Africa Needs These Two to Prosper Economically


PHILLIP VAN NIEKERK: To prosper economically, Africa needs both ‘big men’

While Nigeria has benefited from South Africa, our companies have benefited hugely from access to such a big market




UNDERLYING the embarrassing fallout over SA’s refusal of entry two weeks ago to 125 Nigerians, including a senator, on account of alleged fake yellow fever vaccination cards, is a deeply negative perspective of Africa’s other economic power. Many South Africans buy into the idea of Nigeria as a disaster — a hell of endemic corruption, rigged elections, terrorism, hijackings and internet fraud. This dark view, shared by some in official South African circles, holds that Nigeria is about to go over a cliff, and every piece of bad news — from the protests against the scrapping of the fuel subsidy to the terrorism of Boko Haram — confirms their worst fears.

And yet there is, concurrently, a radically different view of the country that is far more compelling. In this perspective, Nigeria is the waking giant of Africa. A decade of growth and revolutions in retail, mobile phones and banking has unlocked the dynamism of its people and given rise to an economic power that is only years from surpassing SA as the continent’s largest economy.

And it is the South African business community that has embraced the more positive version of Nigeria, while official SA, underneath its polite diplomacy, appears at times to cling to the more negative version.

South African companies have participated fully in Nigeria’s extraordinary growth. While foreign investors from outside Africa were still only drilling for oil and government contracts, MTN, DStv, Standard Bank , Protea Hotels, Shoprite Checkers, Massmart and many others took a gamble on the Nigerian consumer. Today, Nigeria is the only sub-Saharan African country rated by Goldman Sachs among the N-11, the fastest emerging economies that will be the drivers of the global economy in the decades to come.

More than a decade of 5%-plus growth has led to the rise of an emerging and assertive middle class. Nigeria has long been a two-class society — a tiny unaccountable elite and a vast underclass trapped in poverty, with a small middle class. Today, more than 40% of the population (more than 60-million people) can be said to belong to Africa 2 — everyone between the elite and the underclass — and this is why Nigeria has to be viewed as a rising market. These are people with disposable income, who increasingly pay taxes.


The response to the scrapping of the fuel subsidy in January, which precipitated protests throughout the country, was an indication of a democracy at work, driven by people united in challenging what they see as official corruption.

There is much talk of regional integration to create a multiplier effect from larger markets in Africa, but Nigeria already has a single market of more than 150-million people — almost half the population of the entire Southern African Development Community.

There is an often-quoted figure that claims that most Nigerians live on less than $2 a day. It was precisely these kind of statistics that MTN chose to ignore when it entered the country 10 years against the advice of those who warned of the political risks and the low incomes. Today, there are more than 70-million cellphone subscribers in Nigeria. MTN has more customers and makes more money in Nigeria than SA, and the merger between cellphones and banking means we are just at the start of another revolution that could provide a bridge for the vast mass of capital in the informal cash economy to move in and out of the formal economy.

The takeoff of organised retail — led by chains such as Shoprite Checkers and Massmart — is another indication of the rising middle class.

Anyone who cares to visit Abuja these days will be aware that everywhere you look there are fresh developments, new projects and a private-sector-driven model of growth and development. State governments are also contributing to this turnaround with private-public infrastructure projects.

Mining exploration has come back in a big way for the first time since the 1970s and by the end of this year Nigeria could be exporting iron ore once more.

Driven by a new generation of young entrepreneurs — many of them educated overseas yet willing to return and invest in the opportunities at home — Nigeria is changing. The country’s phenomenal growth rate of the past two years (7% to SA’s 2%) has been driven by the non-oil economy. And yet Nigeria is still the hydrocarbon hub of Africa, despite the buzz around the new discoveries in Ghana, the Gulf of Guinea, East Africa and Uganda. Nigeria has 60% of Africa’s recoverable natural gas and by a long shot the largest oil reserves in sub-Saharan Africa (36-billion barrels to Angola’s second-placed 12-billion barrels). The long-delayed passing of the Petroleum Industry Bill this year, a coming bidding round for marginal blocks, as well as the billions that are being spent on new infrastructure, mean big projects are on their way.

The unclogging and cleaning of the banks under the stewardship of central bank governor Lamido Sanusi has left many Nigerian banks in a strong state of health.

Nigeria can be a tough operating environment and yet leading private-equity fund managers believe that, of all the countries in the world, Nigeria has one of the highest gaps between perceived risk and real risk.


Ironically, the anger and resentment of Nigerians at the deportations was directed not at the South African government but at the business community. There has been talk among ordinary Nigerians of a South African invasion of their country, calls for an end to South African "economic domination" and for measures to be taken to prevent the flight of Nigerian wealth to SA.

The truth that this speaks to is that, while Nigeria has benefited from South African investment and expertise, South African companies have benefited hugely from their easy access to such a big, dynamic market. SA needs Nigeria and will continue to do so.

The question of whether Nigeria needs SA to the same extent can be answered only by saying that, together, the two countries can be the engine of African development. Why, then, is official SA at times so far out of sync with commercial SA ?

When former presidents Olusegun Obasanjo and Thabo Mbeki were in office, they both had pretensions that were often competitive to continental leadership and yet there was mutual respect between the countries. It was this that allowed the commercial ties to flourish.

But, increasingly, Nigeria is seen not just as a continental rival but an ideological one. Nigerian foreign policy is much more accommodating of the West, certainly on the issues that have divided Africa during the past 18 months, such as Cote d’Ivoire and Libya.

Nigerians say they have been more consistent in supporting regional democracy and upholding the outcome of elections — hence the different regional approaches to Cote d’Ivoire and Zimbabwe.

Nigerians believe it is disrespectful to imply that because its foreign policy lacks the occasional anti-imperialist impulses of SA that it is a lackey of the West.

While Nigeria and SA’s respective world views should be respected, at the end of the day, SA will pay a high price for regarding Nigeria as a rival. There is not just space for one big man on the block — it is the combination of Africa’s two big men that will be the most effective way to build the economy of this continent.


• Van Niekerk is managing partner of Calabar Africa, a strategic consulting firm, and a former editor of the Mail & Guardian.

Via Business Day

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