Nigeria about to overtake SA

By Drum Digital
07 April 2014

Nigeria set to become Africa’s biggest economy

Nigeria is set to overtake South Africa as the biggest economy in Africa with a long-overdue recount of its GDP that will give it continental bragging rights but do little for its 112 million people scrabbling to survive in desperate poverty.

That's cause for reflection in longtime rival South Africa, the only African member of the G20 on the strength of its position as the continent's economic powerhouse.

Nigerian Finance Minister Ngozi Ikonjo-Iweala is to announce new GDP figures Sunday to include previously uncounted industries like telecommunications, information technology, music, airlines, burgeoning online retail outlets and Nollywood film production that didn't exist when the last GDP count was made in 1990. Then, there were 300,000 landlines. Today, Nigeria has 100 million cell phone users. The new figures also will take account of growth in agriculture and tourism that have flourished since democracy was restored in 1999, ending decades of military dictatorship. The new count could increase the monetary size of Nigeria's economy by as much as 60 or 70%, analysts say. "Nigeria's success is a reminder that Africa is moving ahead despite its current challenges," said investment manager Kevin Daly of UK-based Aberdeen Asset Management, which invests in Africa. He pointed out that it is a Nigerian, billionaire Aliko Dangote, who is building Africa's largest privately owned oil refinery.

South Africa, bedevilled by mining strikes, violent protests over services and a lacklustre performance that has kept annual growth at around 3.5%, still has infrastructure unrivalled on the continent, most notably a power sector that generates 10 times as much electricity as Nigeria. Nigeria's revised figures will lower its much-vaunted growth rate but also decrease an already low debt to GDP ratio of 21%, which should lower interest rates should the government want to borrow more, economists said. Financial analyst Bismarck Rewane called the revisions "a vanity. The Nigerian population is not better off tomorrow because of that announcement. It doesn't put more money in the bank, more food in their stomach. It changes nothing."

Finance Minister Ikonjo-Iweala has said that Nigeria's economy needs to grow at more than 7% to address massive poverty and youth unemployment. Government statistics say unemployment increased from 12.7% in 2007 to 23.9% in 2011; the World Bank says unemployment among young Nigerians stands at 38% but analysts say it is as high as 80% in many parts of the country. "We don't want to rain on your parade, however, as Nigeria got richer per GDP, more and more Nigerians have gotten poorer," social commentator Baba Adam wrote in an open letter quoting government statistics that indicate 67% of the population lives below the poverty line today, compared with 17% in 1980.

On the positive side, tens of thousands of Nigerians have been returning home from abroad since democracy returned, many setting up businesses that will be counted in the new statistics.

-          Sapa

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