Technology, the bad governance solution (or: why Nigerians love their smartphones)

Nigeria recently announced a statistical revision that at a stroke nearly doubled the size of the country’s economy. The International Monetary Fund, after careful review, endorsed the revised estimate as accurate. That said, there was some statistical trickery involved. Nigeria had failed to update the base year for its GDP estimates since 1990, which had the effect of making entire sectors of the Nigerian economy disappear from official statistics. This may have been an oversight, but probably wasn’t. For countries soliciting foreign aid, appearing to be very poor is useful. By contrast, for countries soliciting foreign investment, appearing to be rich is useful. And indeed, shortly after the revision, Nigeria raised $1 billion in a sovereign bond issuance, despite a Standard & Poor’s rating downgrade. Indeed, the bond issue was oversubscribed, as investors rushed into what is now (following the revision) Africa’s largest economy. The understatement of Nigerian wealth is one reason that the big international telecoms companies decided not to bid when Nigerian mobile phone licenses were put up for auction in 2001. As a happy result, Africa has some thriving mobile telecoms companies and entrepreneurs, notably South Africa’s MTN and the Sudanese telecoms billionaire Mo Ibrahim. Actually, the understatement of Nigerian wealth is only part of the reason for this strategic miscalculation. What international telecommunications companies also did not understand is just how badly Nigerians wanted mobile phones. Consider the following graph, taken from the Upstream/YouGov 2013 Emerging Market Mobile Attitudes Report: Strikingly, an overwhelming majority of Nigerian respondents envisioned using smartphones for activities beyond talking and texting. Even more strikingly, the top choice of content that Nigerian...

The Emerging Markets Have Emerged

The acquisition of IBM’s PC business by China’s Lenovo was no red herring. The emerging markets have, at long last, emerged. It looks, at first, like just another bubble in emerging equities. Following the acquisition of IBM’s PC business by China’s Lenovo, Chinese businesses are in the headlines. The usual suspects are up – Brazil, Russia, Turkey. Americans who once feared a rising Japan now talk of a rising India. All of which usually means, sooner or later, another emerging market meltdown. But there is an important difference. That difference is Nigeria. Or, more specifically, the fact that Nigeria became, in 2004, the third largest global market for Guinness breweries – trailing only Ireland and Britain in Guinness’s global sales and edging out the United States. So odd a fact cannot be dismissed as a fluke. There are no speculative bubbles in beer consumption. Nigeria’s unlikely rise is, in fact, the harbinger of a trend that is changing the global business landscape. That trend is not a simple expansion of wealth. Since the early 1990s emerging markets enthusiasts have made much of the fact that the combined output of the developing economies is, by some measures, roughly on par with that of the rich world. But this sizeable economic output does not make the emerging markets relevant to global business – any more than the Warsaw Pact economies were relevant to global business during the days of the USSR. To be relevant, economies must be integrated. Until recently the emerging markets were cordoned off by barriers of politics, policy, culture, and sheer economic difference. These barriers were as real...