Being the continent’s largest economy does matter
NIGERIA IS NOW Africa’s largest economy – which is great news for Nigerians. Many South Africans; at least those I interact with on Facebook, Twitter and Instagram; seem to downplay this recent revelation by Nigeria’s Bureau of Statistics. They argue Nigeria’s rise to Africa’s largest economy status does not matter much; because, on Gross Domestic Product (GDP) per capita basis, South Africa’s economy is three times higher than Nigeria’s.
Well, I think they are wrong. South Africa’s loss to Nigeria as the biggest economy in the continent does matter.
You see, being the largest economy in the continent gives the country visibility, and it’s even more beneficial if the economy grows at a high rate (at least 6% a year). Because remember, the basic definition of GDP is: the market value (monetary) of goods and services produced within a country’s borders over a period of time (which could be a week, a month, a quarter of the year, or a year).
So if this year’s GDP is higher in comparison to the previous year, in simple terms, it means the country has produced more of the goods and services; or perhaps that the monetary value of these goods and services surged (but I doubt this is ever the case).
GDP growth varies across countries. Look at China, it has maintained at least 7% growth even in times of global financial crisis. That does not mean its economy is immune to global economic headwinds. It’s been affected, but the growth numbers remain relatively impressive.
Look at Mongolia, which is experiencing double digits growth rates.
In Africa, countries like Ghana, Angola and Tanzania; all grow at remarkable rates.
The GDP (total output) is a good measure of the country’s economic productivity. The country’s high growth rate reflects its robust productivity. People are spending, producing, investing, taking risks.
So tell me, isn’t it sane for international corporations to invest more in productive economies; than the economies of Greece, Ireland, Spain, or Italy?
One of the reasons China has become the world’s biggest car market is because its economy is productive. The Chinese are producing what they are good at, consuming and investing. Today, their economy is the second largest in the world, behind the United States; and will likely take the number one spot as the world’s biggest few years from now.
Because of this robust productivity, China is very much attractive to investors. Investments will continue flowing into the world’s most populous nation. And because it is the second largest economy, and one of the fastest-growing in the world; it’s being seen as the next global super-power.
Nigeria is poor, no doubt about that. The “World Bank president Jim Yong Kim included Nigeria with India, China, Bangladesh, and the Democratic Republic of the Congo as the countries with the largest number of people living in “extreme poverty,” defined as less than $1.25 per day. He went on to say that if you add to those five countries Indonesia, Pakistan, Tanzania, Ethiopia, and Kenya, those ten countries together account for 80 percent of the world’s total “extreme poor.”” , according to The Atlantic.
The new status is good for Nigeria, and given the fact that their economy grows impressively, with the young and a growing population; the future looks bright.
There is a serious challenge facing Nigeria though – violent Islamic extremism in the north. Boko Haram continues to destabilize the region, with occasional massacres on a massive scale. But I remain optimistic about the future of Nigeria.
Terrorism is a global challenge, as I argued in my blog post titled “Terror in Africa – a threat to the entire world”. I do hope that one day, Nigeria will win the battle against the monsters of the world who pursue their heinous murders in the name of a religion.
SOUTH AFRICANS NEED TO TAKE THESE CONTINENTAL DYNAMICS SERIOUSLY
This week, I read an article in The Economist; about recent South Africa’s bills that will surely hurt investment inflows – the mining bill and the security bill. Both of these bills propose a bigger role by government in these sectors.
Interestingly, the magazine points out that, South Africa holds its elections next month; so the ruling party, the African National Congress (ANC) proposes these bills because it faces a huge political challenge from Julius Malema’s left-wing party, Economic Freedom Fighters.
The point I raise here is that being the continent’s largest economy, especially when you’re a developing nation seriously matters. South Africa is still developing too, it needs global visibility. It needs faster economic growth to create jobs for the quarter of the population unemployed. It needs that status now attained by Nigeria. Yes it’s GDP per capita ranks among the highest in Africa, but that’s very a far from being enough to address the economic and social challenges it faces.
The world has become more and more competitive, and South Africa lags behind on many measures – the economy is not productive enough, we rank at the bottom on basic education and corruption is rife. My feeling is that this country needs economic revamping that will bolster economic growth, so that one day we become the largest African economy again. Those who say it does not matter are wrong, in my opinion. Perhaps it does not matter in already developed nations, but in this country it does.