On Sunday, 6 April 2014, on the way to the South African Institute for International Affairs (SAIIA) offices in Braamfontein, Johannesburg, I passed many Nigerian churches, which are now permanent features of inner-city Johannesburg. Sermons were already underway and sounded celebratory. I wondered if they were celebrating the announcement of Nigeria being named the continent’s largest economy, usurping South Africa.
What does this mean for South Africans and for the continent? It was ironic that Nigeria released its gross domestic product (GDP) rebasing results a few days after the end of the European Union - Africa Summit at which South Africa, the continental leader, was conspicuous in its lack of representation at the highest level.
This article is part of a series of opinion pieces published on SAIIA's specialised Global Economic Governance website. Read "Nigeria Rising? Reforms Needed to Benefit from GDP Rebasing" and Should Australia Change the Membership of the G-20?
Nigeria’s decision to recalculate the actual size of its GDP was necessary. The last such exercise was in 1990. Nigeria waited for more than two decades to recalculate its GDP as it still wanted to have its debts to multilateral finance institutions cancelled on the poverty card.
The rebasing exercise was undertaken in order to capture industries which had come into being since 1990 and/or those that had expanded since then. The notable industries in this regard are the telecommunications, information technology, music, airlines, retail, film (‘Nollywood’), agriculture and tourism.
Before the rebasing, Nigeria’s GDP stood at a modest US$264 billion, while that of South Africa was at a considerable US$384 billion. After the recalculation of its GDP, the Nigerian economy has now skyrocketed to a staggering US$453 billion.
Nigeria’s GDP per capita has moved from a traumatising US$1 555 to a somewhat promising US$2 688. The GDP per capita here is misleading, though, in that it does not capture Nigeria’s gross inequalities, meaning that for rural Nigerians who form the bulk of the population, it is much lower than that. South Africa’s GDP per capita stands at a decent US$7 336.
Nigeria’s release of its recalculated results has indeed rattled a lot of people throughout the continent, but mainly in South Africa. However, before delving into what the result means for South Africa and the continent, it is important to grapple with its impact on ordinary Nigerians, both in Nigeria and those whom I heard churning out celebratory sermons on 6 April 2014.
Does it mean the Nigerian economy is now great, and the country’s citizens can return home, while Naledi Pandor swallows humble pie with her recently gazetted stringent visa laws which Nigerians particularly felt were directed at them? Should they now start demanding respect from South Africans as a new continental powerhouse? Will OR Tambo, Heathrow, JF Kennedy and other international airports be jammed with Nigerians returning home to the greener pastures painted by the GDP results?
Or, at the most extreme, will South Africans now be queuing to apply for visas at 971 Francis Baard Street, Pretoria to escape the 25 percent unemployment at home?
The reality is far from this. There is a depressing disconnect between the GDP results and actual quality of life for Nigerians.
Nigeria has almost 70 percent of its citizens living on less than R10 a day, and a more than 80 percent unemployment rate, especially in the rural areas. This is not to mention a low human development index, chronic fuel and energy shortages, rampant corruption feeding on an entrenched ethnic and class-based patronage system, decayed governance institutions and, recently, the Boko Haram menace.
For ordinary Nigerians it is business as usual in Johannesburg and Lagos. Nigerian social commentator, Baba Adam, was indeed speaking on behalf of ordinary Nigerians when he cautioned thus: “We don’t want to rain on your parade. However, as Nigeria got richer per GDP, more and more Nigerians (became) poorer.”
It is indeed a case of much ado about nothing for ordinary Nigerians. Maybe the Nigerian elites in charge of state capture and its attendant crony capitalism should have shared the GDP results among themselves without flaunting their booty to poor Nigerians who cannot even access the crumbs of this huge economy. The results are a damning indictment on the Nigerian elites; on how a half a trillion dollar economy benefits less than 30 percent of the citizens.
It is a paradox that the GDP results will allow Nigeria to borrow more from the international markets at a lower rate. This will allow the elites to access even more funds, which might not be accounted for as has been the case since military rule.
Looking at it from a ‘sibling rivalry’ context and economic perspective, South Africans should not be worried by Nigeria’s GDP rebasing results. While South Africa inherited a lot of baggage from its apartheid past characterised by the triple evils of unemployment, inequality and poverty, its economy is unrivalled by that of Nigeria.
South Africa, furthermore, has young but strong governance institutions. It has infrastructure that competes with that of First World countries. The Nkandla report is proof of the strength and resilience of South African institutions. Due to its competitive governance institutions, South Africa might be perceived as quite corrupt, but by emerging-market standards it is doing quite well. Unlike most African countries including Nigeria, South Africa does not suffer from the same level of state capture.
Nigeria’s GDP results have also brought to the fore the issue of South Africa’s leadership role on the continent. South Africa, due to its large economy and normative framework of good governance, respect for human rights and the magic of Madiba, had emerged as a strong contender for continental leadership.
Disappointingly to many in South Africa and beyond, the country has been a reluctant hegemon in spite of being a natural one. South Africa’s reluctance has, however, not deterred the international community from crowning it as such. South Africa, therefore, plays a representative role, on behalf of the continent (albeit informal), in many multilateral and plurilateral groupings and institutions. As a consequence, South Africa is the most strategic partner for the European Union and the United States in Africa.
The apparent rise of Nigeria to the apex of continental economics leaves many wondering whether this comes with a natural displacement of South Africa from its leadership role in favour of the former. Could the absence of President Jacob Zuma at the EU-Africa summit in Brussels, and the presence of Goodluck Jonathan, have been a harbinger of this change of roles?
I would argue that South Africa, more than ever, has to, in line with realpolitik, desist from being a reluctant hegemon and demonstrate leadership. South Africa, in addition to a much sophisticated economy, enjoys unparralled soft diplomatic power. This has to do with what South Africa stands for on the world stage which is democracy, good governance, human rights, ubuntu and an open market economy, areas in which Nigeria fares quite badly.
By assuming its proper leadership role, South Africa will then be able to work together with Nigeria, which, like South Africa in Southern African Development Community, is a leader in the Economic Community of West African States. South Africa should use its benevolent hegemonic role to convince the Nigerian elites to institute and strengthen democratic institutions and culture.
While South Africa had its own magic moment when Nelson Mandela was released from prison, Nigeria’s own Mandela moment could actually be the release of its GDP results. It will, however, need sound leadership from both Nigeria and South Africa, working together, to capitalise on this moment. After all we are all Africans: a prosperous Nigeria makes South Africa and Africa a better world in which to live.
- Azwimpheleli Langalanga is a research assistant with the Economic Diplomacy Programme at the South African Institute of International Affairs (SAIIA) and a visiting PhD Fellow at the Institute of Social Science, University of Tokyo. This article first appeared on the SAIIA website.