Nigeria and South Africa:Africa's economic powerhouses
Tag: Africa economic, Africa economic powerhouses
Summary: The recent focus on the relationship between Nigeria and South Africa highlights the potential for Africa's two largest economies to enhance substantially the continent's development prospects – pa…
The recent focus on the relationship between Nigeria and South Africa highlights the potential for Africa’s two largest economies to enhance substantially the continent’s development prospects – particularly if they work together more closely.
South Africa with an estimated gross domestic product (GDP) of $368 billion in 2011 represents Africa’s biggest economy, despite slowing growth that is forecast to drop to under three percent this year. Meanwhile, the continent’s most populous nation, oil-rich Nigeria, overtook Egypt last year to become Africa’s second biggest economy by GDP, recording $232 billion.
It has been envisaged that, with a growth rate of seven percent, Nigeria could overtake South Africa’s economy by 2015.
Clearly, mutual benefits could accrue from a relationship that combines South African capital and know-how in creating business models for African marketplaces and within African institutional contexts, with access to Nigeria’s burgeoning economy of 140 million consumers – the single largest market on the continent and three times the size of South Africa’s. A recent policy seminar organised in Lagos by the Cape Town-based Centre for Conflict Resolution (CCR), and involving key diplomats and business people from South Africa and Nigeria, sought to explore these benefits and to strengthen ties between both countries.
South African and Nigerian business people have recognised the synergies. Trade between the two countries has grown ten-fold since 1999, and they are each others’ largest trading partners on the continent. The value of bilateral trade, which totalled only $16.5 million in 1999, increased to over $3.6 billion by 2011.
Nigeria now represents a long-term destination for South African investments and home to many of its recent business ventures. Mobile Telephone Networks (MTN) led the way, posting greater profits from its West African operation than it did in South Africa within only four years of entering the Nigerian market in 1999.
Other notable South African businesses in Nigeria now include: Standard Bank; Rand Merchant Bank; fast-food chains Chicken Licken and Debonairs Pizza; ABMiller; and retailer Shoprite Checkers. Media house Johncom has opened Nu Metro cinemas and multimedia stores, as well as DVD and CD manufacturing plants. Multichoice boasts 700,000 Nigerian customers in 2012 and has spent $100 million on developing local content.
Two airlines fly seven times a week between the two countries. Many South Africans now live in Nigeria; while an increasing number of Nigerians live in South Africa. In addition, further large-scale South African entries into the Nigerian market are planned. Massmart and Woolworths retailers, Old Mutual insurance company, and Distell beverages are looking to invest in the country.