producer, Nigeria is heavily dependent on oil revenue to drive government receipts. NGE allocates over 27% of its weight to the energy sector, which can be problematic on multiple fronts. First, Nigeria’s oil assets are frequent targets of rebel violence, making operating conditions in the country perilous for Western oil majors. Second, the U.S. shale boom has trimmed Nigerian crude exports to the U.S. [Nigeria ETF Plagued by Violence]