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Nigeria’s large economic size is good for Africa

As part of #AfricaCelebrating series, I am writing this piece to express shock at the negative reaction of some South Africans to the news that Nigeria is now officially the biggest economy in Africa. This is news to celebrate by all of South Africa and the continent at large, and not something to frown upon. I hope to show why commendations are in order in the rest of this post.

Disclaimer: I shall be using economic facts and stats in this post. But I am not an Economist, and will not pretend to argue as one. I am an Infopreneur who uses data to generate insights.

The latest Google search results show that there are 126 million links related to “Nigeria’s economy is bigger than South Africa’s”.  This amount of content cannot have been generated since the official announcement at the beginning of April. Thus, the writing has been on the wall for a long time coming. As a result, the sudden negative reaction is rather unfortunate as it prevents the continent from moving forward as a united force.

Let the numbers do the talking

Analysis of regional economic and population contributions clearly shows that Africa’s contribution to the world economy is miniscule, compared to its contribution to world population.

Region GDP (US Tril) GDP% Population (Mil) Population%
Africa 1,18 2% 1100 16%
Asia 18,52 26% 4200 59%
Europe 19,92 28% 731 10%
Americas 20,97 29% 855 12%
         
TOTAL 71,83 100% 7095 100%

 

The key insight from the table above is that Africa has consumers but not producers. This makes the continent what economists would call a net importer of goods, and essentially the market for goods from Europe and the Americas. In this context, the South Africa vs Nigeria economic debate is a sideshow. We, the South Africans, may feel better by pointing out Nigeria’s economic weaknesses, but we are missing the bigger picture by being so inwardly focused. This makes us look silly in the eyes of other regions that are leveraging their economic dominance at our expense.

Some more stats worth considering

According to the annual African Economic Outlook report, Nigeria’s economy has been growing at an average of 7,9% for the last 9 years (regional growth has been 5.9%). Compare that to South Africa’s sluggish 3,9% growth for the same period, with world economic growth average in the similar range. Notice that Africa’s growth is midrange between the two continental economic powers.

If Nigeria’s economy was rebased in 2012 and it was found then, as was the case now, that its economy is actually in the $500 billion mark, the following were going to be the results using the World Bank’s 2012 GDP report:

  • Nigeria’s economic size would then be as large as Norway, and ahead of Asian countries Malaysia, Indonesia and Thailand; and South American countries Chile, Columbia and Venezuela.
  • Nigeria was going to jump 16 places to spot 23 in world economy rankings. South Africa is at number 28.
  • Africa’s contribution to world economy was going to grow by 0,35% – from 1,65% to 2% 

Without a doubt, Nigeria has been and will continue to be playing a significant role in driving the Region’s economic growth and its contribution to world economy into the foreseeable future.

In conclusion…

Africa has an enormous challenge of punching above its weight in all the main global relationships and forums if it is to be taken seriously. So far, the continent has made inroads into the G20 (or now the G19 with suspension of Russia?), the UN Security Council, the WEF and many regional bilaterals such as EU/Africa Summit. Growth of the continent’s economy is an important leverage for it to be treated as an equal, regardless of the source of such growth. In the end, South Africa will also benefit from the elevated African economic status as part of the continent, and currently one of its leading voices and beneficiaries of a fair share of foreign investment.

KE NAKO YA HORE AFRIKA BORWA E KGWAPHETSE MOHATLA

If you want to know what the South Sotho phrase above means, check it using Google Translate feature.

As a a parting shot, the uprising experienced in Ukraine right now is because this former USSR country wants to become part of the UE block and move away from its former home – the USSR. Simple logic dictates that the former promises better economic prospects than the latter.

 

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