South Africa has come to terms with its Number Two status after Nigeria in the continental economic pecking order. The trick now is to put aside commercial rivalries and find common ground for further growth. Report by Tom Nevin.
Six months down the line, South Africans seem to have accepted that, economically speaking, their country is Africa’s Number Two. They’ve had that long to come to terms with the harsh reality that South Africa’s GDP had been knocked off the top perch by Nigeria, the continent’s big, brash, bustling, noisy pretender.
It happened suddenly and decisively. With little ceremony, Nigeria’s Statistician-General announced that his country’s GDP for 2013 had virtually been doubled from 42.4 trillion naira ($250bn) to 80.2 trillion naira ($509bn).
By comparison, South Africa’s stood at a paltry $354bn. The estimated income of the average Nigerian went from less than $1,500 a year to $2,688 in a trice. The economy of the West African had grown by almost 90% overnight.
On Saturday 5th April, South Africa was Africa’s largest economy and Nigeria was a distant second. And then, faster than you could say ‘gross domestic product’, the roles were reversed. The IMF has put South Africa’s GDP at $354bn last year, well ahead of its closest rival for the crown, Nigeria. By Sunday afternoon that had changed.
In faraway South Africa, the awakening was of a ruder sort. South Africans, supremely confident in their continental economic and financial superiority, found the pecking order reversed, with Nigeria the honcho rooster in the African henhouse. And the difference wasn’t chicken feed: Nigeria’s economy outpaced South Africa’s by over $150bn, and the gap was widening rapidly.
South Africa’s economy is reckoned to expand by an average of 2% a year for the next half decade, while Nigeria’s should have little trouble in mustering growth of 7% to 9%.
In that fateful event, Nigerians also discovered they were twice as wealthy as they had been when they went to bed the previous night. It was cold comfort, however, because the new dawn did not actually put more money in their pockets, and most of Nigeria’s 175m people would still have to get by on a dollar a day.
What had changed quietly but substantially in the 15 years since the economy was last measured, was Nigeria’s economic maturity, transforming from a financial base of crude oil to more diversified activity comprising such vibrant and robust livelihoods as manufacturing, agriculture, financial services, mobile telephony and Nollywood.
As the economy was busy remaking itself, the oil extraction industry’s share of GDP was squeezed from 33% 15 years ago to just 14% today. Manufacturing is soaring, financial and other services are booming. “Suddenly,” notes The Economist, “any company or investor who wants exposure to Africa’s fast-growing markets cannot afford to pass the continent’s largest economy by.”
Analyses of Nigeria’s economy a decade and a half ago paid little attention to such fast-growing sections of the economy as mobile telephony or the movie industry. The number of mobile phone subscribers has leapt from a few hundred thousand customers to some 120m today.
“On the old 1990 figures,” observes the magazine, “the telecoms sector was less than 1% of GDP; it is now almost 9% of GDP. Motion pictures had not shown up at all in the old figures, but the industry’s size is now put at 1.4% of GDP. Nigeria’s number crunchers have improved the gathering of statistics in other ways. The old GDP figures were based on an estimate of output. The new figures are cross checked against separate surveys of spending and income.”