Nigeria Overtakes South-Africa As Continent's Largest Economy

Nigeria is expected to release revised
economic numbers from 1990 to 2008. That
is expected to show that the country has
overtaken South Africa as Africa's largest
economy
.With us to discuss all this is professor at
the University of Massachusetts Amherst
Léonce Ndikumana. He is a professor of
economics at UMass Amherst, as I
mentioned, and he's the director of the
African Policy Program at the Political
Economy Research Institute (PERI).Thank
you for joining us.LÉONCE NDIKUMANA,
ASSOC. PROF. ECONOMICS AND LAW,
UMKC: Thank you very much for the
opportunity.DESVARIEUX: So, Professor,
let's talk about Nigeria. It's moving to
become the number-one economy on the
African continent. What is the cause behind
this rapid economic growth?NDIKUMANA:
Thank you very much. I think this is a very
important and interesting question.There
are two things that we need to single out.
One is that even as of today, Nigeria is the
second-largest economy on the continent,
with about $262 billion in 2012, compared
to $384 billion GDP for South Africa.
The second one is that Nigeria had been
growing quite fast. In 2011, they grew by
7.4 percent, which that went down a little
bit to 26.6 percent in 2012. At the same
time, South Africa's been growing a little bit
slower, in the range of 2 to 3 percent,
which is consistent with a more mature
economy. So that by itself would mean that
over time Nigeria is going to get closer and
closer to South Africa. Even if you look at
the last 12 years, in 2012 the economy of
South Africa was about three times larger
than the economy of Nigeria. Now it's
about 1.5 percent.Now you bring in
another factor, which is the rebasing of the
national data in Nigeria, which is something
that other countries are going to also have
to undertake because their national
accounts based on outdated--have
outdated bases, in the sense that some
sectors which were not there when they
were doing the calculations now are more
predominant in production of goods and
services.
One of the biggest new innovation is the
telecom sector, which is becoming a bigger
and bigger part of the service sector. So
this requires countries to go back in their
statistics and redo the weighting of each
economic sector. And this, for many
countries, is going to result in a larger
major amount of national output, which is
GDP. Ghana has already done it, and
Nigeria is on track of releasing their new
statistics. And this will result in a larger
GDP for Nigeria. And, again, as you said, it
may be the case that they may be either
closer, even take over South Africa,
assuming that South Africa doesn't do the
rebasing [incompr.]DESVARIEUX: And I can
imagine what's propelling this rapid growth
is that three-letter word, oil, since Nigeria
has a lot of it. What do you make of that?
NDIKUMANA: Yes. As you indicated, the
rapid growth in Nigeria over the past years
is driven mainly by the oil sector.
To give you an example, of the six point--
while the country as a whole grew by 6.6
percent in 2012, the oil sector actually grew
faster, by 8 percent, which means that
some of the sectors were shrinking. And
this poses--is a source of concern because
oil, the oil sector, as we know, is a very
capital-intensive sector, which means that
it doesn't create lots of jobs.At the same
time, since we're talking about South Africa
and Nigeria, they share two important
problems. One is unemployment, and the
second is [incompr.] to global markets,
shocks in global markets. Unemployment
has been high in South Africa. It's known.
And they have very good statistics. It's
about 25 percent. In fact, Nigerian
unemployment over the past two years has
been increasing from 21 percent to 24
percent. So even as the economy's growing
in Nigeria, unemployment is actually
growing at the same time, which is the
result of the fact that growth is taking place
in sectors that are not creating
employment. So this is a major, major
problem for Nigeria.
At the same time, the sectors which are the
life--which provide the life for the majority
of the population, especially agriculture, is
not growing as fast, because there has not
been sufficient investment in technology so
that productivity in agriculture, the
mainstay of the livelihood of the
population, is actually seeing a decline in
productivity. And that is true for Nigeria as
well for many other countries.
So the challenge for Nigeria is how to
harness these oil resources so that the
growth in revenue that's coming from oil
can actually trigger expansion in other
sectors outside of the oil sector.
http://therealnews.com/t2/index.php?
option=com_
content&task=view&id=31&Itemid=74&
jumival=10954

Published with Blogger-droid v2.0.10