China’s GDP grew 4.9% in the third quarter compared to the same time last year, the country’s National Bureau of Statistics <a rel="noreferrer noopener" href="http://www.stats.gov.cn/english/PressRelease/202010/t20201019_1794616.html" target="_blank">said</a> Monday, as the economic superpower continues to rebound after the coronavirus pandemic. 



<h4 class="wp-block-heading">KEY FACTS</h4>



That growth was fueled by strong retail sales and industrial production, the government said.&nbsp;



China’s exports rose 9.9% last month while imports soared 13.2%—two more&nbsp;<a href="https://www.reuters.com/article/us-china-economy-trade/chinas-imports-exports-surge-as-global-economy-reopens-idUSKBN26Y0BL" target="_blank" rel="noreferrer noopener">strong signs</a>&nbsp;of recovery.&nbsp;



China’s is the only major economy that is expected to grow in 2020, according to the International Monetary Fund, which is forecasting&nbsp;<a href="https://www.imf.org/en/Countries/CHN" target="_blank" rel="noreferrer noopener">1.9% growth</a>&nbsp;for the year.&nbsp;



<h4 class="wp-block-heading">CRUCIAL QUOTE&nbsp;</h4>



Despite robust growth at home, the Chinese government also noted Monday that the global environment remains “complicated and severe” and that the country is under “great pressure” to prevent any further outbreaks of the virus.&nbsp;



<h4 class="wp-block-heading">KEY BACKGROUND</h4>



China’s economy&nbsp;<a href="https://www.forbes.com/sites/isabeltogoh/2020/04/17/coronavirus-drags-chinas-economy-into-first-slump-in-four-decades/#1aa08e324bcb">shrank 6.8%</a>&nbsp;in the first quarter—its worst contraction in 40 years—as the government shut down nearly all activity in parts of the country to prevent the spread of the coronavirus. In the second quarter, growth bounced back to 3.2% after factories reopened and the government poured billions of dollars in stimulus measures back into the economy.&nbsp;



<h4 class="wp-block-heading">TANGENT</h4>



Economists&nbsp;<a href="https://markets.businessinsider.com/news/stocks/economic-outlook-gdp-estimates-bank-america-stimulus-bill-recovery-quarter-2020-9-1029582684#" target="_blank" rel="noreferrer noopener">expect</a>&nbsp;the United States to see growth in the third quarter, too, but that growth is likely to be limited in the fourth quarter if further stimulus measures from the federal government are delayed until 2021.&nbsp;



<h4 class="wp-block-heading">FURTHER READING</h4>



<a href="https://www.forbes.com/sites/sarahhansen/2020/07/30/economy-shrank-at-historic-33-annual-rate-in-second-quarter-but-thats-not-the-whole-story/">Economy Shrank At Historic 33% Annual Rate In Second Quarter—But That’s Not The Whole Story</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/sarahhansen/2020/09/07/chinas-exports-surged-95-in-august-despite-escalating-tensions-with-the-united-states/">China’s Exports Surged 9.5% In August Despite Escalating Tensions With The United States</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/carlieporterfield/2020/10/15/europe-breaks-record-for-weekly-coronavirus-cases-as-countries-enforce-new-lockdowns/">Europe Breaks Record For Weekly Coronavirus Cases As Countries Enforce New Lockdowns</a> (Forbes)



-By Sarah Hansen, Forbes Staff

CHINA-ECONOMY-GLASS

China’s Economy Continues Rebound With 4.9% Growth In Third Quarter

After the United Kingdom narrowly voted last year to leave the European Union, predictions swirled that the British economy would collapse. Yes, the pound plummeted 9% versus the dollar the day after the surprise result and remains down, but the economy as a whole has held up relatively well. Gross domestic product grew 1.8% in 2016, a tick behind only Germany’s 1.9% growth among the Group of Seven industrialized nations. Economic growth has continued in 2017, home prices are up and unemployment has sunk to a 42-year low at 4.3%.
Much uncertainty remains with the official exit from the EU scheduled for March 2019. Some U.K. companies are holding off on investments to see how Brexit effects trade relations, and growth is forecasted to slow in 2018, but Britain’s business climate remains attractive. The U.K. ranks first for the first time in Forbes’ 12th annual survey of the Best Countries for Business.
The U.K. ranked among the top 25 countries (out of 153 measured) in each of the 15 metrics tracked, outside of political risk where it ranked twenty-eighth. Great Britain ranked fifth overall last year.
Wells Fargo and Apple both made substantial moves within London since the Brexit vote. Wells Fargo spent $400 million to buy a new European headquarters in London&#8217;s financial district. Apple announced plans to open a new London campus in 2021 that covers nearly 500,000 square feet of space. Facebook is also in the market for 700,000 square feet to accommodate 9,000 employees. &#8220;These commitments signal a belief across industries in the long-term strength of the U.K. economy,&#8221; says Jeff Lessard, who helps companies with location strategies as a consultant for Cushman &amp; Wakefield.
The U.K. scored particularly well on technological readiness (fourth) and the size and education of its workforce (third). Its $2.6 trillion economy is the fifth largest in the world. London serves as the central hub for European financial services and is home to financial giants like HSBC, Prudential and Barclays. “The best thing going for the U.K. is that London is one of three global hubs for financial services,&#8221; says Lessard. &#8220;Post-Brexit, a few European cities have the opportunity to challenge London but each has deficiencies.”
Britain&#8217;s reign as the top country could be brief as companies&#8217; plans for Brexit unfold. London <a href="https://www.bloomberg.com/graphics/2017-brexit-bankers/" target="_blank" rel="noopener">might lose 10,000 banking jobs</a> as a result of Brexit, according to think tank Bruegel. Citigroup, Morgan Stanley, Nomura and Standard Charter are moving their EU headquarters to Frankfurt, with Paris and Dublin landing spots for other banks looking to ensure access to the single market.
“The single biggest issue Britain will face is the frictionless participation in their economy of highly educated global talent. Talent is the key that unlocks innovation, growth, and competitiveness,” says Matthew De Luca, a strategic consultant with Cushman &amp; Wakefield.
We determined the Best Countries for Business by rating 153 nations on 15 different factors including property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape and investor protection. Each category was equally weighted.
We tweaked our methodology this year for the first time in a decade after conversations with multiple site-selection experts. Stock market performance is out, and we added workforce, infrastructure, market size, quality of life and political risk to provide a better gauge of how attractive a country is for capital investment. The data is based on published reports from Freedom House, Heritage Foundation, Property Rights Alliance, United Nations, Transparency International, World Bank Group, Aon, Marsh &amp; McLennan and World Economic Forum (click <a href="https://www.forbes.com/sites/kurtbadenhausen/2017/12/19/best-countries-for-business-2018-behind-the-numbers/" target="_blank" rel="noopener">here</a> for more details on the methodology and the best and worst country on each metric).
New Zealand ranks second overall for the third straight year. The island country in the southwestern Pacific Ocean is home to only 4.5 million people, but the economy has been on a roll, up 3.6% last year. Among the countries in the top 20, only Ireland&#8217;s economy expanded faster.
New Zealand has transformed from an agrarian economy to an industrialized, free market one over the past four decades. The Kiwi nation privatized dozens of industries like airlines, insurance, banking and telecommunications previously controlled by the government. It scores first overall for red tape, corruption and property rights.
Rounding out the top five are the Netherlands, Sweden and Canada.
The U.S. previously went on a decadelong slide in our ranking from the top spot in 2006 to No. 23 last year thanks to rising levels of red tape and bureaucracy, along with falling scores on trade and monetary freedom. But the $18.6 trillion economy moves up to 11th this year thanks to improved scores relative to the rest of the world on technological readiness, innovation and trade freedom.
“The U.S. has excellent access to both European and Pacific Rim economies, a highly educated and diverse workforce, companies that lead the globe in innovation and a stable business environment,&#8221; says Lessard. &#8220;And the new tax bill will only increase the favorability of basing profitable businesses in the U.S.”
The U.S. also benefits from methodology changes with the additions of workforce (size and education level) and market size (gross national product). The U.S. ranks first in both categories.
&#8220;Foreign direct investment in the U.S. has been strong in recent years as international companies have sought to be closer to their customers and better control over their supply chain in the world&#8217;s richest market,&#8221; says Chicago-based site selection consultant Jerry Szatan.
The world’s second (China) and third (Japan) biggest economies rank 66th and 21st, respectively, among the Best Countries for Business. China is held back by a lack of trade and monetary freedom. Japan has cut its corporate tax rate by eight percentage points since 2012, but its tax burden still lags the vast majority of developed nations, per the World Bank. Japan rates among the 10 nations for innovation and infrastructure.
African nations populate the worst countries for business with six of the bottom 10 (Haiti is the worst performer among non-African countries). Most of these countries fare poorly on innovation, trade freedom and investor protection. Chad ranks last for the third straight year. The landlocked African nation suffers from a lack of infrastructure and trained workers, as well as high levels of bureaucracy and corruption.
<a href="https://www.forbes.com/best-countries-for-business/list/#tab:overall" target="_blank" rel="noopener">READ MORE: Best Countries For Business List</a>
<h2>Africa&#8217;s Rankings</h2>
#41 Mauritius
#48 South Africa
#76 Botswana
#79 Rwanda
#82 Seychelles
#85 Ghana
#86 Namibia
#89 Senegal
#90 Cape Verde
#91 Kenya
#95 Zambia
#96 Tunisia
#101 Egypt
#105 Uganda
#110 Burkina Faso
#114 Tanzania
#115 Nigeria
#118 Niger
#119 Cote d&#8217;Ivoire
#121 Madagascar
#124 Algeria
#125 Lesotho
#126 Mali
#127 Mozambique
#128 Swaziland
#129 Angola
#130 Gabon
#131 Sierra Leone
#133 Cameroon
#136 Malawi
#138 Ethiopia
#139 Liberia
#141 Democratic republic of the Congo
#142 Mauritania
#143 Togo
#145 Zimbabwe
#146 Burundi
#147 Guinea
#149 Libya
#152 Gambia
#153 Chad
&#8211; Written by <a href="https://www.forbes.com/sites/kurtbadenhausen/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Kurt Badenhausen</a>, FORBES STAFF

The U.K. Tops Forbes’ Best Countries For Business 2018

Life in Nigeria today is like living in a dilapidated caravan, or driving around in a fancy jalopy.
When this sort of accommodation or transportation is your daily reality, then your long-term ambitions become hobbled by the pragmatic quest to simply make it to the next day’s hustle, the next salary, the next windfall or gift from that well-to-do cousin, and perhaps, for businesses, waiting for that large order that may never come. Under these faltering conditions, a balanced diet, quality education, satisfactory healthcare, comfortable and safe transportation, and strategic focus become luxuries.
For most folks, simply existing has become a risk; and for businesses and corporate citizenship, a wasteful pleasure. Phrases like “the economic growth and recovery plan” begin to sound somewhat pretentious. Another government mirage perhaps. Sadly, the disdain for diligence is rife and few Nigerians seem convinced that patriotism has its rewards. The paradox of hoping for affluence has become a pandemic, with citizens, companies and communities prowling around for scarce resources and opportunities like a herd of famished goats. Even government’s uptake of loans – $1 billion from the African Development Bank (AfDB) and $1.3 billion from China’s Exim Bank for rail projects – has not restored confidence in the shaky polity. Another $1 billion World Bank facility is expected to flow into government’s coffers in 2017, says Nigeria’s Finance Minister, Kemi Adeosun.
“The economy is on the path to recovery and confidence in the macro-picture is key,” Adeosun told CNBC Africa anchor Wole Famurewa in February. “Government is focused on investing in the priority areas of power and infrastructure… even as we continue work on payroll clean-ups and efficiency at the state level…”
The dire economy will not stop government from taking its statutory pound of flesh from companies, as oil revenues now represent only 10% of GDP. So, tax reforms will take center stage. At 6%, Nigeria has one of the lowest tax to GDP ratios in the world, with Ghana at 15% and South Africa 24%, Adesoun cautions, warning that “we should be very careful about getting excited about recent crude oil price recovery.”
At the micro level, pervasive poverty, disdain for Abujanomics and the proliferation of dodgy pyramid/Ponzi schemes is the new social order. Camouflaging as financial literacy, network marketing or empowerment programs, they represent on one side, the quest for overnight wealth and absolute disregard for government’s agenda and promissory notes, and on the flip side, the emergence of a new breed of professional charlatans peddling crafty concepts in an increasingly sophisticated economy.  Somebody needs to commission a poll to measure Nigeria’s social desperation index.
In a risk-averse, reward-hungry society such as this, contemporary concepts and capabilities like coding, digital literacy, big data analytics, cybersecurity, the Internet of Things (IOT) and artificial intelligence (AI) are farfetched ideas. Non-profits like the Lagos-based Book Club, which has been promoting the altruistic pleasures of reading books and advocating for a return to the culture of heuristics, seem largely ignored, their activities lost in the babble of personal, communal and corporate survival.
The nation seems to have lost a large portion of its liberal ethos. The number of pepper soup joints and event centers has now surpassed the number of libraries and bookstores in the land. Clearly, the pursuit of leisure and lucre has overtaken the quest for the wealth of knowledge to be found on books – or e-books.
But it is difficult to grow a culture of reading and research when citizens go to bed every night with hunger in their bellies and hyperinflation on their minds. Consumer price inflation peaked at an 11-year high of 17.9% in September 2016 and had neared 19% by February. “2016 was defined by politics and policy spats… our currency and foreign exchange issues led to the economy catching cold. But as we entered 2017 the forex issue moved from being a cold into financial pneumonia stage,” Kayode Oguntayo, a Lagos-based entrepreneur told this writer.
Notwithstanding these issues, Nigeria’s $1 billion Eurobond was eight times oversubscribed during its early hours of trading on the London Stock Exchange last February. The 15-year bond offering 7.875% in trading is the first Nigerian offering since 2013 and the 2015 change of government. Nigerian legislators had last year rejected government’s plan to raise $30 billion through loans.
Could Nigeria be flirting with a new era of economic rejuvenation?

Risks, Rewards  And Eurobonds

At least the new president Nana Akufo-Addo is optimistic. In a press statement he called for reflection on what makes Ghanaians who they are. This year’s theme, according to him, is:  “Mobilizing for Ghana’s Future.” That is, a year for Ghanaians to understand their country’s shortcomings and look at ways to improve.
Good timing, when growth is falling. According to figures from the World Bank, Ghana’s economy grew by 4.9% during the first quarter of 2016. However, overall gross domestic product (GDP) growth for the whole of 2016 could be below the 3.9% achieved in 2015, due to production problems in oil.
Inflation is at 16.7%, made worse by the country’s erratic energy supply that sees businesses put prices up when they use generators.
Victor Ohene Oppong, Founder of Invest Hub, a financial advisory firm in Accra, is, like many of his countrymen, in no mood for jubilation.
<div id="attachment_4605" style="width: 245px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-4605" decoding="async" loading="lazy" class="size-medium wp-image-4605" src="/wp-content/uploads/2017/04/GettyImages-146126958-235x300.jpg" alt="" width="235" height="300" />Dr. Kwame Nkrumah of newly independent Ghana, Ghana, mid to late 1950s. The British crown colony of the Gold Coast, became its own country of Ghana on March 6, 1957, with Dr. Nkrumah as its first President. (Photo by Underwood Archives/Getty Images)</div>
“Sixty years ago our founding father, Dr. Kwame Nkrumah famously opined, Ghana your beloved country is free forever, and we all thought managing our own resources would lead to prosperity for everyone but that has simply not been the case. We have issued our fifth Eurobond debt for $750 million and the oil crisis has led to a sharp contraction in oil exports. Businesses are fighting for survival because when there is no cash flow you die. So what is there to celebrate?” he says.
Economic hard times have hit Oppong in the pocket. Last year, he had to lay off five expatriates and close down one of his two branches because of low revenues.
“The debt to GDP ratio stands at about 70% and the last unemployment figures show at least 42% of people are still struggling to find jobs. I think the president is right when he calls this a time of reflection, we need to think very hard and carefully about the future of this country,” says Oppong.
Richmond Nartey, Managing Director of RN Shipping in Tema, agrees.
“Sixty years is a lifetime. For most people that is the age when they begin to think about retirement and enjoying life. But that is not the case for Ghana. The value of our currency is still very weak against the dollar and even though we decided to use our own local currency, many companies still charge in dollars. Foreign currency restrictions in Ghana are still a big issue for our kind of business. What happens to businesses that cannot get their hands on the much-needed dollars to be able to run their business?” says Nartey.
Following the end of decades of rule by former coup leader Flight Lieutenant Jerry Rawlings, Ghana has done its best to clean up its democratic act. Ghana’s two-party electoral system is earning the confidence of the world for its peaceful political transitions. For this reason alone, Mary Osei, Account Manager at HFC Bank, believes there is cause to celebrate.
“This is a time to remember all the things that make this country a wonderful place to live. Yes, there are several challenges we are facing, but which economy isn’t facing challenges? We have to continue to work together to build on the achievements we have and make this nation great,” says Osei.
“If there was ever a day to be proud of your Ghanaian heritage and to be patriotic, there is no better day than March 6, so I do not agree with the naysayers and people who believe there is no need for celebrations,” she says.
Yet the debate over how to celebrate Ghana’s 60th birthday has been fierce. Akufo-Addo set up a 30-member committee to plan the celebrations with a budget of GHc20 million ($4.57 million), which has proved controversial on the streets.
“If there is anywhere that money needs to be spent, it should be in the creative industry instead of throwing it away on branding buses with faces of old presidents or parties. There are failing sectors in the economy where that money could be put to much better use,” says Adamz, a hip-hop artist in Ghana.
The influence of Ghana’s independence over Africa cannot be underestimated. It was the first black African nation to cast off colonialism and inspired many others to follow suit.
&#8220;At long last, the battle has ended!  And thus, Ghana, your beloved country is free forever!&#8221; said Ghana’s first leader Kwame Nkrumah on independence night in 1957. The new leader wore his prison cap – a symbol of his incarceration by the British during his independence struggle – with the letters PG, for prison graduate, embroidered on the front.
Martin Luther King Jr. was with half a million Ghanaians at the ceremony and saw a parallel with Ghana’s freedom and his struggle for civil rights in the United States.
“Before I knew it, I started weeping. I was crying for joy. And I knew about all of the struggles, and all of the pain, and all of the agony that these people had gone through for this moment,” recalled King in an interview years later.
Nkrumah, the father of the Organisation of African Unity (OAU), which evolved into the African Union, drew many admirers in his first bold steps as a pan-Africanist leader. They included a young teacher by the name of Robert Mugabe who had been seconded to Ghana, by the then Rhodesian government, to a training college.
Mugabe was very taken by the sight of confident Africans in an independent nation and returned home determined to fight for an independent Zimbabwe.
Independence turned out to be bittersweet for Ghana – it was followed by assassination attempts and coups. The idealistic Nkrumah disappointed many when he declared himself president-for-life in 1964.
At least, in the 21st century, democracy in Ghana is closer than it probably ever has been to the shining ideals of 1957.

Ghana At 60

The respected Kenyan scholar Ali Al’amin Mazrui would have had interesting things to say about Africa’s current dalliance with Asia, especially the rise of Chinese business interests and influence across the continent.
Increasingly, companies from Japan, Singapore, Malaysia and South Korea have also been boosting their national GDPs with Africa-based projects. According to Linklaters, a commercial law firm, Asian-sponsored project finance funds in Africa grew by over 160% during the last decade, with Nigeria, South Africa, Mozambique, Egypt and the Democratic Republic of Congo the leading destinations for these commitments, which were in excess of $12 billion.
Mazrui would have advanced a quaint thesis for re-balancing Africa’s trade, cultural and diplomatic ties with Asia’s power blocs. He would have been especially aggrieved by the current state of inertia in the political economy of Africa’s most populous nation. A pan-Africanist and student of Nigerian affairs (his wife Pauline Uti, mother of two of his five sons, is Nigerian), the late professor is credited with stating way back in the 1970s that, “Africa produces what it does not consume and consumes what it does not produce.” And those were the early days of continental profligacy.
Nigeria could be Africa’s biggest culprit in this regard. The country is consequently experiencing its first recession in 30 years. Tired of waiting for the promised hope of a better nation, Nigerians now, rightly or not, accuse their current leader of bringing Africa’s largest economy by GDP to its knees.
President Muhammadu Buhari has been blamed for not ‘radicalizing governance’ fast enough, which was one of the reasons Nigerians voted for his All Progressives Congress (APC) party in 2015. Nigeria is engulfed in a torrent of crises never before seen in the history of the nation.
Clearing the cobwebs of the past is proving to be a delicate dilemma for the taciturn president and his team. Grappling with sluggish growth, dwindling external revenues, double-digit inflation and a prolonged currency constipation, he is leading the ethical campaign to wrestle with the seen and unseen forces of corruption and ineptitude. His seeming preference for advisers from his northern base is also being openly examined by civil society.
For Nigeria’s sake, Buhari needs to win the war against graft and impunity. His victory will begin to recreate a new nation, sealing his place in history and in the soft spot of a large-hearted nation.
But, can he do what is required to transform the ethos of governance, business and society? Will “the Nigerian system” allow him?
Will confirmed and well connected crooks go to jail? Will reportedly recovered looted funds be reinjected into the treasury? Will massive recovery of this commonwealth mean less recourse to external loans? Will the judiciary invoke its constitutional principles on its own stables? Will the Economic and Financial Crimes Commission (EFCC) ever successfully convict any person of influence?
Will federal and state legislatures reduce their allowances and salaries in tandem with the austere times? Do we need a referendum on their astronomical salaries? Will the Nigerian state significantly increase investment in education, healthcare and the police, using advanced technology tools and techniques to revamp these ecosystems? And when will politics with principles become the order of the day?
These are the sort of questions Nigerians are asking themselves. But they also realize their quest for jobs, stability and development is hobbled by a subculture of guile and graft.
Teaching at Uganda’s Makerere University between 1963 and 1973, the late Mazrui was known for poking fun at the megalomania of Africa’s fat-cat leaders and speaking truth to power. Naturally, Idi Amin disliked him a lot. He was also not able to get a job in any Kenyan university during the regimes of Jomo Kenyatta and Daniel Arap Moi. Were Mazrui alive today, he would have also queried the absence of truth and the dearth of altruism in the politics of modern Nigeria.
Mazrui would have encouraged Nigeria’s business, political and military intelligentsia to openly discourse their festering sores. He would have prayed for peace, unity of purpose and nation-wide reflection. He would have said hope should never be allowed to get into a cul-de-sac.
So will 2017 be the year Nigeria begins to recalibrate its moral compass? Nigeria desperately needs to lead Africa out of the nadir of homegrown frustrations.

Quest For A New Nation

South Africa’s renewal of the African Growth and Opportunity Act (AGOA) with the United States (US) a few months ago seemed to be about local poultry, when in fact negotiations were about a wider range of exports from 39 predominantly sub-Saharan African countries.
All had to meet the criteria of good governance, sound democratic values and protection of property rights. Countries such as Zimbabwe and Swaziland did not make the cut. It also did not go unnoticed that sub-Saharan Africa accounts for around $1.6 trillion of Africa’s $2.4 trillion GDP. AGOA therefore gives the US economic reach into countries where it would ordinarily have no influence.
AGOA is not a gift. As South Africa discovered, its economic strength on the continent does not guarantee its AGOA membership, and the accompanying eligibility to trade at preferential rates with the US. If South Africa did not loosen its stance on the anti-dumping tariffs imposed on chicken imports from the US, it would feel the costs in more lucrative areas, such as motor vehicles and parts, and wine and citrus exports. In the end, South Africa agreed to take 65,000 tons of bone-in chicken imports per annum, free of anti-dumping duties, from the US. Concessions could, however, have been as high as 300,000 tons, threatening an industry in which almost a billion chickens are slaughtered each year for local consumption.
The arrival of 16,000 tons of US chicken, a few weeks ahead of the deadline in mid-March this year, allowed South Africa to retain its preferential access to the world’s biggest market, and benefit from the latest version of AGOA, which was extended until 2025.
The arm wrestle between the US and South Africa may have been prompted by pressures the Americans were facing elsewhere. The dollar was strong at the time and the US needed to find export markets for its chicken. There was also the issue of a trade war looming with its neighbors, Mexico and Canada, over meat-labeling legislation, where the World Trade Organization ruled in favor of these countries being allowed to retaliate with $1 billion in punitive tariffs.
Another plausible reason was Russia imposing its own sanctions on the US in retaliation for economic sanctions it suffered while attempting to Balkanize the Ukraine. With threats to its industry coming in fast and furiously, pressuring South Africa to make the concessions must have seemed an easy option.
With the focus on what concessions the South African poultry industry had to make, it was easy to lose sight of the shortcomings in South Africa’s domestic trade policy. The concessions shed light on the lackluster performance of the manufacturing sector, caused by the political economy tilting left, protectionist trade policy, restrictive regulation, and labor disruption.
The pending Private Security Bill on the local security industry, which could see 51% of US-based companies, like Chubb, G4S and ADT, sold to South African participants, was also a worry, as were plans to limit foreign ownership of property. While the knee-jerk response may have been to assume that greater local ownership translated to black economic empowerment, a more significant interpretation is that no private foreign entity has an equity interest in South Africa’s state defense and protection services, and by extension, neither should they have controlling equity interest in private security establishments.
Land restitution may also fall short of AGOA legislation. The still-to-be promulgated Regulation of Land Holdings Bill will not affect foreign ownership of residential property, but will prohibit ownership of agricultural land, which could instead be leased for between 30 and 50 years. A ceiling on land ownership would be set at 12,000 hectares, regardless of nationality.
The potential overhaul of intellectual property laws, which could impact the pharmaceutical industry, is also concerning. While it makes socio-economic sense to roll out cheap generic drugs to as many South Africans as possible, foreign-owned multi-nationals may see this as an infringement of patents on their own more expensive medication.
Although the controversy surrounding the chicken industry seems to have settled, South Africa is still vulnerable to the vagaries in US trade policy. Should the US feel aggrieved by any of its preferential offerings, they may be withdrawn much quicker than what was allowed under the older version of the agreement. South African policymakers should be more cautious when making decisions, especially those that affect US interests.

Playing Chicken  With The US

In 1966, if you drove through Gaborone and blinked you would have missed it. It was little more than a barren railway stop, in the middle of nowhere, on the way from Cape Town to Cairo. Those living here would have said there was nothing more to it than termite mounds and elephants.
At the time, this land-locked country was considered to be the poorest in Africa, with a per capita of $70. It had nine secondary schools, 50 university graduates, a railway line built by Cecil John Rhodes, and five kilometers of tarred road that stretched between Lobatse Station and the High Court.
From this backwater beginning Botswana has emerged as one of the fastest growing economies in the world and moved into the ranks of upper-middle income countries. Real GDP shows an average growth of 5% per annum over the past decade, at a time when the most advanced economies have been falling apart. In 2015, GDP stood at $14.39 billion. This remarkable growth, according to the World Bank, is because of diamonds hidden deep in Orapa, 521 kilometers north of Gaborone. The discovery was made in 1967, months after Botswana’s independence was declared on September 30, 1966, and the proceeds went to the state rather than colonial coffers.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5201" src="/wp-content/uploads/2017/05/Botswana_JC-1-300x200.jpg" alt="" width="300" height="200" />
But, if you look closely at the white walls and fresh cement of Gaborone, cracks appear. In the week FORBES AFRICA arrived in Gaborone, unemployed youth clashed with police outside Parliament; four of them spent the night in jail.
It is called #UnemploymentMovement and uses social media to fuel support, much like South Africa’s #FeesMustFall student protests a year ago. It comes at a time when citizens question the government’s P100 million ($9.76 million) budget for its golden jubilee.
It is a big problem. One third of Botswana’s two million people are youth. The World Bank says poverty in Botswana is 17.8%, among youth aged between 15 and 24 its 34.10%. This is despite government spending 9% of its $14.39 billion GDP on free education.
One of those that spent the night in jail is Jones Banda, a committee leader behind #UnemploymentMovement. Speaking to FORBES AFRICA while on a march on August 13, he says the movement started with just one student, Tlamelo Tsurupe, standing outside Parliament with a poster. Within a week dozens more, including Banda, joined him.
“The youth of Botswana have realized our government can no longer place jobs for the youth&#8230; Most of our emphasis now is on the graduates. Why? Because it is [graduates] that are very frustrated. They have been educated by the government to take control of the economy and now the government is not absorbing them. Mind you, the students have loans to pay,” says Banda.
At the time of going to print, the BDP had not released an official statement concerning police assault at the protest on August 8. A permit was granted for the march held on August 13.
Banda believes unemployed youth make up more than 17.8%. This is because unemployed graduates have to register with the government, meaning that thousands of other students who are not graduates are not considered.
Banda’s stint behind bars hardened his resolve.
“Being in jail is almost as if I was home, not that I have ever been in jail. But for the movement it was a good thing. We felt the brunt of system and so we know now who is on our side. It was what we expected,” says Banda.
While students called for better employment, there are others who have managed to eke out a living.
A 32-year-old electrical engineering graduate, Kagiso Monkgatusi, makes his living from flying a P45,000 ($4,400) drone, one of the few owned and licensed in the country.
Monkgatusi, a photographer by trade, got the idea for his business after seeing footage on the internet. It led to him starting his small business, Africa Killer Bee Media, named because of the sound the drone makes in flight. The drone was given to him as a grant by the government-run Local Enterprise Authority. Monkgatusi’s success is an indication of Botswana’s potential.
<img decoding="async" loading="lazy" class="alignleft size-medium wp-image-5203" src="/wp-content/uploads/2017/05/Botswana_unemploymentmovement_JC-8-300x200.jpg" alt="" width="300" height="200" />
In Gaborone, there are small signs of burgeoning wealth; tarred roads glisten, as bright as the country’s diamonds, next to dusty sidewalks; malls, polished and pristine, are packed to the rafters with food, shoes and cell phone stores. The city center is a hive of activity as scaffolding rises on the skyline.
Botswana’s success is largely due to a stable government with strong fiscal management, reports the World Bank. President Ian Khama, whose photo hangs on the wall of every store you visit, has held office since 2008. He is the head of the Botswana Democratic Party (BDP) that has been in power since the first elections in 1965. Every president has been democratically elected and all stood down after their two-term limit.
At the very least, Botswana is trying hard to improve investment and growth in their small economy.
For the hungry investor, Special Economic Zones (SEZ) have been built in Lobatse, Gaborone, Palapye, Selibe Phikwe, Tuli Block, Francistown and Pandamatenga.
“In April, P1.6 billion, of P3.5 billion over three years, in tenders have been awarded and the focus is mainly on the construction of roads, health and education facilities. Other sectors that have been allocated package proceeds are manufacturing, tourism and agriculture,” says Moatlhodi Sebabole, Research Manager at First National Bank Botswana.
Sebabole says Botswana also has a five-year national development plan (NDP) which will focus on coal mining, base metals and diamonds. However, according to Sebabole, investors need to keep a careful eye on low agriculture and food security, stability of water and electricity, and low investment growth.
“The production side of the economy still remains under turbulence with the closure of some abattoirs as well as base metal mines like African Copper,” says Sebabole.
Regardless, Sebabole believes Botswana’s outlook over the next 10 years is promising. Focus will remain on infrastructure projects in water, rail and electricity, which will need financing of P100 billion (around $10 billion) by 2019.
Botswana is a far cry from the country that started with $70 per person a year and five kilometers of tarred road. Fifty years on, it faces new challenges that show how far the country has come – some might even go as far as calling it first world problems, including an educated and militant youth.

Young,  Jobless And ANGRY

After years of sliding down the World Bank’s Ease of Doing Business index, Kenya finally managed to turn things around and pull itself up to a ranking of 108 out of 189 economies. It is a rise of 28 positions from the previous year. Through wide ranging reforms, the country halted a downward trend since 2011, when it slipped to the position of 109 from 98 a year earlier, 121 in 2012 and 137 in 2013.
The latest ranking is ahead of the average sub-Saharan African ranking of 143. Much of the change is down to the government’s attitude towards economic reforms. The increased focus in the crucial areas of the access to credit; electricity; and business and property registration has yielded positive results.
For instance, the passing of legislation that allowed the sharing of both positive and negative credit information has seen the introduction of three Credit Reference Bureaus (CRBs) in the past four years. Consequently, CRB coverage of adults in the country climbed to 14%, up from 5% in 2014, a development which will simplify aid lending decisions in the country. Furthermore, sound collateral laws helped push the country to 28th position, up from 118 the previous year, and are expected to improve the ratio of private sector credit to GDP in the coming years. The average in sub-Saharan Africa on this indicator stands at 118.
On the issue of electricity supply, the reduction of procedures has cut the time it takes to connect to the grid from 158 days to 100 days. This has led to the total number of users connected to electricity, from March 2013 to date, spiking by 41%. It has also resulted in a 37% jump in the national electrification rate. In all, the initiative helped push the country to position 127, up from 141 in the previous year. Of course, much more needs to be done especially around the areas of reliability and affordability. With this in mind, the recent deal agreed with China to build the country’s first nuclear power station by 2025, with a capacity of 1,000MW, is a step in the right direction. Moreover, plans to expand installed capacity to about 6,700MW by 2017, from the current 2,500MW, should see the country climbing future rankings.
Minor improvements were seen areas such as: resolving insolvency (ranked 144, up from 145), dealing with construction permits (ranked 140, up from 152) and the registration of property (ranked 115, up from 121). The latter, through the automation of land records, has contributed to the rise is the registration of property. Areas that saw a drop in performance include: starting a business (ranked 151, down from 148), paying of taxes (101, down from 99) and the protection of minority investors (ranked 115, down from 114). Areas where performance remained flat are: trading across borders (ranked at 131) and the enforcement of contracts (ranked at 102).
In all, Kenya is on the right path and it’s resulting in reform-driven legislation. Despite the many challenges the country faces, the ongoing reforms herald good tidings for Kenya’s ease of doing business. The Business Registration Services Act, legislation that was recently enacted and not included in the report, should improve the country’s standing even further. The law, by changing the process of business registration, aims to streamline the incorporation of companies, partnerships and firms.
For policy makers, knowing where the economy stands with regards to the ease of doing business is useful. However, it might be more useful knowing the distance to frontier (DTF) scores which are indicated in the same report. DTF scores benchmark economies with respect to regulatory practice, showing the absolute distance to the best performance in each indicator. Kenya’s DTF score stands at 58.24, behind Namibia (60.17), Botswana (64.98) Rwanda (68.12) and Mauritius (75.05).
Be that as it may, Kenya has come a long way and deserves credit. Given the progress so far, aspirations to rise to 50th on the index by 2020 are valid.

ON THe RIGHT PATH

I wrote an article for a business news website several months ago about South Africa’s need to develop industrialists. The need is simply unavoidable: we incessantly hear about the country’s high unemployment rate in the media. Much is stated yet little is done.
A reader commented on the article, making a rather brash statement, which he is entitled to. He was of the opinion that I was naive for stating that we need to produce A-grade industrialists, instead highlighting the fact that our government should rather focus on mitigating the capital outflows South Africa has experienced in recent times. Perhaps our stringent labor laws are to blame or maybe our sluggish economy has precipitated these outflows. I agree in part; ultimately my point, and the real issue, is that not enough great ideas are being cultivated. There are various reasons such as entrepreneurs continuing to find it difficult to access funding, and our high skills deficiency relative to other industrialized economies.
The tenuous relationship between the private and public sectors cannot be over-emphasized. This issue is constantly debated in the media, illustrated by differing ideologies that the public and private sectors have pertaining to the economy: what should be done and how it should be done. Unfortunately for the greater masses, and more importantly the economic welfare of our country, their issues remain unresolved. The situation with our capitulating mining industry is a perfect illustration of the tipping point that has been reached as far as relations between the state and business are concerned. It comes as no surprise that the sector has cut thousands of jobs and this trend is likely to continue in other sectors.
According to recent data from the Department of Trade and Industry, South Africa’s gross domestic fixed investment to GDP hovers around 20%, well below the fastest growing nations. We can no longer justify our lack of saving as a nation on the fact that we have a growing fiscal budget, placing greater pressure on our budget deficit. There are several countries that face similar challenges, and are considered developing countries by the World Bank, that have significantly higher national savings as a proportion of the national income. The Asian Tigers – Hong Kong, Singapore, Taiwan and South Korea – owe some of the successes of their economic revolutions to substantially higher national savings, which enabled them in part to finance the industrialization of their economies through private investment rather than relying on foreign investment.
This brings me to my next point: South Africa needs to create world-class industrialists now and at a rapid pace. The ‘industrialist’ term has been misused by being prefixed by ‘black’ in recent government economic policy documents. The term has been used to describe what appears to be Black Economic Empowerment benefactors who will be moulded into billionaires. The ruling African National Progress (ANC) party has stated several times its need to create black billionaires. Few would disagree that the emergence of wealthy blacks, including all previously disadvantaged race groups, is necessary in the transformation struggle. The issue is not as much whether the emergence of black billionaires is wrong, but rather the manner in which the government plans to go about it.
The prioritization of creating employment opportunities remains pivotal in curbing the dependency of South Africans on state welfare and ultimately building a society in which the economic benefits of the country benefit everyone. For now, the prospect of higher employment amid the slowing economic growth is inconceivable. Great ideas need to be cultivated. Ultimately it was great ideas that birthed many of the largest corporations the world has ever seen and immortalized industrialists such as Andrew Carnegie and Cornelius Vanderbilt that transformed the concept of entrepreneurship.
The alternative of creating an elitist ‘black’ faction of billionaires through state procurement processes, better known as tenderpreneurship, will not only breed discontentment among the poor black majority, but will be a clear sign that the ANC has never, at its core, been a truly leftist party but is mutating  into a right-wing movement.

More Entrepreneurs, Less Tenderpreneurs

Kenya’s economy is set to grow at a faster pace than previous years. The World Bank’s Kenya Economic Update (KEU) estimates that Kenya’s economy is poised to grow by 6% this year, 6.6% in 2016 and 7% in 2017, making it one of the fastest growing economies in sub-Saharan Africa. Similarly, in a review of Kenya’s economic performance, the International Monetary Finance (IMF) forecasts real GDP growth of around 6.5% this year, supported by rising infrastructure investments, lower energy prices and a dynamic private investment environment.
The country’s past growth has also had a strong showing, especially after rebasing its economy. Average annual growth for 2007 to 2013 was 5% in the new GDP series, up from 4.3% in the old series. This single event also increased its economic size by 25% to an estimated $55.2 billion making it the ninth largest in Africa (up from 12th, surpassing Ghana, Tunisia and Ethiopia) and fifth largest in sub-Saharan Africa (after Nigeria, South Africa, Angola and Sudan).
Relative growth comparisons also show an above average performance. Average growth between 2010 and 2013 stands at 6.2% compared to a 5.3% average for sub-Saharan Africa. The IMF’s latest Regional Economic Outlook: Sub-Saharan Africa projects regional growth at 4.5% this year, which is two percentage points lower than its Kenyan forecast. The World Banks’s Country Director for Kenya, Diarietou Gaye, cited the country’s expansive fiscal and monetary policies as having played a huge role in making Kenya the growth center of East Africa.
To add to the momentum, the recent renewal of the African Growth and Opportunity Act (AGOA) by United States President Barack Obama for a further 10 years further supports the growth story. Kenya, which is already a leading exporter of garments to the United States, expects to earn about $10 billion before the 10 years are over. With the new deal, Kenya also expects to offset sluggish demand from its traditional European export markets which have struggled in recent years. Through AGOA, Kenya can also hope to generate the much needed foreign exchange revenues to help narrow its widening current account deficit currently standing at about 10% of GDP.
However, risks exist. Security concerns have seriously affected the tourism sector, a key foreign exchange earner. Contraction in the sector is partly blamed for the slowed GDP growth. Data from the Economic Survey 2015 indicates that earnings from tourism were down 7.3% to 918 million. Agriculture, which accounts for around 25% of the economy, is another sector that has had mixed performance. Often vulnerable to bad weather and volatile world commodity prices, the sector frequently suffers from fluctuating production and revenue levels.
The manufacturing sector also had a less than optimal performance. Commenting on the KEU report, the World Bank’s Finance and Private Sector Development Specialist, and a co-author of the report, Maria Paulina Mogollon, cautioned Kenya on the need to increase competitiveness of its manufacturing sector so that the country can grow, export, and create much-needed jobs. In recent years, manufacturing’s contribution to Kenyan exports and growth has lagged.
Despite the challenges, Kenya still has a good chance to become Africa’s great success story. From its growing and youthful population, stable macro-economic environment, a dynamic private sector, a new constitution and its pivotal role in East Africa, Kenya is undoubtedly the new regional growth center.

Onwards and upwards

Independence celebrations in Nigeria have traditionally been marked by the Head of State urging citizens to be thankful for how far the country has come and promising new beginnings.
Now, it is also a stark reminder of lingering trouble: terrorism. The last few national celebrations have taken place in the confines of the presidential residence, instead of the traditional Eagle Square, after a bomb blast during the 2010 celebrations killed several people.
<div id="attachment_3124" style="width: 195px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-3124" decoding="async" loading="lazy" class="size-medium wp-image-3124" src="/wp-content/uploads/2017/04/153160755-185x300.jpg" alt="" width="185" height="300" />Nigeria&#8217;s President Goodluck Jonathan arrives to attend the ceremony marking the country&#8217;s 52nd anniversary of independence from Britain, on October 1, 2012 in Abuja. AFP PHOTO / EMMANUEL WOLE</div>
This year, there will be even more reason for the day to be subdued. The Nigeria that will be celebrating its 54th anniversary will be smaller than the one that turned 50. The militant group Boko Haram, in brazen defiance of the government’s resolve to subdue it, now takes pride in seizing portions of Nigerian territory.
The insurgency shaved half a percentage point off the GDP this year, says Finance Minister Ngozi Okonjo-Iweala. In addition, the threat of the Ebola virus, which has swept through West Africa since April, has alarmed investors. From an economic point of view there is much cause for worry.
Nigeria has a history of navigating through choppy waters. A decade ago, militants in the Niger Delta were busy stoking frustrations and amassing weaponry, which they would use to cripple the oil industry that is the country&#8217;s mainstay. The force majeures that followed, combined with the global economic meltdown, left the country in a precarious position.
The country that gained its independence on October 1, 1960 – one of 18 African countries that would break free from the colonial grip that year – was a hopeful one. From the day it dawned on Nigerians, three years earlier, that that the much smaller Ghana had beaten Nigeria to freedom, enthusiasm had swelled in the then federal capital Lagos.
“This is a wonderful day, and it is all the more wonderful because we have awaited it with increasing impatience, compelled to watch one country after another overtaking us on the road when we had so nearly reached our goal,” said Prime Minister Tafawa Balewa in his Independence Day speech.
“I promise you, we shall not fail for want of determination. And we come to this task better-equipped than many.”
Barely six years later, it was all over. The republic crumbled, partly under the weight of corruption that critics say has grown worse. They claim corruption is depriving Nigerians – more than half of whom live below the poverty line – of the benefits of hundreds of billions of dollars in oil revenue.
While the road to independence may have been, in Balewa&#8217;s words, without bitterness nor bloodshed, the road since has been rocky. So, like several other African countries, bloodshed has defined much of Nigeria’s post-independence history. From a succession of coups to a bloody civil war, that claimed more than one million lives, and ethno-religious crises.
Added to that is the copious number of deaths from needless causes that Nigerians have long got used to: infants dying from easily treatable diseases, car crashes, petroleum pipeline spills and adulterated drugs.
Amid the gloom, however, Nigeria has never been better placed than it is now to pull off a long-awaited economic miracle. The last decade has been marked by solid growth – averaging in excess of 6%, and placing Nigeria among the fastest growing economies in the world. In April, it emerged, after a long overdue reassessment, that Nigeria, not South Africa, is Africa’s largest economy.
<div id="attachment_3126" style="width: 244px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-3126" decoding="async" loading="lazy" class="size-medium wp-image-3126" src="/wp-content/uploads/2017/04/104408801-234x300.jpg" alt="" width="234" height="300" />The Duchess of KENT Katharine WORSLEY presiding over Nigeria&#8217;s independence ceremonies on October 1st, 1960. Le 1er octobre 1960, la duchesse de KENT Katharine WORSLEY préside les cérémonies d&#8217;indépendance du Nigéria.</div>
Investor confidence is strong in spite of the country’s challenges. The confidence is fed largely by a large youthful population. A large diaspora also remits around 4% of GDP annually.
A regime of relative macroeconomic stability, dating back more than a decade, also contributes to the confidence. A debt relief package obtained in 2006 freed the country from crippling interest payments, and, with a sovereign wealth fund launched in 2011, signposted the country’s intent to be taken seriously by the international community.
The biggest challenge facing the managers of the economy has been – and will continue to be – converting that abstract progress into a visible lift in the fortunes of millions of citizens.

A Gloomy And  Stark Reminder

The world’s second largest exporter of cocoa is currently experiencing serious economic pain.
Proceeds from Ghana’s cocoa, timber and gold exports have not been enough to cater for its national lifestyle. Add liquid gold to the mix and suddenly this regional champion is showing symptoms of the proverbial Dutch disease so early in its crude oil career.
Ghana’s financial system is now frequently constipated, coping with low savings and high borrowing rates. Its also is characterized by unsustainable appetite for foreign goods, resulting in missed spending targets, inflation and dollar-denominated thinking. Sustaining real economic growth has therefore been difficult. In a nutshell, West Africa’s second largest economy is engulfed in a failing currency crisis.
The Ghanaian cedi is suffering its worst humiliation against major trading currencies in decades. Consumer price inflation peaked at 14.5% in April. Public sector spending has remained way above the regional sub-Saharan average for many years, even as the country continues to record fairly strong growth.
By contrast, the cedi has depreciated in recent years. As a result, equities on the Ghana Stock Exchange (GSE) have also been losing weight, shedding about 16% of their value in US dollar terms this year alone.
The business community and ordinary Ghanaians feel helpless. Their view is that politics now threaten to transform their currency into ordinary tissue paper.
“Notwithstanding the fact that Ghanaians are resourceful and resilient people, local businesses have been hit hard by this currency crisis… the authorities need to cultivate public empathy, they need to involve the business community in their fiscal planning process,” says Albert Ngumba, general manager of e-commerce firm Cellulant Ghana.
The crisis has induced a total slowdown of the once stable polity and left politicians and economists puzzled on how to stop this once bubbling economy from drifting away.
How is it that Ghana now finds it difficult to pay its bills after years of sustained economic growth and after commercial production of crude oil began in 2010? How can a nation be growing into poverty?
For those interested in the fortunes and foibles of African nations over the last five centuries, this is an old tale. The logic of the international marketplace is a simple linear equation: if weaker economies have weak currencies then stronger currencies will produce stronger, more robust economies. This is the turf of the world’s central banks.
Of course, beyond the currency conundrum, one of the reasons why economies fail is fiscal indiscipline. This has been the bane of Ghana’s current economic woes. Its current account deficit, according to the Bank of Ghana (BoG), the banking industry regulator, was a whopping 12.30% of its GDP, as at December, 2013. Debt-to-GDP ratio is forecast to reach 51.2% by the end of 2014. If this figure ever gets to the 60% mark, Ghana might lose its status as a lower middle-income country, according to the IMF.
Government’s quest to increase teachers and civil servants pay blew up in its face: public sector salaries now gulp 70% of internally generated revenue. These civil servants represent less than 1% of the population. With falling commodity prices, and energy supply hiccups, the fiscal deficit is expected to persist for at least another five years.
To stem the negative currency tide, the BoG outlawed companies from maintaining domiciliary accounts and engaging in foreign currency denominated transactions in February. It also limited withdrawals to approximately $10,000. The plan did not work. The cedi has depreciated by more than 6.4% since then. The BoG promptly unfastened the guidelines in July. The effect of this policy flip-flop on the psychology of the markets has been mixed: macro- and micro-level economic pains, heightened currency and sovereign risk ratings, faith in the ability of the economy to turn around in the long term, and erosion of confidence in government’s economic management capabilities.
The matter is threatening Ghana’s hard won reputation as a magnet for foreign investment. Ghana’s share of Africa-bound FDI ($3.3 billion per annum) needs to grow. The value of exports also needs to grow. Ghana’s business and political elite need to be stimulated to increase their appetite local products.
For most Ghanaians, whose outlook on life has been defined by decades of mass penury and perseverance, this is proving to be a bitter pill to swallow, especially after President John Mahama made promises of steady and sustained economic progress.

Growing Into Poverty

Re-benchmarked, readjusted, refurbished; whichever term you choose to use, Nigeria’s GDP has been given a statistical facelift and the results reveal that the size of its economy has leapfrogged South Africa to become the biggest on the continent.
Twenty four years after its last rebasing exercise, Nigeria’s National Bureau of Statistics (NBS) has released the country’s new estimate of its Gross Domestic Product (GDP). Now estimated at $510 billion for 2013, the rebasing effect values Nigeria’s GDP at almost double the previous year’s World Bank estimate.
To many economists, Nigeria’s rise to become the top economy in Africa came as little surprise. Given the delayed rebasing &#8211; usually practiced by countries every few years &#8211; it is widely acknowledged that Nigeria, economically, was probably ahead of South Africa three or four years ago. Whereas previous estimates relied on 1990 as the base year for calculations, the revised estimate uses the year 2010, now taking into account key sectors that were otherwise overlooked, such as telecoms, professional services, and entertainment.
What the NBS has achieved isn’t quite as crude as putting lipstick on a pig, as some have suggested, but perhaps more like reclassifying beauty so the pig is more appealing to look at. Lipstick or no lipstick – it’s still the same pig, just around 93% bigger than previously thought.
Without the context of GDP per capita or developmental statistics, such as life expectancy and adult literacy, it’s been tempting for Nigerians to draw false positives from their nation’s recalculated size. Indeed, with the country’s rising poverty levels, as reported by the same statistics bureau a year earlier, many outside the country have greeted the rebased figure with cynicism. It’s probably the equivalent of that noisy neighbor who boasts of living in the biggest mansion of a small town, bereft of the minor necessities of constant electricity, running water and a paved road to drive to it.
So, does the size of Nigeria’s GDP really matter? The simple answer is, yes, and by a great deal too. A larger GDP places Nigeria at the forefront of conversation regarding Africa’s development, even more so than it has previously.
When global investors look to deploy resources in Africa, Nigeria’s GDP, coupled with its already massive population, means it can&#8217;t be ignored. As the scale of investment nations attract will principally be driven by their economic size, this could make a world of difference. Potentially, Nigeria could receive a larger consideration for investment compared to competing economies, even those viewed as more stable. As outlined in the NBS’s report, Nigeria has achieved a lower debt to GDP ratio, falling from 19% to 11%, thereby, at least in theory, increasing Nigeria’s capacity to borrow and attract higher levels of Foreign Direct Investment.
However, don’t expect Nigeria to displace South Africa as the top investment destination anytime soon. Critical infrastructure such as highways, rail and ports required to attract investment remain insufficient. The country might as well be shouting: “Invest in Nigeria. We may have poor road, port and rail infrastructure, but our GDP is huge.” It won’t convince many as an investment slogan.
For Nigeria to realize the rapid development as achieved by its MINT counterparts, Mexico, Indonesia and Turkey, investment needs to be channelled towards infrastructure development for the benefit of sectors outside oil exportation. Areas such as agriculture and manufacturing need more focus. Increased borrowing power offers the ideal opportunity to attract the required funding for such investments. Only when Nigeria begins to bridge the infrastructure divide will the real impact of its GDP size be felt by the masses. It’s not about the size of the economy but what is done with that size that ultimately counts.
In defence of the NBS, it has never claimed that the new GDP estimates translate into a changed or improved Nigerian economy. The new figures are simply about having better measurements. It’s about providing a better understanding of Nigeria’s economic structure, under which investment decisions can be made, such as increasing Nigeria’s weak non-oil tax revenue base.
For Nigeria to make that much needed leap forward, the stark realities of its income inequality, low GDP per capita and living standards need to be confronted head on. As well as infrastructure, the game changer will be education and up-skilling to put Nigeria’s massively unemployed and underemployed populace to work.
So, while a larger GDP may not immediately equate to the rapid improvement Nigerians have longed for, the rebased figure should kick-start the conversation for which the accelerated development needs. Much credit should be given to the NBS for achieving this feat.
Beyond bragging rights, Nigeria’s rebased GDP offers opportunities for Africa’s giant to really awaken. With Nigeria scheduled for a reweighting of its inflation index by the end of 2014 and another rebasing in 2016, we may well see this pig begin to fly someday.

Will This Pig Fly?

Countries in sub-Saharan Africa are set to clock up the fastest pace of growth since the global financial crisis struck five years ago, despite the weak global environment. But it has not prevented the finances in many of their economies from deteriorating. The question is, should we be worried?
Budget deficits in the region have swelled in the past decade, as governments have ratcheted up their spending. According to research from UK-based Capital Economics, the combined shortfall for the region in 2012 amounted to 2.5% of gross dom-estic product (GDP) – a key financial health ratio – compared with just 0.5% in 2000. Ironically, the trend has nothing to do with excessive borrowing. Over the same period, government debt as a share of GDP plunged to 33% from 70% – a respectable level.
However, the improvement in debt ratios has been driven largely by debt relief from Western donors. As these countries grapple with their own fiscal constraints, this is likely to dwindle. At the same time, prices for exported commodities, the mainstay of the region’s economies, are starting to subside after reaching historic peaks in the past decade. This means that governments will have less to spend on financing their own development, and may have to borrow more to do so.
The marked acceleration in spending that has taken place across the region is generally viewed as positive. Most of the money is invested in capital projects, which will ultimately boost growth potential. Sub-Saharan Africa needs an estimated $93 billion a year for infrastructure development. But some governments are pumping increased amounts of money into what is known as current spending. This includes the salaries of civil servants and subsidies on necessities like fuel, electricity and food. These eventually become unaffordable.
The biggest spenders on subsidies in the region are Angola, Ghana, Nigeria, Mozambique and Zambia. Ample oil revenues mean that Angola and Nigeria can cope with the financial burden, but the finances of the other three countries are not as healthy. In Ghana, fuel and electricity subsidies swallow nearly a quarter of official revenues. Power subsidies alone account for 17% of revenue in Mozambique and 20% in Zambia.
Yvette Babb, Standard Bank’s Africa strategist, believes that countries in sub-Saharan Africa are trying to address the burden of fiscal subsidies. She says that there has been a strong improvement in the way that fiscal budgets have been managed. She also says that the debt burdens of countries in the region are generally still “enviable” when compared with the US and Europe.
However, there are significant exceptions. The region’s two main offenders are Ghana, its biggest cocoa producer, and Zambia, its top copper producer. Both countries’ economies are growing at a heady pace of more than 7%, so there is little justification for fiscal slippage.
In what was seen as a bid to garner support ahead of the 2012 elections, Ghana overhauled its government salary structure in 2010. The public wage bill was pushed up to nearly half of overall spending. This had disastrous effects on the country’s financial credentials. Ghana’s budget deficit ballooned to about 12% of GDP in 2012, nearly double its official target, from just 4% in 2011. Its debt had reached 50% of GDP at the end of 2012, up from 41% a year earlier.
Ghana’s government has pledged to narrow its budget deficit to 9% in 2013 and 6% by 2015, but there is widespread skepticism that these targets can be achieved. In what was seen as a step in the right direction, the country scrapped fuel subsidies worth $500 million in May.
Despite partial cuts in fuel and maize subsidies in 2013, Zambia’s budget deficit is also expected to widen, reaching 8.5% of GDP in 2013 from 2.8% in 2012. After a broad-based increase in civil servants’ salaries, the country’s budgeted wage bill will climb to more than half of official revenues in 2014, from 40% previously.
One of the strategies that Ghana, Zambia, and several other sub-Saharan African countries have deployed to deal with their fiscal challenges is tapping international capital markets. In 2013, governments from the region raised more than $5 billion in global sovereign bonds – including several debuts. That compares to issuance of just $1 billion a decade ago.
More bonds are in the pipeline, with Zambia, Kenya, Tanzania and Senegal all likely to enter the market. And there is ample appetite from investors. In 2012, Zambia’s debut $750 million Eurobond was 15 times oversubscribed. Provided the money is allocated wisely, the trend is set to continue.

Healthy finances Africa’s spending PATTERNS

With an 18% unemployment rate, Botswana is the largest producer—by value—of diamonds, the country’s main source of income, and one of Africa’s fastest growing economies. It has come a long way since its independence in 1966.
Botswana has recently been commended by the African Development Bank (AFDB) for maintaining good economic growth and healthy foreign reserves. The country’s fiscal discipline has raised it to middle income status.
With a GDP of $14.4 million, the International Monetary Fund (IMF) has projected GDP and inflation growth at 3.9% and 6.8%, respectively, for 2013 and 4.1% and 5.8% for 2014.
The country’s main exports are diamonds, copper, nickel and beef. The discovery of alluvial diamonds in the late 1950s has played a large role in the country’s development. Botswana has achieved what many countries in Africa have longed to with their natural resources; ensuring its citizens benefit from their country’s riches.
Debswana, an equal partnership between the government and diamond company De Beers, began in 1978. De Beers has moved its operations and $6 billion-a-year worth of sales to the country. De Beers’ sites have been moved to Gaborone and a new 10-year sorting, valuing and sales contract was secured. The government is looking to turn Botswana into a major international center. The subprime crisis that rocked the world shrunk the country’s diamond revenue.
The country’s rule for new mining investments is that 15% of the company needs to be offered to local investors on the same terms as foreign ones. If the locals do not take up the offer, the companies are free to commence with business as usual.
Pangolin Diamonds recently announced it had discovered one of the largest known kimberlite pipes—a rock formation in which diamonds are formed—in the world at its Tsabong North project.
Botswana cites low inflation, low corruption, a stable economy and investment protection as some of its attractive qualities when courting investors. Investment opportunities lie in manufacturing, information technology and tourism.
It takes 61 days and 10 procedures to start a business in Botswana, and ranks at 56 on the ease of doing business index. The country has increased the profit tax rate; corporate tax is 15%, value added tax (VAT) is 10% and the country has no foreign exchange controls.
Botswana was number 59 on FORBES’ ‘Best Countries for Business’ 2012 list. Credit ratings are stable, with an A- from Standard &amp; Poor’s and an A2 from Moody’s.
Botswana is a member of the Southern African Customs Union (SACU), Southern African Development Community (SADC), enjoys the benefits of the African Growth and Opportunity Act (AGOA) and the Interim Economic Partnership Agreement (IEPA) between SADC and the EU.
Near the Sir Seretse Khama International Airport lies the Botswana Innovation Hub. The country is hoping to attract domestic, regional and global companies. The hub will focus on the biotechnology, energy and environment, information and communications technology and ICT enabled services, as well as the mining technologies sectors.
With a history of having one of the highest infection rates in the world, and one of the most advanced HIV/Aids treatment programmes on the continent, a study by Botswana’s National AIDS Coordinating Agency has recorded a 71% decline in new HIV infections since 2001, thanks to increased knowledge and condom use.
Amid all the advances that Botswana has made, it is currently facing some controversy. A court battle against the government began in 2003 after the government began relocating the Kalahari Bushmen population to settlements.
London-based Survival International has called for a boycott on Botswana tourism as a stance against how the Bushmen are being treated by the government. There is concern over Spain’s king, Juan Carlos, being allowed to shoot elephants in the country while the Bushmen are prevented from hunting, a way of life for them. They are also prevented from digging for water in the reserve, but Wilderness Safaris was granted permission to dig boreholes for water, supplying a swimming pool. Botswana is facing a severe water shortage due to receding dam levels caused by drought.
The British lawyer defending the Bushmen’s rights has been barred from returning to Botswana.
On a governance front, the 2013 Ibrahim Index of African governance, compiled and published by the Mo Ibrahim Foundation, ranked Botswana second out of 52 countries.
The president is selected by the party that wins 29 of the 57 parliamentary seats through proportional representation system. Parliament rejected a call for the people to vote for the president in 2008. The ruling party, the Botswana Democratic Party, has been in power for the last 46 years.

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