I Go Chop Your Naira.

October 19, 2014

Last April the globe was shaken to its foundations, or at least the roots of its bleached hair, by the news that Nigeria had finally Made It Big. Their economy had surged ahead of South Africa’s and become Number One in Africa. The Economist was delighted that “sluggish, complacent South Africa” had been defeated by the new go-ahead country. News24, never slow to attack South Africa on any basis, quoted a U.S. economist from Bumhole College, Colohoma, who explained that Nigeria’s triumph was entirely due to the fact that it had privatised its electricity generation (hint, hint, ESCOM).

There were, however, a few problems identified. While the Economist explained that hordes of foreign companies were investing in Nigeria, it failed to explain that two of the ones it cited (SABMiller and Shoprite) were South African companies (ignoring another, MTN). It also noted that the Nigerian government was incapable of collecting taxes (although the Economist‘s neoliberal philosophy does not see that as a problem). Nigerian society is of course deeply corrupt and the economy largely runs on oil. But who worries about such issues when the economy is surging with a tremendous surge, like the effects of the world’s biggest suppository?

Or is it?

The CIA World Factbook gives Nigeria’s 2013 GDP as $502 billion. The World Bank says $522 billion. The United Nations says $262 billion. These are supposedly experts, and yet one body gives a figure twice as big as the other. In contrast, the South African 2013 GDP ranges between the World Bank estimate of $350 billion and the UN’s $384 billion. That’s a range of only 10%. It seems, then, that the figures are unreliable. Perhaps this explains why Nigerian GDP inflates and South African GDP deflates according to the degree of US control of the observer.

The 2013 revenues and expenditures are probably more measurable. In 2013, according to the CIA, South African revenues were $88 billion, expenditures $105 billion. (Oddly enough, Wikipedia’s figures for 2011 are, respectively, $102 billion and $118 billion; reflecting a dramatic fall in currency value in two years.) In 2013, according to the CIA, Nigerian revenues were $24 billion and expenditures $31 billion; the 2011 Wikipedia figures are $23 billion and $31 billion, suggesting that Nigeria’s much higher inflation rate than South Africa’s, and the even more dramatic fall in currency value there, is not being accommodated. Or perhaps Nigeria’s figures are guesstimates. Who can say? By these figures Nigeria’s tax revenue is somewhere between a third and a quarter of South Africa’s — although its budget deficit manages to be about half of South Africa’s. How does a country so much richer than South Africa acquire so little revenue from its wealth?

Nigeria’s sudden surge is supposedly due to “telecoms, banking and the Nollywood film industry”, according to the Economist. These were apparently not counted in the economy previously. Apparently, Nigeria didn’t count its banks and its phone companies and its movie industry as part of the economy. But banks are the ones who are employed to do the counting. Nigeria is extremely, and unjustifiably, proud of its horrible film industry. Thanks to South African investment, Nigerian telecoms have been growing rapidly (though sending income to Johannesburg rather than to Lagos). It’s not credible that a country which seriously wished to assess its national income would ignore these elements. This suggests that the surge in economic clout is essentially smoke and mirrors. (Banks are very well equipped to rig the system, while telecommunications were the source of the fraudulent dot-com boom, and of course movies are all about illusions.)

Nigeria is a significant country. Its population is over three times South Africa’s. It therefore has great potential to overtake South Africa. However, by global economic orthodoxy its economy ought not to be growing, because that orthodoxy says that corruption and protectionism prevent economic growth, and Nigeria has both. Realistically, with such an insignificant government revenue the government can do little to stimulate economic growth. But in the first decade of the century, according to a wholly unreliable website called indexmundi (let us pretend that such a website is reliable, for it probably presents the picture which big business and NATO approve of), there was an astonishing surge in Nigerian growth:


Year Growth rate
2001 8.164
2002 21.177
2003 10.335
2004 10.585
2005 5.393
2006 6.211
2007 6.972
2008 5.984
2009 6.96
2010 8.724
Average: 9.051


That’s impressive. It’s odd, though, that it swings so rapidly from 21% down to 10% and then to 5%, and then back up — almost as if the figures were being manipulated. There are other useful figures — the naira/$ exchange rate, which is hard to fiddle, and the inflation rate, which is easily fiddled, and which most countries underestimate. (Starting with 1999, the last year when the official exchange rate was pegged at 21.89).



Year Naira to dollar Inflation rate Decline in Naira
1999 21.89 (88-90 PM) 6.618
2000 85.98 (105.00 PM) 6.938 ~75%
2001 99-106 (104-122 PM) 18.869 ~19%
2002 109-113 (122-140 PM) 12.883 ~6%
2003 114-127 (135-137 PM) 14.033 ~11%
2004 127-130 (137-144 PM) 15.001 ~2%
2005 132-136 17.856 ~4%
2006 128.50-131.80 8.218 ~-4%
2007 120-125 5.413 ~-2%
2008 115.50-120 11.581 ~0%
2009 145-171 12.543 30%
Average inflation 11.814


So the naira roughly halved in value between 2000 (when its value collapsed by 75%, to what the black-market value had previously been) and 2009. Not exactly Zimbabwean-scale collapse, but unimpressive by any standard. And, with an average inflation of almost 12% (if Nigeria is like every other country in the world, this is doubtless an underestimate), one would expect an even greater fall; doubtless some currency juggling was keeping the value of the naira higher than it deserved to be. But, compared to South Africa, Nigeria’s performance is pitiable. Such comparisons are never made, even though virtually all the unjustified praise of the Reserve Bank relates to currency value. Instead we are constantly told how terrible our country’s inflation performance is and how weak and unstable our currency is. If such things are really important, Nigeria ought to be in the toilet instead of having stellar economic growth which, somehow, nevertheless, does not lead to the country looking any richer than it ever did, or being able to build its own infrastructure or win a war against raggle-taggle insurgents in the north-east.

So what conclusions can we draw from this? Predominantly, that we don’t know whether South Africa or Nigeria is the biggest economy in Africa, and we have no means of finding out because the sources of information are unreliable. However, it looks very much as if the South African statistics are more reliable than the Nigerian, and therefore as if South Africa might still be ahead (whatever that means — probably very little). After all, the surge is supposed to have happened at a time when the world’s economy was in a weak position, while West Africa was in economic and political chaos as a result of the Ivory Coast and Libyan wars, and Nigeria itself was engaged in a rapidly-expanding war in its north-east. This is a surprising occasion for an economic surge coming from nowhere and driven by no sign of substantial investment.

Why, then, was there no scepticism whatsoever about the rise of the Nigerian colossus? There seem to be two reasons. One is that the South African media and its attendant pundits have no desire or will to challenge Western propaganda, and the West persistently wishes to attack South Africa — as with the recent ludicrous fuss about the supposed refusal of a visa for the Dalai Lama, which led to the cancellation of a loathesome conference (of “Nobel Peace Laureates”, i.e. of psychopaths, mass murderers and useful idiots of Western imperialism) which had been set up for the specific purpose of being cancelled, so as to smear South Africa and China. (Similarly with the smear campaign against Russia launched with the false claims about Russian nuclear power plants being built in South Africa, which the Leader of the Opposition shrieked about as if Kremlin agents were waddling around Pretoria with fur hats and snow on their boots.)

Another is that the South African establishment has a great deal of disdain for South Africa, and therefore loves to find material to use against it. The apparent goal of the South African establishment is to make South Africa more like Nigeria — with a weak government, an all-powerful corporate elite, gigantic inequality and total subservience to Western capitalist imperialism. It is nice that they have found such an example to emulate, especially since the black South African bourgeoisie has bought into the whole horrid mess.

All sane people can do is hope that in the real world things will be different.