Nigeria to become Africa’s biggest economyComment on this story
Lagos, Nigeria - 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 percent, analysts say. Ghana's economy grew by 60 percent when it recalculated its goods and services production in 2012, and Kenya and Zambia are considering the same.
“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.
Investors' attention will be drawn by the fact that while oil remains the biggest source of government revenue, about 80 percent, oil production is declining while Nigeria's agriculture, communications and service sectors are enjoying healthy growth.
“This helps to explain why many investors are now banking on a rising consumption story in the most populous country in Africa,” Daly said.
The revisions are expected to boost Nigeria's per capita income of $1,555 a year for its 170 million people, but it will remain feeble beside South Africa's $7,336 for its 48 million people. The International Monetary Fund currently puts Nigeria's GDP at $292
billion and South Africa's at $353 billion.
South Africa, bedeviled by mining strikes, violent protests over services and a lackluster performance that has kept annual growth at around 3.5 percent, still has infrastructure unrivaled 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
percent, 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 percent to address massive poverty and youth unemployment. Government statistics say unemployment increased from 12.7 percent in 2007 to 23.9 percent in 2011; the World Bank says unemployment among young Nigerians stands at 38 percent but analysts say it is as high as 80 percent in many parts of the country.
Nigeria's woes were highlighted in recent weeks by fuel shortages that had miles-long (kilometers-long) lines at gas stations with people in search of gas for cars, diesel for electricity generators and kerosene for cooking. Nigeria produces about 2.2 million barrels of petroleum a day but is forced to import refined fuels because hundreds of millions of dollars allocated to rehabilitate refineries have been stolen or mismanaged.
“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 percent of the population lives below the poverty line today, compared with 17 percent 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.