Much has recently been made of reports that Egypt has overtaken South Africa as Africa’s second largest economy and that we have now slipped to third place - with Nigeria in first place. All this has added to South Africa’s sense of national decline - after having prided ourselves for so long as being in an unassailable position as the continent’s largest economy. Commentators must now console South Africans with the reassurance that we are still the most “highly industrialised” economy in Africa.
The relative size of economies is generally measured by assessing their Gross Domestic Products on a PPP (Purchasing Power Parity) basis - which irons out kinks caused by the differences between official exchange rates and the actual purchasing power of the currencies involved.
In terms of PPP GDP China in 2015 already had the largest economy in the world - US$ 19,392 billion, (17% of global PPP GDP) compared with the EU at US$ 19,205 billion and the United States at US$ 17,947 billion. India was next with US$ 7,965 billion.
The largest economy in Africa was Nigeria at 22nd position in the world with a PPP GDP of US$ 1 092 billion. Egypt, at 23rd place, had a slightly smaller PPP GDP of US$ of 1 048
billion. South Africa limped in at third place in Africa and 30th place in the world with a PPP GDP of US$ 724 billion.
But it was not always thus. Nigeria suddenly assumed the leading position in 2014 after recalculating the basis on which its GDP was assessed, increasing it overnight by 89%.
The new figures were apparently verified by the IMF and the World Bank. However, if one considers other core factors relating to the Nigerian and South African economies, some of the statistics just don’t seem to add up. So, for example, the Nigerian Federal budget in 2014 was US$ 30,4 billion compared with South Africa’s budget the same year of US$ 115 billion.
Consider also the fact that South Africa with its 54 million people consumes more than 10 times as much electricity as Nigeria with its 177 million people. South Africa’s consumption of 234 million MW hours/year was the 15th highest in the world. We have over 2 000 shopping malls (the 6th highest number in the world) compared with 12 - 15 in the whole of Nigeria. Our exports and imports in 2013 amounted to US$ 198 billion compared with Nigeria’s total trade of US$ 135 billion. 90% of Nigeria’s exports were oil and oil products - which have fallen by more than 40% in the past two years.
In 2015 South Africa produced 615 000 motor vehicles and we had 165 cars per 1000 people. Nigeria had 31 cars per 1000 people. Nor is it a question of Nigeria having a prosperous rural farming sector. 62% of the population live below the international poverty datum line of US$ 1,25 per day - compared with 9.4% of South Africa’s population.
Also, in terms of financial services South Africa appears to be far in the lead. The value of shares on the Johannesburg Stock Exchange is US$ 790 billion, compared with the US$ 47 billion on the Lagos Exchange. South Africa’s banks and financial services are also rated amongst the best in the world by the World Economic Forum’s Global Competitiveness Report.
Egypt probably has a better claim to being the continent’s largest economy. Its budget is US$ 85 billion and its foreign trade was US$ 97 billion. It has 28 Cars per 1000 people. However, only 1.2% of its population live below the US$ 1,25 poverty line - which means that there is a much higher general level of prosperity among its people than there is in South Africa.
What it comes down to is the need to be skeptical about statistics. As one commentator observed, they are like bikinis - more important for what they conceal than what they reveal. Nevertheless, whatever South Africa’s real economic ranking in Africa may be, we are slipping with each year that passes. During the past three years the Sub-Saharan economy has grown by an average of 4.5% compared with South Africa’s growth of only 1.3% in 2015 - and projected growth of 0.4% this year.
By Dave Steward, Executive Director of the FW de Klerk Foundation