The Nigerian paradox: gloom & bloom.

Position:COVER STORY: Nigeria - Cover story

Africa's most populous country appears to be experiencing both its best and worst times--being crowned as Africa's largest economy, amidst a mounting brutal terrorist insurgency which is entering its sixth year, with no signs of letting up. In the same breath as Nigeria is spoken of as Africa's biggest economic opportunity, it is also considered its biggest source of worry. And last month something momentous happened to Nigeria's economy.

After two years of working on revising important economic data, the National Bureau of Statistics announced that Nigeria's economy, previously valued at $270bn, was actually worth $510bn--an 89% leap no one expected--and with that leap the country instantly overtook South Africa as Africa's largest economy and 26th largest in the world, up 13 places. These new figures now put Nigeria under an immense spotlight. But the gap between reality, and this much-talked about optimism has become starker, in the face of the havoc wrought by the deadly antics of Boko Haram. As Tolu Ogunlesi critically analyses Africa's new biggest economy, Nigeria will now be under even more pressure to resolve this paradox.

On a Tuesday morning early in February a group of investors gathered at the new InterContinental Hotel in Lagos, for Renaissance Capital's Investment Conference. Among the event's highlights were the duo of Bob Diamond, ex-CEO of Barclays Bank, and Ashish Thakkar, a 32-year-old Indian-Ugandan billionaire. At that time there was speculation that the two men were seriously looking at investment opportunities in Nigeria, through their new joint investment vehicle, Atlas Mara. In April confirmation arrived, with the news of Atlas Mara's acquisition of a sizable stake in Nigeria's Union Bank.

Two months after the Renaissance Capital conference, in the InterContinental Hotel hall, another investment meeting--this time a 2-day Nigeria Summit--was held by the Economist magazine. The second day of that Summit coincided with an investment conference by the Africa Finance Corporation (AFC), highlighting the possibilities of investing in infrastructure in Nigeria.

Seven hundred kilometres north of Lagos, in Abuja, the seat of government, preparations are on for Nigeria's hosting, in May, of the World Economic Forum on Africa, seen by the government as "an unprecedented opportunity for Nigeria to showcase its vast economic opportunities to the world." It's the first time Nigeria will be hosting the event; South Africa has hosted it seventeen times out of twenty-four.

Welcome to Nigeria Rising--the slowly but steadily changing story of Africa's most populous country, rich in oil and gas, hobbled for years by bad governance, but now emerging as an investor's delight; welcoming a never-ending stream of individuals and businesses drawn by its promises of unprecedented financial return.

The influx of opportunity-seekers is reflected in the boom in Lagos' hotel business. In the last decade, the number of upmarket hotel rooms in Lagos has tripled, according to W. Hospitality Group, a consultancy. And yet there's still plenty of room for growth.

The numbers that support the Nigeria Rising theme are bold--the most dramatic being the emergence of Nigeria, in April, as Africa's largest economy. In the last three years, more than $20 billion has flowed into the country in direct foreign investment; making it the second largest recipient of FDI on the continent, after South Africa. By the end of 2013, foreign investors held $5.4 billion in Nigerian bonds, up almost five-fold from 2012. The Nigerian Stock Exchange, headquartered in Lagos, has recovered remarkably well from the 2008 global economic slump; its 2013 results earning it a place among the ten best-performing stock markets in the world.

And a wave of reforms in the last decade are slowly opening up opportunities long locked away by government ineptitude and corruption, translating into scenarios like the one that has seen Nigeria emerge from being the world's second biggest...

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