The Nation Newspaper

Category: Business

  • Why investors shun Nigeria’s capital market

    Why investors shun Nigeria’s capital market

    At the first public engagement with the media last Thursday, the management of the Nigeria Stock Exchange led by Oscar Onyema gave insights on how the stock faired last year, reports Bukola Afolabi

     

     

    FRESH facts have emerged as to why the nation’s stock market failed to achieve optimum growth potential in the outgoing year.

    Early last year the managers of the Nigeria stock Exchange had projected that at the end of the year 2012, a record 20 companies would be listed at the Exchange.

    An upbeat Oscar Onyema, Chief Executive Officer of the NSE in a manner somewhat reassuring had told a packed audience at the time that the prospective companies would be substantial in terms of equity and value.

    But one year down the line, the blessed assurance has turned to forlorn hope.

    The NSE boss said that much at a news conference last Thursday where he lamented the parlous state of the market. According to him, the market for IPOs and new equity listings was flat – no IPOs and there were two new listings on the main board while a total of four companies were delisted, including FinBank Plc, following its acquisition by FCMB Plc, and Ablast Products Plc, Udeofson Garment Factory Plc and Hallmark Paper Products Plc, as a result of noncompliance with the Exchanges’ post-listing standards.

    Three banks were also delisted and relisted in compliance with the holding company structure mandate by the Central Bank of Nigeria (CBN), following the repeal of the Universal Banking Guidelines, in a move to restore regulatory and corporate governance soundness in the Nigerian Financial system.

    He said 20 companies indicated there interest at the end of year 2011 that they are coming to the stock market to be listed only 2 companies show up.

    According to Onyema besides unfavorable effects of the global financial crisis which lingered throughout the year, the country suffered fiscal challenges, double-digit inflation (12.3% in November), high lending rates (MPR of 12% in November), and a decline in GDP contributions from key sectors such as oil and gas (13.42% in Q3, down from 15.80% in Q1), to record GDP growth of 6.48% in the third quarter.

    The implementation of the nation’s policy on fuel subsidy last January also stalled economic activities at the beginning of the first quarter, the result of which was felt in the capital market through the first half of 2012.

    There was more excitement in the second half of the year with steady growth across most sectors, and the inclusion of selected Nigerian government bonds in the JP Morgan Government Bond Index Emerging Markets (GBI-EM). Consequently, international institutional investors flocked to the Nigerian bond market, while local institutional investors’ appetite for equities was reawakened.

    Notwithstanding certain prevalent, national and market-specific challenges, the NSE’s major index closed the year with its strongest performance since 2008, while other indices topped their performance pre-global financial meltdown.

    The NSE All Share Index gained 35.45% in 2012, as the Bloomberg showed, soared to 44.63% while the NSE Lotus Islamic Index, comprising Shariah-compliant equities, saw a 44.21% jump.

    Besides, the Bloomberg NSE Consumer Goods Index grew 42.29%, and the Bloomberg NSE Banking Index added 23.84% to its 2011 value.

    A few indices mimicked the negative trends affecting their respective economic sectors, including the Bloomberg NSE Insurance Index which shed 17.45%, and the Bloomberg NSE Oil/Gas Index which plunged 30.53%.

    Onyema has said entrance of local companies into the capital market was expected to improve the Exchange.

    The NSE boss, said the capital market which was dominated in the past by forging companies has witnessed increased in the presence of local companies being listed on the stock Exchange.

    “It is time that the rise of the Nigeria Stock Exchange was at the back of foreign companies and investor but we are happy to know that local companies are beginning to show interest into the market which has been responsible for the improvement of the Exchange. We are working hard to bring in new good local companies and we believe the rise in the market will encourage more local companies to come on board. Hopefully we will see companies coming into the market,” he said.

    The NSE boss also recalled that in March 2012, offered issuers greater flexibility to raise capital from the market, just as the Exchange amended its listing rules to include quantitative measurements for profit, market capitalization, price and public float, among others.

    To increase the level of market compliance, the NSE launched the Broker TraX tool at the start of the year. The tool provides transparency of broker and brokerage firm compliance with the rules of the market.

    The exchange also introduced the XCompliance Report, a transparency initiative designed to help maintain market integrity, by providing compliance related updates on all listed companies.

    This was followed by the release of the Market Quality Report (X-Qual) in November 2012, which offers brokers and analytical investors insight into how to derive best execution of orders in the market, and the quality of execution that can be expected.

    To enhance the investor experience, the NSE launched its new Web site in January 2012 with a real-time feed to a ticker, and rolled out X-Net, a virtual private network (VPN), to enhance brokers connectivity (20x faster than the previous offering) to the Exchange’s trading systems.

    The Exchange also commenced development and testing of its new trading platform, X-Gen, which will go live in 2013.

    NSE boss said that they are seeking Federal Government support to hit $1trillion capitalization mark in 2016.

    According to him, it is not impossible for the NSE, which currently has a market capitalization of N10tn, to reach $1tn (N150tn) mark by 2016, however, the support of the FG is needed in many ways to achieve this.

    He said “When we gave the target of 1trn market capitalization in five years. It was an aspiration target, we were aware that a lot of things had to align to be able to achieve this, for instance, we depended on the regulation of the power sector and the quick passage of the petroleum industry Bill.

    “And so, we need the support of the government to ensure that the 16 companies that would come out of the power privatization process would be listed on the NSE. The same goes for the telecoms companies we need government assist in getting them to list their companies also.”

    The NSE helmsman is also optimistic that this year would see gains by global investors hoping to emerge in the frontier markets.

    Despite an anticipated dip from 5.0% to 4.8% by the OECD, economies in Africa are forecasted to maintain a positive growth trajectory, underpinned by factors such as strong performance of oil-exporting countries, continued fiscal spending on infrastructures projects, and expanding economic ties with Asian economies, Onyema stressed.

    In a related development, the African Development Bank has issued the following GDP projections for key African economies: Ghana 7.7%. Angola 7.1%. Nigeria 6.6%. Kenya 5.5% and South Africa 3.6%.

    The outlook for the Nigerian economy also remains promising with a projected growth of 7.67% by the National Bureau of Statistics (NBS).

    While the impact of government policy on fuel subsidy and other macro-economic shocks were felt last year, the CBN’s restrictive monetary policies, expectations for stable crude oil prices, and the FGN’s continued effort at fiscal conservatism should create an environment for single-digit inflation rates and MPR reduction by the CBN.

    Although existing challenges such as the security situation in the country are not expected to disappear, on-going governments initiatives to increase power generation, financial inclusion, and transformation of the agriculture sector are expected to carry over into the new year.

    The Nigerian Capital Market will continue to face challenges around liquidity and depth in 2013, however, there is a concerted effort to drive improvements in market participant experience.

    The CBN’s efforts to achieve single-digit inflation and a lower MPR should have a positive impact on the equities market. As investor confidence measures implemented by the NSE mature, we expect that a growth trend similar to that experienced in Q4 2012 will extend into 2013.

    On the fixed income side, we anticipate the relative attractiveness of FGN bonds will continue for local and global investors, as a result of record-high yields. With the upcoming inclusion of Nigerian FGN bonds in the Barclay’s Emerging Market Local Currency Bond Index, this should keep the nation’s bonds in the international spotlight.

    Furthermore, foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market this year.

    Other contributing factors to optimism about the capital market include early passage of the national budget, which creates an impression that fiscal policy is being prioritized.

    The pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013.

    Besides, Onyema is persuaded that the elimination of VAT and stamp duties, which should take effect in 2013, freeing up funds for capital market investment just as continued product innovation by the Exchange, such as the commencement of secondary bond market trading, and the introduction of new indices and ETFs.

    Notwithstanding the hopeful promises, many analysts are of the view that a lot is required to turn the tide for the market.

     

  • Omatek boss tasks FG on local content

    Omatek boss tasks FG on local content

    The Chief Executive Officer of Omatek Ventures Plc, Mrs Florence Seriki, has said that unless the federal and state governments lay good examples by patronising locally made products, Nigerians will not take the government seriously.

    The Omatek boss said for the local industries to grow, government at all levels must lead by examples and stopping patronising foreign goods. She added that Nigerians must also shun the rush for foreign products as the locally made goods are of the same quality with those made abroad.

    “Unless the president and other government officials put their trust in local products by patronizing them, Nigerians will not take them serious,” she said.

    The ICT boss added that the company is poised to produce quality computers and other technology products and urged Nigerians to trust local manufacturers. She also advised President Jonathan to do more for the ICT Industry by providing funds for researches to be made.

    It would be recalled that the federal government recently announced plans to ban foreign computers and technology products in public institutions and schools to encourage patronage of “Made-in-Nigeria” and foster growth in the local ICT industry.

    She equally advised Mrs Omobola Johnson, Minister of Communication Technology, to be proactive by ensuring that all ICT products that are used in the ministry are locally made as this will not only take the sector to its next level but create unprecedented employment opportunities for the teeming youths of this country.

  • LCCI decries planned importation of rice mills

    LCCI decries planned importation of rice mills

    The Lagos Chamber of Commerce and Industry (LCCI) has taken a swipe at the Federal Government’s plan to import 100 rice mills from China for distribution to states.

    LCCI, through its President, Goodie Ibru (OON) said the plan, if implemented, will spell doom for the local industries.

    Ibru said: “The proposed acquisition of rice mills raises a number of specific concerns, some of which are the way the rice mills will be distributed, how will they be managed and operated alongside the existing rice processing mills owned by small scale operators without creating the challenge of unfair competition?”

    He advised the Minister of Agriculture, Dr Akinwumi Adesina, to engage local operators in the plan so as to avoid any unforeseen difficulties that might arise. “The minister’s vision and programmes must align with the needs of the agricultural community since they are the operators that would ultimately translate the vision to reality. This can only happen if there is meaningful engagement with the operators in the sector. The agricul.tural transformation agenda will be better enriched through a better consultative process,” he stressed.

  • Council, hospitals take delivery of DFID-funded drugs

    KOSOFE Local Government Area on Lagos mainland and six different healthcare centres have taken delivery of health commodities and equipment worth several millions of naira as part of the Drug Revolving Fund scheme by the DFID-UKaid channelled through Partnership for Transforming Health Systems II (PATHS2), Lagos.

    The official roll-out of the first phase of the scheme which kicked off at the Lagos State Central Medical Stores, Oshodi, recently, is expected to provide drugs and equipment valued at about N750million to various public and private healthcare centres across the state.

    While presenting the drugs to Executive Chairman, Kosofe LG, Hon. Babatude Sofola, Mrs. Bisi Tugbobo, State Team Leader, PATHS2, Lagos, who led other officials of PATHS2 including Pharm. Salihu Idris, States Logistics Coordinator, PATHS2, Abuja, Logistics Adviser PATHS2, Kano, Pharm. Kabir Yusuf and Strengthening System Logistics Officer, PATHS2, Lagos, Pharm. Oluwafunmito Adeyanju, said the council was chosen for the pilot scheme having met all the requirements.

    Justifying the need for the scheme, Mrs. Tugbobo said it was a pro-poor programme which has the potential of delivering quality healthcare services to the populace.

    “With the funds from UK Aid channelled through DFID to PATHS2, Lagos, we were able to provide 3million pounds (about N750miilion) worth of drugs and equipments to 143 facilities in the first phase and additional 62 facilities in the next phase which takes off soon,” she said.

    An elated Sofola, who thanked the UKaid for the kind gesture, assured that his administration would build on the foundation laid by PATHS2 in its quest to ensure access to medical care for the under-privileged.

    In a related development, PATHS2 also presented various drugs to six private hospitals including Barbinton, Deltacrown, Firstcross, Ram Salom, Rally and Yomi Convalescent Home, all of which have signed a memorandum of understanding with PATHS2.

    Dr. Ademola Yusuf, Medical Director, Barbinton Hospital, who took delivery of the drugs for his facility at the Lagos State Central Medical Stores, Oshodi, lauded the initiative by PATHS2, saying it has the potential to improve healthcare delivery in the state.

    Echoing similar sentiments, Mr. Tachere Urhoro General Manager, Deltacrown Hospital, confirmed the receipt of over N800, 000 worth of drugs, adding that the gesture will no doubt help to reduce the cost of treatment both to the patient and caregiver.

  • 2013 trends: Reinventing the sales function

    2013 trends: Reinventing the sales function

    Prominent sales authority, professor and author Neil Rackham states: “Irresistible new forces are reshaping the world of selling. Sales functions everywhere are in the early stages of radical and profound changes comparable to those that began in manufacturing 40 years ago. But one change outweighs all the others. The meaning of selling itself is shifting. The very purpose of sales is being rapidly redefined.”

    Consequently, sales organisations face a huge challenge, because there is no longer any sustainable competitive advantage through product superiority.

    Author Jerry Stapleton points out that the second problem is that the sales rep’s customers just do not need him or her any longer. At least, not the way they used to. Traditionally salespeople brought value to their customers by facilitating transactions and communicating information about their products and services. Almost overnight, these two core functions of the salespeople have been lost.

    Belatedly, sales – long the corporate stepchild – is emerging not only as a topic worthy of academic and executive attention but also as the business function where substantive improvement is not only doable but also capable of delivering extremely attractive improvements in shareholder returns.

    Sensible investment, handsome returns

    In short, sensible investment in sales effectiveness produces handsome returns.

    •Sales forces, rated as world-class by their customers, showed organic revenue growth of nearly 50% per annum over the last five years. All of this in recessionary markets.

    •An increasing number of business-to-business (B2B) sales forces, facing the insidious effects of commoditisation and margin erosion, are focusing increasing attention on the very purpose of their sales forces. And many are concluding that sales is less about selling their wares, and more about making customers successful.

    If you accept this assertion, the implications are profound. It changes everything. What you sell. How you sell. What kind of salespeople you recruit. How sales managers manage. How you align sales and marketing. How you are rewarded for the value you deliver. And the kind of relationships you have with your customers.

    •In the US, there are an estimated 19 million B2B field salespeople and, over the next decade, this number is likely to shrink to about 10 million. The middle-ranking “field sales rep” who sells products, features and benefits is becoming irrelevant and unaffordable, and will be replaced by competent and well-qualified internal telephone-based salespeople, who carry out account management and other roles.

    •This will create a requirement for highly educated, financially literate, business-savvy, well-trained consultant-type salespeople who are highly paid. These salespeople are in short supply, and there will be an increasing demand for universities to fill this void. In the US, around 60 universities now offer degree courses in sales, and 94% of their students are recruited before they graduate.

    •In South Africa, finding a sales organisation with a clearly defined and articulated sales strategy is all but impossible. This results in lack of focus, confusion and appalling inefficiency.

    •Some business processes have achieved extraordinary levels of accuracy and precision. Commercial airlines have a defect level of 3,2ppm, and electronic chip manufacture 3,4ppm. Sales, in contrast, not only tolerates but accepts as normal extremely low standards. Lack of process, poor adherence to process, hiring failure rates of 50% and sometimes higher, inaccurate forecasting, forecasting slippage, untrained sales managers, and much more. Massive improvement is both necessary, and achievable.

    •According to ASTD in its 2011 report ‘Developing Sales Teams that Win’, more than US$15.5 billion is spent annually in the US on sales training. Yet, despite this level of investment, ‘conventional’ sales methods seem not to be delivering profit at the rates required by most B2B companies – and, as ASTD so elegantly put it – that’s “[a] large investment to attain more mediocre results”.

    Sales effectiveness

    Unfortunately, most discussions on sales effectiveness default to a discussion on sales training, which should actually be the last step in the sales enablement process.

    •Sales effectiveness begins with an informed management decision to capitalise on the economic benefits to be derived from a highly effective sales organisation. The second step is to decide upon an appropriate go-to-market sales strategy for each business unit or line of business.

    Many companies, trying to shed the shackles of commoditisation, are electing to play in the solution space. This, however is very challenging, and most fail to get any return on their investment, often because they strive to deliver value to their customers, but have no clue how much value they actually deliver, and find themselves unable to get paid for it.

    •Customers are increasingly demanding ROI when purchasing large complex solutions, but few suppliers have an effective and credible mechanism for building a robust and logically unassailable business case. Those that do are achieving remarkable growth, with much smaller sales forces.

    Two other areas handled very poorly are recruitment and onboarding. Research by CSO Insight reveals that in a survey of some 2000 B2B sales force, on average, 20% of salespeople delivered 62% of revenues. In industries such as real estate, 10-15% of salespeople deliver about 80% of revenues. This is totally unnecessary and, with readily available tools and systems, a hiring accuracy of 90+ percent is achievable. The financial impact is dramatic.

    In summary, a carefully considered, and well-planned investment in sales effectiveness will yield substantial financial returns, and a 50% improvement in sales productivity should be well within the reach of most organisations.

     

  • Firm boosts eLearning

    phase3 Telecom, West Africa’s leading aerial fibre infrastructure company, has lmade a bold statement in the education sector of Nigeria. The company currently provides broadband connectivity to several primary, secondary, and tertiary schools in Nigeria. And recently, Phase3 Telecom provided broadband internet and Wi-fi connectivity to Baze University, Abuja.

    The CEO of Phase3 Telecom, Stanley Jegede, stated, “The ability for the Nigerian student to go beyond the knowledge of their teachers through research via eBooks and eLibrary is the cultural shift that takes education from the conventional platform of lecture and teacher focused education to a more open collaborate approach that reaches beyond school hours, beyond classroom walls, and between geographically dispersed locations.”

    He also added that the company has plans to increase the role of ICT in many schools especially in the rural parts of Nigeria by providing high speed broadband connectivity via their Open Access Network. The company provides broadband connectivity to, amongst others, Spring Hall British School, Cradle to Crayon School, Centagon International School and The Regent Secondary School in Abuja.

    Education is one of the main instruments for repositioning Nigeria’s global status in science and technology. The Information Technology Association of Nigeria (ITAN) and the Association of Telecommunication Companies of Nigeria (ATCON) signed an agreement to influence critical government policies at all levels with regards to the Information and Communication Technology at all levels, which includes education.

    “I see Baze University setting standards for excellence in this part of the world. Currently, no Nigerian University is rated in the top 5,000 in the world. Many Nigerians thus feel compelled to send their sons and daughters to be educated abroad. We are determined to deliver the same quality of education that many of these high ranking schools offer abroad. The need to raise the education standard in the country led us to partner with Phase3 Telecom for high-speed and high-capacity internet connectivity so that Baze University students can experience online research and eLearning as do the students in quality schools abroad,” the founder and Pro-Chancellor of Baze University, Sen. Datti Yusuf Baba-Ahmed, stated.

     

  • CAC committed to service delivery

    CAC committed to service delivery

    AS part of efforts to ensure effective service delivery, the Corporate Affairs Commission (CAC) has opened additional offices in some parts of the country, a move, it says, will enable friendlier environment for trade and investment to thrive.

    This revelation was made by the Registrar-General of the Commission, Bello Mahmud, in Abuja recently.

    “This is part of measures to ensure efficient service delivery to its customers and reform of the investment climate through the provision of an electronic system of registration that allows customers to transact with the Commission remotely, the CAC has introduced various reform initiatives,” he said.

    Expatiating, the CAC boss said: “The CAC has taken practical steps to decentralize its operations by making the state offices more functional and at par with the head office. The new system has taken off in two Lagos offices since November 1, 2012 with the official launching by the Honorable Minister of Trade and Investment. Necessary test running is being carried out in the remaining three offices of Kaduna, Enugu and Kano.”

  • Ajagu tasks telecoms operators on effective branding

    Dr. Ausbeth Ajagu, a renowned political economist and entrepreneur, has impressed on telecoms operators in the country the need to carry out effective branding.

    According to him, this becomes necessary because the force of a brand is such that embodies values which define a given product.

    He made suggestion as a key facilitator at a strategic conference in Cotonou, Benin Republic, recently.

    Speaking on the discourse, “Building a Powerful Entrepreneurial Brand”, Ajagu asserted, “There is enough space for all products to sell, though depending on what your desire is. However, if your desire is to be the market leader, then you have to go the extra mile to subdue your competitors.

    “Always remember that the market place is not meant for the chicken-hearted but the lion-hearted, thus capitalism by default.”

    Expatiating, he said: “There are numerous characteristics of a good brand and you must screen your potential brand against these characteristics. You must select the right branding strategy.

    “One of your most important tasks is to create and sustain brand equity. Brand equity provides you with a competitive advantage and allows you to command a premium price. It also increases the value of your business. There is also the need to entrench the principles of Total Quality Management (TQM), meaning that the organisation’s culture is defined by and supports the constant attainment of customer’s satisfaction through an integrated system of tools, techniques and training.”

    Ajaugu, who is President, Academy for Entrepreneurial Studies, Nigeria (AES), also reaffirmed the need for ethics and morality in the workplace and condemned every vice of immorality that is likely to amount to ineffectiveness.

  • NNPC loses N165b to oil theft, vandalism

    NNPC loses N165b to oil theft, vandalism

    The Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), said the corporation lost about N165 billion to petroleum products theft and repairs of vandalised pipelines in four years.

    The Managing Director of PPMC, Prince Haruna Momoh, made this known this yesterday while fielding questions from reporters after inaugurating four triple agent fire fighter trucks at Mosimi Training Centre in Ogun State.

    He said the corporation was discussing with the National Assembly on the appropriate punishment for vandals.

    “We are talking to legislators at the National Assembly on proper sanction and prosecution of people that engage in oil theft and pipeline vandalism. We believe that between now and the end of June, we should be able to come up with s solution,” he said.

    He said between 2009 and end of December 2012, the NNPC alone lost about N165 billion, not only on product theft, but to crude oil and vandalism, adding that beside this, lives of workers had been lost to the dastardly act.

    “We have also lost lives in the cost of repairing the vandalised pipelines in Arepo. We have lost about five members of staff who were killed while on duty repairing the vandalised pipelines. We, however, call on Nigerians and stakeholders to come together to fight this menace head-on,” Momoh said.

    The PPMC boss said the supply of petroleum products has been robust. “We, at the NNPC, are still keeping the mandatory 30-day national stock reserve as directed by the Minster of Petroleum Resources, Mrs. Diezani Alison-Madueke, but we always have challenges because of the rate at which pipelines are been vandalised, practically on daily basis.

    “So, we have challenges in terms of distribution. If only the vandals would allow PPMC to efficiently distribute products across the states, there would be nothing like fuel scarcity.

    “We need to restate that looking at economy, the quickest, safest and easiest means of distributing product is through the pipeline network,” he added.

    He said in a country of about 160 million people, it is through the pipeline that the government can effectively push products rather than engaging trucks as a method of distribution.

    “The truck methodology of product distribution has contributed immensely to the challenges confronting effective products distribution across the country. System 2B pipeline is pumping effectively and about 60 to 70 per cent of the country’s petroleum products are distributed through it. Therefore that axis is one of the most important networks in NNPC’s pipelines’ network.

    “Some areas prone to vandalism, such as Ijedodo, Imagbon-Ijegun and Arepo would definitely have negative impact on the nation’s products distribution,” he said.

  • Nigeria can rank 13th among world’s top economies, says report

    Nigeria can rank 13th among world’s top economies, says report

    Nigeria has the potential to be the fastest growing economy among the world’s top 20 economies from now to 2050, according to the latest report by World in 2050.

    The growth and placement are, however, premised on the country’s judicious use of its oil and energy resources to develop and improve on its derelict infrastructure.

    The country should apply its oil wealth to develop a broader-based economy with better infrastructure and institutions, which will support long term productivity growth, the report indicated.

    With a projected Gross Domestic Product (GDP) of about $4 trillion by 2050 and a yearly average real GDP growth rate of around six per cent, as well as a youthful and growing working population, Nigeria is projected to rank 13th among the world’s largest economies, if it can realise its steam.

    The report entitled: World in 2050: The BRICs and beyond: prospects, challenges and opportunities, said a growing, prime working age population, together with rising average rates of schooling and technological progress, drive theh country’s strong growth prospect.

    A partner with PwC Nigeria, Andrew S. Nevin, said: “Nigeria’s projections for population, education levels and technological progress are very strong. Nigeria lags behind with regard to its investment rate. Productivity is lower in Nigeria due to weaker infrastructure and institutions, as well as an over-reliance on oil revenues. By investing in these areas and diversifying its economy, Nigeria can realise its potential by 2050.

     ”Over the past decade, the private sector has played an enormously positive role in sectors like telecoms, retail, and financial services in Nigeria and throughout Africa. For Nigeria to realise its potential, it is going to require governments at the state and federal levels to play their role in fostering the right type of environment, including improvements in the rule of law, greater transparency and strengthening of the health and education systems, and enabling the development of key sectors, with power being the most important. Many strides have been made in this regard and they need to keep coming,” he added.

    PwC Chief Economist/co-author of the report,  John Hawksworth, said: “The shift in the global economic centre of gravity is clear. The E7 could overtake the G7 before 2020, and by 2050, China, the US and India could be by far the largest economies – with a big gap to Brazil in fourth place, ahead of Japan. By the same time, Russia, Mexico and Indonesia could be bigger than Germany or the UK; Turkey could overtake Italy; and Nigeria could rise up the league table, as could Vietnam and South Africa in the longer term.

    “There are huge opportunities for Western companies in the emerging markets – but also great competitive challenges from fast-growing emerging market companies. Governments also face huge challenges, not least in relation to global warming as a result of this rapid pace of economic development,” he argued.

     The report lists growth estimates as driven by: Growth in the labour force, as proxied by United Nations projections for working age population; growth in the quality of labour which is assumed to be related to current and projected average education levels in the workforce; growth in the physical capital stock, which is determined by new capital investment less depreciation of the capital stock; and technological progress, which drives improvements in total factor productivity.