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outdated--have outdated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.
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