The de facto and de jure largest economies in Africa: Whither the similarities?

I  didn’t choose to be born in Nigeria neither did I choose to be born to Nigerian parents, but I consider myself opportune to be a citizen of this great country. After all, my dear country takes the cake as the nation with the most oxymoronic contraptions. A nation with 70% of the populace living below the poverty line, yet crowned the happiest people on earth, the most religious country in the world yet one of the most corrupt, a nation where public servants are lords and masters. A government that celebrates her dictators and detractors yet disparage her loyal high flyers.

A people that celebrate funerals with pump and pageantry, not minding that the dead were actually starved and deprived. We love to remember them long after they are gone, even though no legacy of theirs survived their lifetime. We love our egos massaged with congratulatory messages in the dailies for being appointed delegates to the national confab, and we love our titles and appendages like an oriental loves jewelry; it is commonplace for an individual to be addressed as Honorable Chief Dr. Mrs. ABC (MON). All these incongruities that assault the common sense make us the enigma that we are amongst the comity of nations.

Nigeria, the giant of Africa, prepares to take her rightful place as the largest economy in Africa at the release of the rebased GDP; many view this with cautious optimism as the underlying fundamentals remain basically the same. The rebasing is expected to capture the structural changes that have taken place in Nigeria over the last two decades. Many wonder what this new status translates into for the average Nigerian. Unfortunately, not much in the immediacy, but if properly managed, it should be a harbinger of good tidings. For one, some of the macroeconomic ratios that signal the viability of an economy will all of a sudden look better than they previously did. The public debt to GDP ratio will drop, so also will the ratio of budget deficit to GDP. It will also show the GDP per capita closer to $2600 from $1600. All these will make it almost impossible for the world not to pay closer attention to the largest economy in Africa.

A comparison of some parameters for Nigeria with that of South Africa, the country we are about to leapfrog, however, shows the enormity of the task ahead of us if we are to truly live up to the billing. South Africa’s GDP per capita was estimated at about $7508 in 2012 compared to the $2600 projected for Nigeria. Labor productivity of an average South African is about three times that of a Nigerian. The annual electricity generated in 2012 by Nigeria expressed in kilowatt-hours was about 20.13bn, whereas, that of South Africa was 238.3bn. Without adequate power generation and at a reasonable cost, the competitiveness of Nigeria on the global scene will be greatly impeded. Nigeria also lags behind South Africa in rail transport infrastructure. Rail transport forms the bedrock of economic competitiveness, as it helps in the exchange of goods and services at a relatively lower cost. According to the World Bank, South Africa has a total railway stock of 20,192KM compared to Nigeria’s stock of 3,505KM. Lack of functional transportation systems and network is deleterious to our economic development.

South Africa also boasts a deeper and more sophisticated financial market than Nigeria. The World Bank estimated the market capitalization of the listed companies on South Africa’s stock exchange in 2012 at $612bn compared to that of Nigeria which stood at $56bn in 2012. The largest bank in South Africa, Standard Bank Group, had a total asset of $185bn in 2011, compared to the $19bn total asset of First Bank Nigeria. The combined assets of all the Nigerian banks at that point was lower than that of the largest bank in South Africa.

As we prepare to ‘celebrate’ overtaking South Africa as the largest economy in Africa, and the flurry of congratulatory messages flood the dailies. Let us endeavor to look at the bigger picture and realize it’s not yet Uhuru. There’s still a lot to be done in ensuring that economic size translates into inclusive growth that cascades down to the bottom of the pyramid. It’s time to stand and be counted. On my part, I’m gearing up for a comic relief on the comedic messages I envisage will throng the dailies congratulating the President, Senators, Governors, Pastors, Emirs, Obas, and Citizens for being part of the largest economy in Africa, and making it a reality in our lifetime.

Olugbenga A. Olufeagba