Nigeria and the uk

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Patrick Kenworthy
Nigeria and the UK
An economic performance comparison

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Patrick Kenworthy
Background
Nigeria
 Full name: The Federal Republic of Nigeria
 Population: 166.6 million (UN, 2012)
 Capital: Abuja
 Largest city: Lagos
 Area: 923,768 sq km (356,669 sq miles)
 Population Density: 126.22 People per Km2
 Major languages: English (official), Yoruba, Ibo, Hausa
 Major religions: Islam, Christianity, indigenous beliefs
 Life expectancy: 52 years (men), 53 years (women) (UN)
 Monetary unit: 1 Nigerian naira = 100 kobo
 Main exports: Petroleum, petroleum products, cocoa, rubber
 GNI per capita: US $1,280 (World Bank, 2011)
 Internet domain: .ng
 International dialling code: +234
Oil-rich Nigeria has been held back by
political instability, corruption,
inadequate infrastructure, and poor
macro-economic management, but in 2008 began pursuing
economic reforms.
Nigeria's former military rulers failed to diversify the
economy away from its overdependence on the capital-
intensive oil sector, which provides 95% of foreign exchange
earnings and about 80% of national revenue.
Nigeria is the most populous country in Africa (166.6 million in 2012)
Its GDP was $450.5 billion in 2012, putting it at 31st
(out of
229) in the world but the 27th
highest growth between 2011
and 2012, with a growth of 7.1%. Its inflation rate was 12.1%
in 2012. Its GDP per capita was $2,700 in 2012, 180th
in the world.
In 2012 it had the 11th
largest labour force in the world with
53.83 million. In 2010 it is estimated that 70% of its
population was below the poverty line.
The average annual growth of its GDP was 6.8% between
2005 and 2010.
Did you know?
Nigeria’s film industry
is known as Nollywood
Did you know?
Evidence from archaeological
discoveries has shown that there
was a history of human existence in
Nigeria dated as far back as 9000
BC. One of the oldest found in the
world
National symbols of Nigeria
Flag Bicolour
Emblem Coat of arms of Nigeria
Anthem "Arise, O Compatriots"
Animal Eagle
Bird Black Crowned Crane
Flower Costus spectabilis
Sport Football

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Patrick Kenworthy
GDP - composition by sector:
agriculture: 0.7%
industry: 21.1%
Services: 78.2% (2012 est.)
Background
UK
Full Name: United Kingdom of Great Britain and Northern Ireland
Population: 63,181,775 (2011 Census)
Population Density: 255.6 per Km2
Capital: London
Area: 243,610 km2
Life Expectancy: 78.16 (Males), 82.54 (Females)
Main exports: Fuels, Chemicals, beverages, food, tobacco
Internet Domain: .uk
International Dialling Code: +44
The UK, a leading trading power and financial centre, is the second
largest economy in Europe after Germany. Over the past two decades,
the government has greatly reduced public ownership and contained
the growth of social welfare programs. Agriculture is intensive, highly
mechanized, and efficient by European standards, producing about
60% of food needs with less than 2% of the labour force. The UK has
large coal, natural gas, and oil resources, but its oil and natural gas
reserves are declining and the UK became a net importer of energy in
2005.
GDP (purchasing power parity):
$2.323 trillion (2012 est.)
country comparison to the world: 9
note: data are in 2012 US dollars
GDP per Capita
$36,700 (2012 est.)
$37,100 (2011 est.)
$37,100 (2010 est.)
Public debt:
88.7% of GDP (2012 est.)
85% of GDP (2011 est.)
Inflation rate (consumer prices):
2.8% (2012 est.)
4.5% (2011 est.)

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Patrick Kenworthy
Recent News
"He's going to tear through London like a lion. He's the guy you
want to have at your table at dinner; you want to be on his side of
the room at the cocktail party."
Not a rock star on tour, not the actor of the moment, but the
incoming Bank of England governor Mark Carney, as described
by fellow Canadian and former government colleague Scott Reid.
His appointment has been a break with tradition in many ways.
He is a Canadian, for a start, and as such is the first non-British
appointment to the post. He hails from Canada's sparsely
populated Northwest Territories where, "rural just doesn't
describe it" according to Scott Reid.
He also has a commercial banking, as well as public sector
background, unlike his two most recent predecessors who had spent their careers within the Bank
and academia.
So what should he do with his new job?
Peter Oppenheimer says that he would do well to remember the powers a Bank of England governor
has at his disposal.
"The most important thing by far is personal oversight from the governor. The 'governor's eyebrow' it
is called.
"Banks and the people who run them must conduct their business prudently and honestly, and if they
don't, you sack them.
"Suitable distinguished bankers are not in plentiful supply."
DeAnne Julius agrees that while change is due, he must go cautiously.
"The British economy and the Bank of England are complex institutions, and I think he'd probably be
wise to spend a little bit of time learning the job before bringing in any dramatic change."
For Peter Oppenheimer, he would simply welcome the chance to catch up with his former student.
"When the announcement was made of his appointment, he and I had a jolly email exchange, I said
well done, and that I hoped that once he was in office I'd be allowed through the door to have a cup of
coffee with him, and he assured me I'd be among his first guests. I'm looking forward very much to my
invitation."
http://www.bbc.co.uk/news/business-23050597

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Patrick Kenworthy
UK inflation rate rises to 2.9% in June
The rate of consumer price index (CPI) inflation increased to 2.9% in June, up from 2.7% in
May, according to the Office for National Statistics (ONS).
The figure, a 14-month high, was lower than the 3% expected by markets.
A rise in the inflation rate had been anticipated because of higher petrol and clothing prices
versus a year ago. But it was moderated by slower annual rises in airfares and food prices.
Retail prices index (RPI) inflation also rose, to 3.3% from 3.1% in May.
The RPI index is used to calculate many pensions, as well as inflation-linked government
bonds. It is calculated differently as it includes some housing costs and other items not
included in CPI, and is typically higher than the CPI measure.
Mark Carney has avoided one minor embarrassment in his first weeks at the Bank of
England.
If inflation had gone more than one percentage point above the Bank's 2% target, he would
have had to write a letter of explanation to the Chancellor after the next Monetary Policy
Committee meeting.
With the June rate coming in at 2.9% he can put his pen back in the drawer for a few weeks.
But inflation could yet move higher, with global oil costs always a threat to consumer prices
here.
Higher inflation intensifies the continuing squeeze on consumers, with average wage rises
below 1%.
Mr Carney's main focus seems to be on keeping interest rates low for as long as it takes to
stimulate a sustained recovery.
But he may encounter increasing demands for tighter policy if inflation remains stubbornly
above target and UK growth shows more momentum.
Cheaper airfares
The ONS said that air transport played the biggest role in dampening inflation this month,
with fares falling 2.8% during June, compared with a 7.4% monthly increase in June 2012,
due to lower European air fares in particular.
Despite falling somewhat back during the month, air fares in June were still 9.8% higher than
they had been in June 2012 - which were in turn 21.3% higher than in June 2011.

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Patrick Kenworthy
Clothing and footwear prices fell 1.9% last month - as they typically do during the summer
sales - but the fall was less than the 4.2% drop seen in June last year, which the ONS said
had been the largest such decline on record.
Food prices fell half a percentage point during June, led by a fall of close to 2% in the cost of
fruit and vegetables.
Despite reaching its highest level in over a year, the CPI measure remains well below the
4%-5% range experienced during much of 2011.
The Bank of England is supposed to keep CPI as close as possible to 2%. If it veers above
3%, the new Bank governor, Mark Carney, would be required to write a letter of explanation
to the Chancellor George Osborne.
The lower-than-expected inflation rate also gives the Bank more leeway to pursue monetary
stimulus, such as its buying up of government debts via quantitative easing, and its plans to
start providing "forward guidance" from August - a commitment to keep interest rates at their
historic low of 0.5% for longer.
The pound fell three quarters of a cent against the dollar to about $1.506 on the news, as
markets took account of the likelihood of UK interest rates remaining at record lows.
"Presentationally, the surprise today is important," said Rob Wood, economist at Berenberg
Bank
"With no letter required, it makes it marginally easier to introduce more formal forward
guidance at the next policy meeting."
"Inflation is likely to bobble around 3% for the next few months before heading down towards
the 2% target next year, as weak wage growth feeds through to lower costs and inflation," he
predicted.
Inflationary pressures were also evident in the producer prices index, which tracks the prices
charged by manufacturers.
It accelerated to a 2% annual rise in June, from 1.2% in May, according to the ONS, as the
cost of oil and of foodstuffs rose sharply.
Savers hurting
However, some analysts said they foresaw inflation dropping sooner, with June possibly
representing the high point.
"The uncertainty is whether inflation will peak at its present level before falling later this year,
as we expect," said David Kern, chief economist at the British Chambers of Commerce.
"If this happens, it is still possible that the recovery will continue to slowly gather momentum
throughout the year and into 2014.

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Patrick Kenworthy
"However if unexpected developments, such as renewed surges in energy prices, push
inflation up further, our growth prospects will face new risks."
The rise in inflation is bad news for workers, whose pay continues to be eroded by rising
prices.
Average earnings excluding bonuses in the three months to April were only 0.9% higher than
a year earlier - two percentage points below the rate of inflation.
"Sustained high inflation, coupled with a prolonged pay freeze then squeeze for millions of
public sector workers, has hit families hard," said Dave Prentis, general secretary of the
Unison union.
Price rises are also hurting savers.
To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 3.63%
per annum, according to personal finance website Moneyfacts. However, no savings
account is offering such a rate at the moment.
"The effect of inflation on savings means that £10,000 invested five years' ago, allowing for
average interest and tax at 20%, would have the spending power of just £8,846 today,"
Moneyfacts said.
http://www.bbc.co.uk/news/business-23324635
Comments on the news stories
Story 1, New Governor of the Bank of England.
I believe this could affect the future of the UK’s economy because he has been successful at his
previous post in Canada and could bring in policies to improve the UK and its current economic
situation.
Story 2, Inflation rates rise to 2.9% in June
I believe this is important as the inflation rates are an indicator of how the economy if affecting the
people of a country. Nigeria’s inflation rate was a staggering 9% in May, falling from 9.1% in April.
When inflation is low, that means the growth in the supply of money is either halted or increasing at
a low pace. High inflation means that the money supply is increasing relative to previous levels. High
inflation is a negative for the average consumer as it causes prices of market goods to increase,
before they are able to see an increase in their wages. The inflation rate was just below the Bank of
England’s predicted 3% from last month.

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Patrick Kenworthy
GDP
From these graphs we can tell that the economy of the UK is much bigger, but not growing by a huge
amount, if not shrinking. Nigeria however has a smaller scale economy but it is growing at a much
higher rate.

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Patrick Kenworthy
GDP growth rates
From these graphs we can very clearly see that Nigeria’s Economy is much more stable than the
UK’s, it has grown every quarter since 2008. The UK on the other has had many quarters with
negative growth, and any positive growth has been miniscule. Despite having a higher overall GDP
the UK is in a very unstable position in comparison to Nigeria on the grounds of their GDP growth.

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Patrick Kenworthy
Unemployment
From these graphs one can tell that a larger proportion of Nigeria’s workforce is unemployed
compared to the UK’s. Nigeria’s unemployment is also growing at a slowing, but still high rate. The
UK’s is staying about the same level, but the overall trend since 2012 is that it is very slowly going
down.

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Patrick Kenworthy
Government Debt
From these graphs we can tell that the UK is in a large amount of debt compared to its GDP, and that
figure is rising. Nigeria and the other hand has relatively low debt compared to its GDP and overall is
showing a downward trend. This shows that Nigeria is in a much stronger position for which it to pay
off its debts.

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Patrick Kenworthy
Conclusion
Overall I believe that despite being smaller, Nigeria’s economy is stronger that the economy of the
UK. The growth rate of Nigeria is much higher and growing faster than the UK’s. Despite some data
going against this (e.g. unemployment), I believe that the majority of the data suggests that Nigeria
is heading for more prosperous times.
However the data may be misleading. The main export of Nigeria is oil, and this is a very finite
resource. This means that, perhaps Nigeria’s future is not as thriving as the data in this report may
suggest. The world is contently looking for replacements to crude oil, but presently it is a staple
resource in all major countries, therefore the near future looks excellent for Nigeria and its
economy.
The UK’s near future looks to be bleak one, with government debt rising and inflation rising.
However the downfall is not terminal, in all other major recessions the economy has recovered. The
UK's recovery will gather pace from 2014 as exports and business investment take up the slack in the
economy, Ernst & Young's Item Club has predicted. The forecasting group predicted that UK
economic growth would be 1.1% this year, rising to 2.2% next year and levelling out at about 2.5%
thereafter. The report gave no specific rationale for why business investment was expected to
rebound next year, but noted that a mild recovery in investment in 2011 was snuffed out by the
uncertainty generated by the Eurozone crisis.
Sources
http://www.tradingeconomics.com/
http://www.bbc.co.uk/news/business/economy/
http://en.wikipedia.org/wiki/Nigeria
https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html
https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html
http://en.wikipedia.org/wiki/UK

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