Nigeria’s new statistical position as Africa’s leading economy looks set to intensify rivalry with South Africa, which has been knocked from its long-held perch in what undoubtedly constitutes a psychological blow.
In the hours after Abuja released newly recalculated GDP figures following a lengthy IMF-endorsed review, South Africans were quick to point out Nigeria’s flaws. While some Nigerians saw this as sour grapes, many others were offering a similar commentary, decrying their lack of electricity and services despite their new found status.
First off the mark though was Clayson Monyela, the foreign ministry spokesman in Pretoria, who wrote on Twitter: “OK, let’s explain some numbers here. After all the lights are on in SA, the banking sector & infrastructure is world class.”
Predictably, they also pointed to the considerable gap in GDP per capita between the two. Although Nigeria’s economy, estimated at $510bn, is now $163bn larger than South Africa’s, its population of 170m is more than three times bigger. South Africa’s economy is therefore more productive and Nigerians as a general rule are poorer.
But it is difficult to get away from the narrative of faster growth and greater opportunity represented by the continent’s most populous nation, for all its weaknesses.
“Given the relatively more developed state of our infrastructure and financial systems, South Africa will remain one of the important economies of the continent, though this rebasing will be a significant step in establishing Nigeria as a true African powerhouse,” said Roelof Horne, portfolio manager, Investec Asset Management.
Indeed, some economists, wrong footed by the scale of Nigeria’s upgrade – the GDP figures were a full $110bn greater than the consensus forecast among investment analysts – remain puzzled.
Nigeria’s new data suggest that its economy is much more diversified than previously thought and structured in a similar way to South Africa’s, with a manufacturing sector almost as large, services accounting for the greatest portion of GDP, and natural resources – notably oil – down to 14 per cent.
“If you look at South African trade with the rest of the world relative to Nigeria’s, it doesn’t quite suggest the differences are as great as GDP now suggests, especially if you look at import bills,” said Razia Khan, chief economist for Africa at Standard Chartered.
The same applies to the financial sectors in both countries, with South African penetration much deeper.
On a more conciliatory note, South Africa’s finance ministry congratulated Nigeria on its new found status. But it added a twist by claiming some of the credit was owing to South African companies’ investments in Nigeria’s retail and telecommunications sectors.
“This is a positive story of African countries contributing to reshaping each other’s economies through increased investment. South Africa will continue to nurture mutually beneficial trade and investment ties with Nigeria,” the statement said.
However, some Nigerians and other west Africans are becoming more sensitive about the dominance of South African companies on their turf, and the extent to which profits from their region are supporting their balance sheet back home. That tension has grown in parallel with less collaborative diplomatic relations between the two.
When they were in office in the last decade, Nigeria’s and South Africa’s former presidents, Olusegun Obasanjo and Thabo Mbeki, formed a powerful axis confronting regional crises and promoting African interests on the global stage.
That axis has begun to unravel under Goodluck Jonathan and Jacob Zuma, who worked at cross purposes on the civil war in Ivory Coast, on the Libyan crisis, and most recently during the elections for the African Union.
“It would be interesting to see how international relations will be affected when South Africa is no longer the largest African economy,” Mr Horne of Investec said.
At a strategic level, the GDP figures strengthen Nigeria’s case for more equal representation in world forums. South Africa is at present the only African country in the G20 group of nations. It was also recently added to the BRICS group of emerging economies. One Nigerian commentator suggested this should now be changed to BRINC.
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