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Out of step with Africa

Nov 02 2012 07:40
*Mzwandile Jacks

THIS is no doubt Africa’s century. African capitals and nations that understand this fact will be the victors in coming years, providing jobs and tax generating treasures for their populations.

African countries that can easily attract business from the great cities and countries of the world will win. This is a simple fact of 21st century commerce.

But it is sad to realise that South African politicians do not seem to understand this.

The Marikana carnage, the furore around President Jacob Zuma’s extension of his Nkandla homestead and the embarrassing South African Airways (SAA) debacle would have been avoided at all costs had politicians understood the dynamics involved in attracting business to the country.

No right-thinking person would ever believe these events would go unnoticed by foreign observers, commentators and potential investors.

No right-thinking person would ever think these events would actually attract investors and admiration from all over the world.

The presidency may have vehemently rejected some of the assertions made in The Economist's recent cover story.

But the article - headlined Cry the Beloved Country: South Africa’s sad decline - truly painted a gloomy picture of South Africa to the international world.

The presidency and most of Zuma’s supporters have the right to deny this until they are blue in their faces. But the article made an interesting observation about Nigeria’s economy being poised to outdo South Africa’s in the near future.

Nigeria’s economy has come up tops in many ways in recent years. Whether South Africans like it or not, the country has somehow lost its step with its gross domestic product (GDP) growth slowing down amid faster gowth in the rest of Africa.

South Africa is by far the continent’s wealthiest state in terms of GDP, accounting for 30% of Africa's GDP.

But economies such as Egypt and Nigeria are on the upswing and could surpass South Africa in coming years.

Nigeria is Africa’s most populous nation, but its GDP has traditionally been well below that of South Africa.

But, according to fund and asset managers, this looks set to change. This year, Nigeria will change the base year for its GDP to 2008 from 1990. This looks likely to revise the size of its economy dramatically upwards.

Based on the size of the revision, Nigeria could outdo South Africa as the continent’s largest economy as soon as 2014.

The GDP revision is expected sometime later this year, after having missed an earlier January target because of nationwide fuel protests.

Rebasing involves changing the weighting of sectors of the economy to reflect changes in economic activity over the past three decades.

The new figures would, for instance, put more weighting on Nigeria’s telecommunications industry, which has shot the lights out in the past 10 years.

It is understood that the rebase could prompt a 40% surge in the GDP figure, taking it from $250bn to $350bn and putting it within spitting distance of South Africa's almost $360bn economy.

With over two-thirds of its populace under 30 and a median age of 18, Nigeria's 52 million-strong labour force is one of the world's largest and youngest.

This youthful population will increase productivity across a number of sectors in the coming decades. It will also serve as one of the continent's most appealing buyer markets.

As Nigeria's economic development kicks off, increasing demand for power, housing and retail goods continues to attract new investment. This will see Nigeria becoming Africa's largest destination for foreign direct investment (FDI).

South Africa does have factors that make it look appealing to the international investor - first world infrastructure is one of them. But a few politicians' mistakes are making the country suffer.

It is high time that something drastic is done. Business people should not criticise from the sidelines when they ought to make suggestions.

Head honchos in the ANC and government should be criticised. I suspect that these people are allowed to make decisions without anyone disputing them.

This has led to some of the government's most poorly thought-out decisions. Ah! But South Africa is so beautiful...

 - Fin24

*Mzwandile Jacks is a freelance journalist.

anc  |  gdp  |  unemployment  |  sa economy



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