Africa’s two largest economies are making a comeback

Image: AP Photo/Lekan Oyekanmi
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Africa’s two largest economies are making a comeback: Nigeria’s economy is finally lifting its head after five consecutive quarters of recession, while South Africa clawed back from a technical recession after months of barely-there growth.

Data published by Nigeria’s National Bureau of Statistics (NBS) shows that the economy grew 0.55% in the second quarter of 2017. The first hint of recovery came in the fourth quarter last year when, despite still in being in a recession, the economy showed an uptick. The economic growth is meagre but many Nigerians will hope that this signals the start of a permanent turnaround in the country’s economic fortunes after Nigeria slipped into recession for the first time in two decades.

The economic struggles has had significant ripple effects for both countries. The struggles of several companies meant Nigeria’s unemployment problem  worsened to 14.2% in the last quarter of 2016. A foreign exchange shortage hobbled businesses reliant on imports and made it difficult for Nigerians to access US dollars to pay bills at foreign schools and hospitals and for holiday trips.

South Africa’s recession came after months of political turmoil that directly affected the economy and led to a ratings downgrade in April this year. Trade and manufacturing were already struggling and not even South Africa’s usually buoyant finance sector could prevent the country from experiencing two consecutive quarters of negative growth rates, according to Statistics South Africa. Unemployment rocketed to a fourteen-year-high at 27.7% and consumer confidence dipped to apartheid-era levels of economic pessimism, with a survey showing that few believed the economic position of the country and their households would improve in the year.

Nigeria’s recovery is strongly linked to a sustained increase in its oil production and revenues. Last year, after a brief resumption in militancy in its oil-rich south, Nigeria’s oil production levels fell to 20-year lows. Accompanied by the fall in global oil prices, it meant Nigeria’s revenues from oil—its main export—fell sharply. In the second quarter of 2017, Nigeria produced 1.84 million barrels per day—it’s highest output rate since the first quarter of 2016 when it slipped into recession, NBS data shows. The Muhammadu Buhari-led government has also kicked off reforms to make it easier to do business in the country, like easing bottlenecks at local ports and relaxing entry visa requirements. relaxing entry visa requirements.

South Africa had a maize-crop boom to thank for its recovery. After a record drought in 2015, local farmers harvested the country’s best crop in history in 2016. The agricultural sector grew by 33.6% in the second quarter of 2017, following a 22.2% growth in the previous quarter, while others contracted, according to data from Statistics South Africa. South Africa’s backbone industry, mining, also performed well over the last two quarters, recovering from previous years’ hardship. The electricity industry also showed signs of stabilising, according to Statistics South Africa.

Despite the optimism, South Africa’s statistician general Pali Lehohla was cautious, warning that the headline figures should not be celebrated in isolation. Instead, he warned that the country should take a long-term look, which still showed signs of subdued growth.

“So even though 2,5% might seem like an impressive recovery, longer-term indicators show subdued growth,” the statistician general said in a statement.

In contrast, Nigeria’s government will likely look to claim the new economic data as a win. Earlier today, president Muhammadu Buhari’s assistant in social media took to Twitter to offer “congratulations” to Nigerians.