Africa’s biggest economy has so much going for it, like its oil industry, yet it punches below its weight, writes Victor Kgomoeswana.
A friend was unrepentant on the phone earlier this week: “I can never trust the Nigerians – they are all crooks. And, while you are at it, remember that I do not believe that the Nigerian economy really overtook South Africa in size, as they say. It is one big fraud.”
It was a simple conversation about my role as an evangelist preaching the “Africa Rising” story. Although my friend was impressed with my overall stance on Africa as the future of the world economic order, she was not impressed that I sometimes portray Nigeria as a star – and often a star bigger than South Africa.
She was not interested that Africa’s richest man and woman were Nigerian; or that the financial sector in Nigeria had been reformed to the point that the country’s banks were expanding faster than most into the rest of Africa.
She was not interested in any of that because, in her view, Nigeria did not deserve any of the praise it got from me.
I am sure she was exaggerating a bit; but from time to time Nigeria does hurt the Afro-optimist in me.
This past week, as South Africans faced a fuel price hike after a series of price decreases, Nigerians were queueing for petrol at filling stations in desperation. Reports said some filling stations were charging between 200 and 250 naira a litre. That is between R12 and R15 a litre. So what?
South Africans are paying about R11, after the recent price hike!
The difference is that, unlike Nigeria, South Africa is not a top crude oil producer.
While producing more than 1.7 million barrels of crude oil a day (bpd), Nigeria exports about 2.2 million bpd of petroleum products, according to figures from the Organisation of Petroleum Exporting Countries (Opec).
I must hasten to add that the incumbent president of Opec is Diezani Alison-Madueke, Nigeria’s minister of petroleum resources. Why, then, is such an esteemed member of Opec struggling to meet its petrol demand at home?
I guess the answer lies in what has been Africa’s perennial shortcoming: exporting too much in raw commodities, instead of beneficiation at home.
Nigeria’s refinery capacity is cited as being 445 million bpd, which is less than half of the average daily production quota.
Of course, the fuel shortage is due to a stand-off between the federal government and the Major Oil Marketers’ Association of Nigeria.
The association says its members suspended fuel imports because the government owes them N264 billion in subsidy arrears.
The Minister of Finance in Nigeria, Ngozi Okonjo-Iweala, has promised to settle the debt.
The association says she has not delivered and that’s why it has suspended fuel imports. What else could an oil marketer do if banks are beginning to refuse them the trade finance facilities they need? Carrying on regardless would be a recipe for business failure.
Back to my friend’s incredulity about Nigeria.
Much as I persist in saying that Nigeria is worthy of being the top economy of Africa, it is slip-ups such as this one that make me understand where she was coming from.
That is the source of my love-hate relationship with this country that punches below its weight in so many ways.
A country that has been producing oil since the late 1950s should not still be exporting more than half of its crude oil production, only to import fuel.
A country whose petroleum resources minister is president of the oil producers’ cartel should not be battling with a fuel shortage. I only hope the Petroleum Industry Bill will soon have the teeth to speed up the reform of the oil industry and allow the people to reap the benefits of their abundant crude oil reserves, even if it is late in the day.
Other developments in West Africa this week include Ghana’s finalisation of a $940 million (R11.3 billion) loan from the International Monetary Fund (IMF) to support a programme aimed at boosting economic growth and tightening fiscal discipline.
With Ghana’s gross domestic product growth expected to remain negative, this star of West Africa had better get its act together.
By the way, Ghana has been an oil producer since 2010 and, just like Nigeria – which has been urged by the IMF to devalue its currency, the naira – it could be in for a turbulent time if its economic hardships do not abate. Africa can ill afford another oil curse in West Africa.
Finally, out of West Africa, I read with despondency that Sierra Leone’s Vice-President Sam Sumana has voluntarily placed himself under quarantine for 21 days as one of his security guards has died of Ebola.
Was Ebola not reported to be on the decline in Sierra Leone, Guinea and Liberia?
It was, but somehow Sierra Leone has had a sudden rise in the number of new cases, compelling President Ernest Bai Koroma to restore some of the restrictions. Not again!
Southern Africa’s flashes of promise this week
Eskom, Africa’s largest power utility, gave me hope this week with the announcement that the Medupi power station, expected to be a saviour in this latest season of load shedding, has come on stream. The Afro-optimist in me hears promise, even when reason suggests otherwise. Medupi’s commissioning has been postponed several times, but hope springs eternal.
When chief executive Tshediso Matona announced that unit six had been synchronised, he was bullish, adding that: “All required auxiliary services for the entire power station are ready to ensure that Medupi’s total output of 4 764MW is fully synchronised with the South African power grid.”
When?
At least 794MW will be added in the next three months. Hope, said Albert Einstein, is a good breakfast – but a bad supper. I will take my chances and count on Eskom again.
Another positive story that captured my attention was that the people of Lesotho were able to hold peaceful elections. Although surrounded by South Africa, Lesotho’s near-coup last year cast an unnecessary shadow over Africa’s upward surge in constitutionality and decline in the number of incidents of violent regime change.
Small as it is, Lesotho is central to southern Africa’s hydroelectric power supply. Seeing the elections go off smoothly restored faith in the future of the region.
Rarely does a drop in any company’s revenue or even market share make my list of African business highlights of the week.
However, MTN – South Africa’s proud mobile telephony export – reported a better story than its 3.9 percent lower revenue this week. I was impressed that the company would be investing a further R30bn in infrastructure, which analysts said was a result of stiff competition from Vodacom and smaller rivals Cell C and Telkom Mobile.
The reason this is a good story for me is that we complain a lot about low intra-Africa trade or investment by Africans in their own continent. When an African enterprise puts so much money into the improvement of its infrastructure, Africa can only benefit.
As the portfolio manager at Mvunonala Asset Managers, Maqhawe Dlamini, said: “Data is definitely their target now.”
The future of mobile telephony is in data, not voice calls. Africa needs more data capability to allow us to truly reap the rewards of the mobile telephony revolution.
This is good for education, health care, financial services, among other things. Seeing MTN use its rough patch to catch up with Vodacom’s data technology is encouraging and a win-win proposition for Africa. The company deserves to be commended for making the only decision any enterprise can make during a downturn.
My toast of the week, once again, comes from the East
Believe not what media reports tell you, because some of us on the ground are doing business as usual. These were the words of my guest on Power Hour on Thursday, James Wambugu.
The managing director of UAP Insurance in Kenya he was, as my guest on radio, responding to my query about Kenya being among the top 20 fastest-growing economies, according to a Bloomberg survey. The only other African country on this list is Nigeria; but I digress!
Running an insurance company in a country whose president has faced charges at the International Criminal Court – although these have been dropped – Mzee James knows better.
He told me and the listeners to focus on the real story. His company is in an industry that has been growing by double digits for a while; and it is a subsidiary of UAP Holdings – of which 23.3 percent is owned by Old Mutual. At least Old Mutual thinks highly of Kenya!
The country’s economy is expected to grow by 6 percent, compared with China’s 7 percent, this year, according to the economists surveyed by Bloomberg. The World Bank agrees.
The Kenya Economic Update sees the country’s economy growing by up to 7 percent in the next three years.
To top the good news for Kenya this week, the stalemate involving four media houses and the Communications Authority of Kenya has come to an end. Television is back in business and, we could say, digital migration is back on track in East Africa.
This is in a country that inaugurated the world’s largest geothermal power plant last year, and which will be investing $100m in power stations.
In the same week, the Kenya Commercial Bank – the region’s largest lender – reported an 18 percent rise in post-tax profit for the year to December 31!
It is developments such as these and conversations with people on the ground such as Wambugu that make me, in spite of the difficulties that Africa faces, an Afro-optimist.
Lest we forget: snippets of African history and about icons for inspiration
Ghana celebrated its Independence Day on March 6.
The founding father of the first country in sub-Saharan Africa to gain independence, Kwame Nkrumah, said in his independence day speech on March 06, 1957: “Our independence is meaningless unless it is linked up with the total liberation of Africa.”
No figure in Africa towers higher than Kwame Nkrumah in my book. When I look at Ghana now, facing a fiscal crisis so serous it is seeking a bailout from a Bretton Woods institution, the IMF, I think of how Nkrumah preached and practised self-reliance for Africa.
Credited with providing one of the first forms of foreign aid offered by an African country, President Nkrumah financially supported countries such as Burkina Faso, then known as Upper Volta, because he believed that relying on non-African aid was tantamount to what he called “neo-colonialism – the last stage of imperialism”. This was also the title of his seminal book.
Malawi celebrated its Martyrs’ Day on March 3, commemorating those who lost their lives in the fight for independence, which the country gained on July 6, 1964.
*Kgomoeswana is author of Africa is Open for Business, Anchor of CNBC Africa’s weekly show Africa Business News, and anchor of daily show Power Hour on PowerFM. He writes in his personal capacity.
** The views expressed here are not necessarily those of Independent Media.
Sunday Independent