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Nigeria’s superpower paradox …an irony of quantity versus quality

CURRENT AFFAIRS
By Elvis Mboya | June 11th 2014

Nigeria, the most populous country in Africa has added 89 per cent to its Gross Domestic Product (GDP), now worth USD510 billion to soar past South Africa, worth USD350 billion to become the continent’s economic powerhouse. But, critics have cut their celebration short, arguing that size is not everything as the new giant remains one of the poorest and one of the most corrupt countries in the world with vast violations of human rights and widespread civil strife.

In a recent economic report, Nigeria’s rise is compared to Chinese’s obsession with the size of her GDP –  it recommends that  it should focus actively in transforming its economic development model and shifting attention from merely GDP to the quality and efficiency of economic growth in hopes of maintaining the balance between quality and quantity.

Nigeria ranks 153 out of 187 countries in the United Nations’ Human Development Index. Despite the rapid growth of recent years, unemployment remains high and the number of the poor continues to increase. Even with the revised figures, GDP per head is only USD2,700; South Africans are more than twice as rich, the report states.

The recalculation, the report warns, will not put more money in the pockets of the average citizens in Nigeria, where more than 60 per cent live in severe poverty and increasing number of billionaires.

DYSFUNCTIONAL SYSTEM

Whereas large parts of South Africa have nearly excellent infrastructure, mainly inherited from colonial regime, Nigeria’s infrastructure is one of the poorest in the region with bad road network and chronic power cuts.

And lack of development is helping to breed an insurgency in the mainly Muslim north and stokes violence elsewhere that creates no-go areas for foreigner investors and citizens alike especially the northern Muslim states where recently over 200 schoolgirls were abducted by Muslim militias.

In a country of 170 million people its increasingly becoming cumbersome to absorb the millions of young people pouring into the labour market hence the country requires the sustained double-digit growth that China has shown to be possible, save for its mass violations of human rights that may prove a stumbling block to foreign investments, according to the report.

“Despite roaring growth in recent years and a bigger GDP, Nigeria will continue to trail South Africa in terms of basic infrastructure - power and roads - necessary to lift the bulk of its population of 170 million out of absolute poverty.
“And its legendary dysfunction - abysmal telephone and Internet quality, clogged roads, ports and airports, obstructive police and reliance on diesel generators for most of its power - mean it won't be replacing South Africa as a hub very soon,” the report states.

SOCIAL SAFETY NETS
In a recent interview with Bloomberg, Ngozi Okonjo-Iweala, Nigeria’s economy and finance minister, reaffirms the glaring fears saying that the quality of growth must change and that Africa’s biggest economy needs social safety net to proudly proclaim its new position.

“The quality of growth needs to change. We need to grow faster in the right sectors, including agriculture and manufacturing,” Okonjo-Iweala says.

Razia Khan, chief economist for Africa at Standard Chartered Bank, says the new figures confirm that income in-equality is higher, “which risks adding to perceptions of political risk”. She adds: “The pressure on the authorities to create some sort of social safety net in response will be significant.”

Nigerian gross domestic product for 2013 was re¬calculated at $510bn, a hefty 89 per cent more than previously stated, and well above South Africa’s $350bn. The new estimates were made by updating the base year for calculations to 2010 from 1991, when booming sectors in Nigeria such as the mobile phone industry, the banking sector and the “Nollywood” film industry were in their infancy.

For several years, the International Monetary Fund (IMF) has been warning the country about the problem, saying in its latest report on Nigeria that “despite strong growth in recent years, key social indicators remain below average for sub-Saharan Africa”.

OBSESSESSION WITH GDP

Economists argue that President Goodluck Jonathan should attack widespread corruption, do away with trade barriers, curb incessant bureaucracy and graft to port delays and murky land rights.

And when comparing Nigeria’s rise in Africa to Chinese in the world, Wu Xiaoling, a former deputy central bank governor told Peoples’ Daily that people should not be obsessed with GDP figures, because GDP growth would be totally meaningless without the accumulation of national wealth.

Wu believes that more attention should be paid to income distribution reform as the reform is a precondition for a greater role of exports, investments and domestic consumption in promoting China's economic development.

“Obsession with GDP growth has made many officials to fail to see the forest for the trees. China is actively transforming its economic development model and shifting attention from merely GDP to the quality and efficiency of economic growth in hopes of maintaining the balance between quality and quantity,” Wu said.

“Just like in Nigeria and SA case, China may overtake USA as the world economic powerhouse but in terms of quality of life, efficiency, service delivery, democracy and inventions, America is still the superpower in the world. Consequently, SA is still number one in Africa.”

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