African Lions Begin to Prow: Undiscovered Countries
So back to the future and quickly jaunting several thousand years ahead, as of the year 2012[update] ~1.07 billion African modern Homo Sapiens-Sapiens were living in 54 different countries, with a continental nominal GDP of $1.6 trillion; expected to rise to $2.6 trillion by year 2020 according to Mckinsey Global Institute.
The causes of Africa’s new gained economic momentum and forecast outlook derives from multiple sources in multiple context. And the opportunities that lay ahead for both Africa and foreign investors are as yet uncalibrated, but subjectively substantial. Because although civil conflict and government upheavals might stagger economic growth, in the longer-term - especially the distant-term - international business cannot afford to ignore Africa’s potential. Much of Africa’s future economic growth will be influenced by unprecedented GigaTrends beyond the influence of any single or cluster of African nations. The global demand for fossil fuels, minerals and raw materials, commodity and primary goods will exponentially increase over the coming two decades.
Large-scale trends such as a youthful and growing population, progressively competent workforce, and increasing urbanisation will surge forward African expectations, aspersions and material growth. By 2020 ~120 million households will earn more than $5000 per annum, a point at which more than half the moneys are spent on items other than basic domestic living and food. Lagos, Alexandria, Cairo, Cape Town and Johannesburg consumer spending will be greater than $25 billion each, comparable to New Delhi and Mumbai.
Yet from a broader perspective, Africa’s future has vast, even huge economic and technological potential. According to the World Economic Forum; Africa is on the brink of a fundamental economic transformation. Over the last 10 years, Africa has held 6 of the 10 most rapidly rising nations (below), at a point in time when the much of humanity face major political and economic challenges.
South Africa accounts for over a third of the Africa’s GDP, while growth in the region was ~6 percent, making it one of the fastest growing developing areas.
The economy of South Africa is ranked as an upper-middle income economy by The World Bank, which makes the country one of only four countries in Africa represented in this category (the others being Gabon, Mauritius, and Botswana).
South Africa’s economy is fairly diversified across mining, agriculture and marine fishery, vehicle assembly, food-processing, clothing, textiles, telecommunication, real estate, tourism, transportation, and wholesale and consumer services. South Africa suffers from relatively heavy overall regulation burden compared to developed countries. Interference imposes high barriers to entry in many areas. High numbers in unemployment and inequality are thought to be South African’s most outstanding economic challenges. These issues, and others related to them such as crime, have in turn impaired investment and growth, in turn having detrimental feedback effect on employment.
South Africa, unlike many other emerging markets, has struggled through the 2008-09 recession, where upturn has largely been carried by public consumption and private growth; while exports and private investment have yet to meet expectations. The long-term forecast for South African growth has been estimated at 3.5 percent; while per capita GDP was at 2.2 percent from 2000–09.
Nigeria is most surprising to me in the African equation. For sure it is a large, vibrant, natural energy source rich, West African nation. While its nominal GDP growth over the last decade is bringing the country up as a economic contender. Nigeria’s current nominal GDP is $451 billion (equivalent to the UKs in the early 1950s); with 7.1 growth. And considering the accelerating rate of technological progress, Nigeria should reach developed world GDP rates exceedingly faster than any of the incumbent developed nation have through those years.
Like other nations in Africa, Nigeria is growing trade (GDP generation) with the BRICS nations. Looking way out, Mahesh Sachdev, Indian High Commissioner to Nigeria, made it clear that with a projected 500 million people by 2050, Nigeria will be fifth most populated nation in the world. As a result, Nigeria will become one of the 10 largest consumer economies. Further still, he affirmed that Nigeria could actually meet the target of being among the 20 leading economies in as little as five years (2020). Sachdev, who spoke at the 10th award ceremony for winners of the National Food and Drug Administration and Control (NAFDAC), remarked that India alone buys ~$7 billion worth of primary goods from Nigeria. Plus, India’s direct investment and imports in 2010 was $5 billion, with more medicines coming from India into the country than any other nation.
One important observation is that the economy of 2050 would be largely knowledge-based, not wholly natural resource-based; considering the rate of technological evolution going today. However, for such progress to take place tribalism and extreme religion-based values have to be tempered, the right targets have to be set and achieved, coupled to an ethical course that seeks to build and grow, rather than raze.
Although much has been made of its status as a major exporter of oil, Nigeria produces about 2.7 percent of the world's supply, next to the largest producer Saudi Arabia’s 12.9 percent. To put oil revenues in perspective: at an estimated export rate of 1.9 Mbbl/d (300,000 m3/d), with a projected sales value of $65 per barrel in 2011, Nigeria's anticipated revenue from petroleum is about $52.2 billion. Therefore, though the petroleum sector is important, it remains in fact a small part of the country's overall vibrant and diversified economy.Look at the picture closely. Spend a few minutes studying and contemplating it. Think not the past. That is too late. But think future. Think future politics. Think future resources. Not just merely oil. But think fresh ground water, foods, ores, mineral, precious metals, gems, potential, innovation, and GigaMarkets!
It is wildly voiced in Nigeria that the coexistence of vast wealth in natural resources and extreme abject poverty in developing and emerging countries is known as the as the Resource Curse. Now consider that the population increased from 120 million people from 2000 to 160 million in 2010, whilst at the same time with 45 percent of Nigerian families are sitting in resource blight. One thing is that if South Africa is sincere about leading the continent on the way to a brighter future, it should develop a more comprehensive wealth-based accounting system and help the rest of Africa, including Nigeria, to do the same.
Many estimates suggest that Nigeria’s GDP may increase by somewhere around 40 percent in nominal terms in 2015, which means that the West African powerhouse would overtake South Africa as the continent’s largest economy. But that estimate is questionable one. Comparable jumps have occurred in other nations, as in 2010 Ghana’s status to a middle-income nation occurred because of a sudden leap by 60 percent. Even so, insubstantial it is.
Concerns have also been echoed about the status of the BRICS organisation. But – and I do wonder what Jim O’Neil is thinking – I do not feel that the membership would not necessarily change that quick. South Africa could still act as an integral member state because sear size of GDP status is not the only metric; plus South Africa are in the club, with a lot of goodwill and relationship building under its belt. So Nigeria would not automatically become the preferred counterpart of BRIC(S)? However, some policy makers believe that Nigeria’s economic dominance of Africa would produce significant impacts in governance and political will. Well that is good’ol politics at work.
One not so well know Nigerian gig that is something of mass cottage industry, is her entertainment markets. Since the 1960s, Nigeria has had an active cinematic film industry, often branded as Nollywood in the same style of India’s Bollywood. You may be surprised that it is the world’s second largest producer, ahead of Hollywood, just behind Bolly. Nollywood creates some 200 videos for the home video market every month. Law impeded foreign television content so producers in Lagos started televising local topic and themes.
Currently, Nigerian films outsell Hollywood films in Nigeria and many other African countries. Some 300 producers turn out movies at an astonishing rate somewhere between 1,000 and 2,000 a year. The films go straight to DVD. The chief reason is that TV transmissions do not reach much of the more rural parts of Niger. But the industry is profitable. The average video production costs around $20,000 and shot in just a week; selling up to 200,000 units nationwide in one day. With this type of return, more are getting into the business. By most reports, Nollywood is a $500-million industry. And it keeps growing, according to Frank Ikegwuonu, author of Who's Who in Nollywood.
However, I should emphasise that economic growth – like Nollywood – is not the same as economic development (you may know this). Economic development ultimatly boils down to improving all the things that go to stepping-up and sustaining a nation’s standard and quality of living. GDP focuses exclusively on the money being generated by market activities and the total throughput of goods and services. Hence, even though Nigeria’s GDP per capita doubled from $1,400 in 2000 to $2,800 in 2012, it is important to understand that economic development, not just growth, is vital.
Nigeria, as another example, has immense solar energy potential because of its latitude and its large swathes of unused land. Many approaches are possible, such as off-grid and low-tech hot water. Biomass is a traditional African off-grid heating and cooking fuel. Simple, small-scale and medium-scale biomass plants could improve efficiency. Numerous African waterways possess.
Untapped potential for hydropower would be the cheapest energy source, but requires significant suppliers and then train and integrate local employees into their infrastructure projects, they will find easier market access. The rewards can be substantial for both the company and the economy. Recent calculations by Roland Berger Consulting indicate that making electricity available for one more hour per day would result in a 9 percent GDP increase in Nigeria.