Africa for optimists: 2014 in review

Optimistic Africans

This was the year that Nigeria finally lived up to its potential and became the largest economy in Africa –– and by quite some distance too. As of April this year, Nigeria’s GDP was worth $510bn, an astonishing 89% increase on the year before. In contrast, South Africa, last year’s number one, trails far behind at just $370bn.

It’s not that the Nigerian economy fundamentally changed overnight. It’s just that, for the first time in two decades, the country’s statisticians calculated its size correctly (or, at least, more correctly – the trouble with African statistics is that even the best of them are unreliable). By failing to rebase the GDP calculation since 1990 – ie failing to update the basket of goods and costs from which it is extrapolated – the country had worked with a grossly distorted picture of its economy for far too long.

This was the year that Nigeria finally lived up to its potential and became the largest economy in Africa – and by quite some distance too. As of April this year, Nigeria’s GDP was worth $510bn, an astonishing 89% increase on the year before. In contrast, South Africa, last year’s number one, trails far behind at just $370bn.

It’s not that the Nigerian economy fundamentally changed overnight. It’s just that, for the first time in two decades, the country’s statisticians calculated its size correctly (or, at least, more correctly – the trouble with African statistics is that even the best of them are unreliable). By failing to rebase the GDP calculation since 1990 – ie failing to update the basket of goods and costs from which it is extrapolated – the country had worked with a grossly distorted picture of its economy for far too long.

That’s not to say the new figure, larger though it may be, is proof that the economy is healthy. It is far too reliant on oil, and taking a pummeling from the drop in global oil prices.

Still, it’s progress. Now the Nigerian government and investors know what they are dealing with. The new figure does cement Nigeria’s reputation as the most attractive investment destination on the continent, and also gives it a huge diplomatic advantage: as Africa’s largest economy, Nigeria can make a compelling argument for continental leadership positions such as membership of Brics (five major emerging national economies) and a permanent seat on the UN security council, should UN reform ever happen.

Read more

 

Source: Guardian