For years South Africa has asserted itself as Africa’s most dominant economy, frequently being touted as the world’s gateway into Africa. However, its anaemic growth in recent times has seen other African countries rise to the pinnacle of the continent’s economic landscape. At a time when six of the world’s 10 fastest growing economies in the last decade have been in Africa averaging around 7% GDP growth, South Africa has only managed a miserly GDP growth rate of around 3.9% over the same comparable period.
The growing inequalities between the rich and the poor, labour unrest, service delivery protests and corruption among a range of other ills have hampered South Africa’s progress. Enter Nigeria, Africa’s most populous country with more than 160m people and whose GDP has grown at an average of 6% since 2006 according to the World Bank. Nigeria’s rapid growth over the years appears to have attracted noteworthy foreign investments such as global giant Procter & Gamble’s recent US$300m manufacturing plant and the Dubai-like Eko Atlantic City being built on land reclaimed from the Atlantic Ocean, among other foreign investments.
Nigeria’s Bureau of Statistics is in the process of recalculating the country’s GDP to better reflect its changing economic configuration over the years. The recalculation, called rebasing, is an adjustment that will account for changes in market prices and weights of goods and services, and will also see the base year of calculation change from 1990 to 2010. The last rebasing exercise in the West African country was carried out in 1990. If Nigeria’s GDP were to rise by about 60% as estimates indicate to about $432bn, it will be the 28th largest economy in the world, and overtake South Africa as Africa’s biggest economy in terms of GDP.
The country has set itself an ambitious target of becoming one of the world’s top 20 economies by 2020. Nigeria has been second only to China in terms of cumulative real GDP growth in local currency terms since 2008. Jim O’Neill, former economist at Goldman Sachs famous for coining the acronym BRICS, has now shifted attention to what he terms the MINTs (Mexico, Indonesia, Nigeria and Turkey) which he sees as the pillars of global growth in the coming years, with Nigeria being the most prominent among them. Accounting for about $5bn of the foreign direct investment into Africa in 2013 alone, clearly Nigeria is in good stead to become one of the leading economies with time.
On the surface this makes for some scintillating reading. However, a closer look at the dynamics of Nigeria’s economy reveals structural deficiencies that are overlooked by GDP figures as indicators of economic growth and development.
Military extremism in the north
Nigeria has had to contend with threats posed by Boko Haram as well as other Islamist militant groups for a while. The Muslim north has been the area most affected by the activities of these extremists, perhaps the most antagonistic of them being Boko Haram. It is estimated that since 2002, the group which has been proscribed as a terrorist organisation by most foreign governments, has accounted for over 10,000 deaths in the region.
Often, it is argued that the unemployment, lack of education opportunities, poverty and socio-economic inequalities rife in the northern parts of the country provide a steady supply of youths who can be recruited into the radical organisation. The consequences of such extremism have been all too apparent, ranging from kidnappings, bombings and assassinations. In May 2013, the Nigerian president declared a State of Emergency in three regions in the northern parts of the country as part of state efforts to thwart insurgents.