Politics
Nigeria Beats South Africa for Africa’s Largest Economy
“It’s not the masses who are rich. Those controlling the economy, those with government contracts, get all the money,” he added, expressing the common view that Nigeria’s economy is rigged in favour of a handful of well-connected oligarchs. Though GDP per capita rose to 2,688 dollars last year from an estimated 1,437 dollars in 2012, poverty and inequality widened.
“We need to work hard on infrastructure, governance, corruption and building a social safety net,” Okonjo-Iweala said. “Inequality has been rising.” Services replaced farming as the biggest sector, worth 41.9 trillion naira, compared with 17.6 trillion naira for farming. Most services growth came from telecoms and real estate.
Nigeria’s annual GDP growth for 2013 is expected to come in at 7.41 per cent after the rebasing, compared with about 6.5 per cent in 2012, Kale said.
Nigeria vs South Africa
Nigeria’s taking the title of Africa’s biggest economy will fuel a longstanding rivalry with South Africa. South Africa currently represents Africa at the G20, as well as in the “BRICS” group of the most powerful emerging economies, which also includes Brazil, Russia, India and China. Nigeria may argue that it should join those clubs too.
It will also enliven competition for investor capital at a time when South Africa faces challenges such as striking workers and high current account and budget deficits. Despite its roaring growth of recent years and now a bigger GDP, Nigeria still trails South Africa in basic infrastructure – power and roads – necessary to lift its people out of poverty.
Its mobile telephone network is one of the least reliable in Africa, internet quality is poor, roads are potholed and its ports and airports clogged by bad infrastructure and obstructive officials. The power grid provides barely four hours a day. President Goodluck Jonathan’s suspension, in February, of respected central bank chief Lamido Sanusi after Sanusi had questioned massive oil revenue leakages at the state oil firm reinforced Nigeria’s reputation as a byword for corruption.
South Africa, by contrast, is seen as one of few African destinations where the rule of law safeguards investments. By every measure, South Africa has a more sophisticated, developed and diversified economy, with advanced financial markets, while Nigeria relies heavily on oil. But investors say South Africa cannot afford to be complacent. “South Africa was historically the ‘go-to’ country for investment in Africa. However, the reality is that other regions are increasingly asserting their economic voice,” said Roelof Horne, a portfolio at Investec Asset Management in Cape Town.
Source: CNBC Africa
