South Africa v Nigeria: What Happens Next?

2014-04-06 20:16

  South African and Nigerian flags (www.foreignpolicyblogs.com) On Sunday, 6th April 2014, Nigeria rebased its GDP to become Africa’s largest economy. This position was previously occupied by South Africa. The recalculation puts Nigeria ahead of South Africa, in GDP value, by as much as much USD 50mil, a figure which could rise over time.

It was bound to happen. Nigeria is oil-rich and as the state stabilises internally it was inevitable that oil revenue would allow the country’s economy to surge ahead (despite South Africa’s immense mineral reserves). Further, Nigeria’s population is almost three times larger than South Africa’s: Nigeria’s domestic market demand and labour pools exceed ours. In this case, size does seemingly matter.

Many have been quick to point out, however, that Nigeria’s growth is not the end of all its problems – nor South Africa’s dominance. Nigeria still faces immense domestic pressure: its infrastructure backlog, vast poverty and political turmoil keep it from becoming Africa’s hegemon. So too does rampant corruption and capital fight,

Those who want to see South African leadership of Africa – with a UN Security Council seat and other accoutrements of power to boot – should take little comfort from this. Nigeria’s growth – and its potential for growth, especially as its domestic situation normalises – means that Nigeria’s standing as an investor destination and credit-borrower in international markets has strengthened. Both mean, ultimately, more capital inflow into Nigeria; along with more jobs, (inward and outward) economic expansion and (political) power.

This is simplistic analysis and such growth, in economic and political terms, is influenced by a myriad of factors. But, as Nigeria strengthens its institutions and its polity, thus stabilising its domestic situation, the more likely it is that Nigeria will threaten South Africa’s leadership position even more. That it does so already – notwithstanding its problems – possibly proves this.

This will depend though on the Nigerian state’s ability to aid, rather than hinder, Nigerian growth. And this is not as easy as it would seem. South Africa’s own experience proves it.

With the prospect for economic growth on the not-so-distant horizon Nigeria’s political leadership will have to apply their minds sharply to making it a reality. Ensuring good governance, an opening up of borders and markets and tackling vested economic interests on the left and the right are all ingredients to ensuring that Nigeria will grow. And as the macro-climate improves so too does the possibility that wealth generation for individuals. The state is in a unique position to ensure that industry development and growth as well as economic inclusion and advancement of its people take a central place on its agenda.

But the state can also be the very obstacle to those worthy goals. By placing itself at the centre of the political and economic decision-making nexus the state can be tempted to centralise power in itself. In so doing, the tendency to blur the lines between party and state and private and public becomes the norm and, as South Africa’s own experience shows, where that happens economic growth is far from easy, despite the various natural resources and structural advantages a country may have.

But what for South Africa?

Not all is lost. While South Africa faces its own problems and challenges the chance for the right decisions to be made has not escaped us. While we may have to get used to the idea of sharing Africa with Nigeria, South Africa can still introduce measures to clamp-down on corruption, liberalise state-dominated markets and make trading easier. It can also reform our welfare system, placing individual agency at the heart of the process, better our infrastructure and deliver textbooks to its students. It requires a tough but caring government; one that understands how best to run an empowering state that supports people in making their lives better; a state that equips people to not need it rather than one which breeds dependence.

Time and again, the ANC government has had the opportunity to make these decisions and better South Africa’s prospects. While some of the factors that have made South African growth difficult lie beyond our control – such as the 2008 global financial crisis – others are domestic matters that it can and should pay attention to.

Nkandla dominates the headlines but it is not our biggest problem. It is however symptomatic of a wider, more pervasive culture that dominates our politics. Corruption is an endemic issue that threatens investor confidence here and abroad. This coupled with our energy dilemma and looming water crisis makes for even bleaker thinking. A dangerously upward left that promotes impractical and unaffordable policy that sends shocks through our political system does not help either. Poor infrastructure and ambivalent foreign and trade policies, that at times even contradict each other – and themselves, doesn’t make things any easier. Neither does crime and a lack of security.

But these are policy issues that can be worked on. We have a robust civil society and strong institutions that, even though they are under assault, powerfully protect the Constitution and make it a lived reality. Our politics may be dominated by the ANC but the fact that we live in relative peace and can have free and fair elections is a remarkable feat considering where we once were. And, interestingly, these are things we take for granted but which Nigeria still has a long way to achieving.

The ANC, as the leading party in the tripartite alliance and the dominant party of government, faces an immense challenge. Not only does it now determine how well we do domestically but, for the first time, its decisions also directly determine how we navigate international terrain as well. Whereas it could previously rely on moderate growth and the problems of our neighbours to keep us in the lead, that is no longer the case. Hopefully with increased domestic political pressure and international competition it – and other parties – will rise to the challenge.

And to think, we can influence all of that by how we vote on 7th May 2014. This election just got more crucial.

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