Living in Africa’s largest economy

by Macdonald Ukah

 

Those who, especially by professional disposition, had awaited the release (early in April) of the rebased estimates of Nigeria’s Gross Domestic Product, which revealed her to be Africa’s largest economy, must have anticipated that the release would be greeted by some furore. That’s why it’s not a surprise that the reactions to those numbers have been mostly framed around the “so what?” question. The considerably polarized political landscape in the country has only poured fuel on this needlessly incendiary issue.

I will join the fray from what I hope is a different standpoint; one that should lend credence to the claims of political neutrality that I shall continue to advance about myself, whenever necessary, in public discourse. Whilst leaving it to economic experts of far greater erudition and experience to contest the credibility of the numbers (if needs be), I would like to draw attention to a reality that has remained subterranean, in light of the talking points commentators have projected whilst sparring over this “arrival”.

What we all have arrived at is, for lack of a better expression, a mere statistical epiphany. It is the recognition of a reality that is slightly older than now. Nigeria did not become Africa’s largest economy on April 6, 2014 – the date of the release of the numbers. This writer’s investigations reveal that it actually overtook South Africa back in 2011.

The process of ascertaining this isn’t rocket science. All one needs do is compare the US dollar equivalent of the GDP figures released by the National Bureau of Statistics for the years 2010-2013 to the corresponding figures for South Africa. Doing this places the 2011 size of the Nigerian economy at $409.2bn, surpassing the South African economy’s $401.8bn for the same year, according to World Bank estimates. Carrying out this exercise also reveals the gap between the sizes of the SA economy and the Nigerian economy in the years preceding 2011 to be narrower than thought.

The implication of these revelations is that those comparatively squalid conditions of economic wellbeing that prevail in Nigeria relative to South Africa, as well as the incontestable superiority of the South African economy in terms of modernization, sophistication, diversity, infrastructure, financial depth etc, have actually coexisted with the reality of Nigeria being Africa’s largest economy for a period slightly longer than most realize. It is important for the rancorous gladiators who have made this a political knife, either by dismissing the import of the milestone or trumpeting it out of proportion to realize this.

A veritable connection can be made between the anatomy of the economy as represented by the current GDP numbers and anecdotal evidence about the nature of youthful enterprise in the country. Going by Nigeria’s old GDP series, the services sector accounted for 29% of economic activity in 2013, its peak contribution on record. Nigeria’s rebased GDP series reveals that services now account for 53% of the economy. The corresponding transition in the case of manufacturing is from 2% to 7%.

I make bold to say that those numbers better reflect the dynamism of contemporary youthful enterprise. The “services revolution” is for the most part the aggregate effect of a much bigger ICT sector than previously accounted for, and better capture of the Entertainment industry’s contribution to economic activity. One would not be going out on a limb if he called the latter the leading economic constituency of the youth.

Smashing generalizations are easy to impeach and, regrettably, we are still at the infancy stages of bringing the machinery of data collection to capture certain socio-economic trends to granular accuracy. One is, however, likely to find, upon taking the temperature of youthful entrepreneurial aspirations in the country, that many start-ups and embryonic business ideas are actually geared towards rendering services. Among youth, interest in tapping the ICT mine and its appendages – new media and social media, in showbiz, in fashion and design, in distribution and retail etc, likely preponderate interest in rolling out factory lines.

Now, no one should be told how to dream. However, those who are familiar with the dictates of economic literature on how the structure of economies should evolve, must nurse some concern about the seeming bypass of manufacturing and allied activities in the economy’s evolutionary process. If the youthful tendency looks set to perpetuate this trend, we might have to endure the consequences of this structural misalignment for time to come.

Again, if, for the sake of argument, we contend that this trend is blameworthy, can the youth really be blamed? Now that’s a hard question, especially, if one is cognizant of the challenge of borrowing at industry-destabilizing rates of 24% or having to procure those diesel-powered generators and to incur the cost of keeping them running.

———————————————————–

Macdonald Ukah is a graduate of Economics from the University of Nigeria, Nsukka. He is currently a Senior Research Assistant at Edward Kingston Associates, Lagos and a commentator interested in all things topical.

 

Post Author: Y! Editor

Leave a Reply

Your email address will not be published. Required fields are marked *