These are facts and please take your time to peruse as it is a long essay. Establish the truism of these assertions made here and let us reason together please. Happy reading.
Nigeria has never been wealthier than South Africa.
In 1961, Nigeria had a per capita income of $84, while South Africa’s per capita income was $380. In 2021 dollars that would be $762.46 and $3449.23, respectively. In other words, South Africa was about five times richer than Nigeria.
How about today?
South Africa’s GDP per capita in 2020 was $5,090.72, while Nigeria’s was $2,097.1. They are now about twice richer than we are.
But why?
What we call development is often the result of two factors, one lucky and the other deliberate. The first is your real estate, while the second is the management of the said estate. Some countries, like the USA, have excellent real estate and real estate managers. Others, like Brazil, have prime real estate but inferior management. Some, like Israel, have terrible real estate but excellent management. A place like Burundi unites poor geography and inept administration. Where you start is a matter of luck; how you end up is a question of competence.
Long-time readers will be aware of my lonely campaign against the ‘Africa has humongous resources’ meme. The African continent, by the by, has terrible geography, yet, within it, some are better-placed than others. South Africa, like the other Mediterranean-climate countries in the North, is one of them.
You need not take my word for it; trust the strategic eye of the Portuguese, Dutch and British. To those European empires, the coastal lands of future South Africa were vital. They allowed whomever possessed them access to the burgeoning Atlantic and Asian markets. A naval port there also permitted the policing of maritime traffic in the Atlantic and Indian oceans.
Even before its gold and diamonds, South Africa was already important as a strategic port. Although the Suez Canal diminished its importance, the recent Evergiven saga reminded everyone of its enduring importance. Ships that could not afford to wait until the canal reopened sailed around the Cape of Good Hope like Dias and Da Gama had done in centuries past.
Having the right real estate is only one part of the picture. The proper management of what you have is more important. In the modern world, that means capitalism.
Capitalism means many things. I consider it to be an openness to trading and receiving investment from outside countries, and the recognition of certain natural assets as capable of extrinsic value under private ownership. That must be coupled with the ability to create and sustain mechanised industries.
In all the above categories, South Africa once more outstrips Nigeria. The origins of modern South Africa lie in outposts meant to service trade ships. For much of its history, the fortunes of its politically dominant class depended on sustaining the external trade in beef, grapes, gold and diamonds. South African colonists were from a society that took private ownership of Capital assets as natural. Second, their skin colour meant that for all that some may have been reviled as boorish, they were not considered innately inferior. All those factors inoculated the populace from disastrous rebellions against capitalism.
Divergent land and labour systems, most of all, account for the different trajectories of both economies.
In South Africa, the law, through means underhand and above the board, has created a class of landowners confident in their tenure. That motivates them to invest in improving the value and output from their lands. Land tenure in Nigeria, on the other hand, is a confusing jumble.
Another marked contrast to Nigeria is the nature of their mineral industries. South African mining is more labour-intensive than Nigerian oil extraction. In contrast to Nigeria, South Africa also has a sizable manufacturing component to employ more workers. Most Nigerians, in contrast, are stuck in low-productivity and low-income farming. The South African economy is a cut above the Nigerian.
But enough about South Africa, it has its problems. Some of those are shared by Nigeria.
The fundamental problem with Nigerians is that we believe many false things about the economy, both past and present.
Nigeria is not a rich country. It has never been a rich country. That can change, but not while the people meant to change that situation persist in believing falsehoods.
There was no golden age of agriculture. What we had was a mirage because the war in Asia destroyed the competition. Even then, there were already headwinds. We did not (and do not) have enough space to create agricultural plantations on an Indonesian scale. Maps make them look small, but our lands are about 11% of their 8.3m square kilometres. Cocoa was good while it lasted. Yet, by 1948, officials were complaining about our lower yields compared to Ghana and Cote D'Ivoire, and farmers swapped it for other crops because it was damaging their lands.
The above means that oil was our salvation. Calling it a curse is lazy and ungrateful. Oil pushed us above our economic station. If you’re reading this, there are high odds that oil kept your school fees dirt cheap. It keeps fuel prices low and employs a horde of civil servants to turn up, watch Africa Magic all day, cash a cheque every month and a pension for life. All that without getting into the thieves it has enriched.
Oil did not nor can it can make us a rich country. On a per-capita basis, the Norwegians have 0.39 barrels of oil per head; we have 0.006. We don’t have as much oil as is assumed, and the constant political debate about who gets to spend what portion is a waste of energy keeping us stagnant. Worse, the eventual conclusions are often wasteful.
The Nigerian economy is divergent. There is an oil-linked, ICT and financial services-driven economy employing most of the Nigerian middle and upper classes. On the other side is everyone else stuck in an 18th-century economy of agriculture and disaggregated services networks.
The great task facing Nigeria is improving the better parts of the economy while modernising its moribund sectors. Agriculture most of all. Modernisation is the more pressing task. It is also the easiest because it is a well-trod path. We need to shift workers from agriculture to manufacturing and retail services while increasing agricultural output.
South Africa has already crossed that bridge. That is why it is the continent’s most advanced economy. Yet, like us, they are plagued by eye-watering levels of unemployment. Like us, South Africa has seen a mass scramble for urban opportunities. But there has not been commensurate planning for their habitation and employment. To see this done right, look to China.
Second, South Africans, like many Africans, tend towards Cape to Cairo fantasies. As an astute commenter once pointed out, it is the equivalent of a failed headmaster clamouring to become vice-chancellor. There is no such thing as an ‘Africa’ policy. Not politically and definitely not economically. Neither China, Germany or the USA are plugged into their continents. Instead, they are the vanguards of regional economies within those continents. Africa is no different. The fastest way to manufacturing prowess is figuring out how to create a regional industrial network.
In the world of possibilities, there is an ongoing scramble for the markets of Nigeria’s near abroad. To its victor will go the spoils.
There has been a marked decline in the capabilities of most societies to mobilise towards a set agenda. Nigeria has never had that capacity. Unlike those countries with built-up Capital stock, we cannot afford to live off the rents while enjoying the latest that Silicon Valley and Guangdong province can cook up. The real world is too intrusive.
Prosperity is the ability to make stuff at scale and move it fast to people who don’t even know they need them. The only barriers with countries and prosperity are those preventing from making and selling. Political debates should revolve around solving them. Everything else is somebody selling you something putrid and laughing to the bank at your expense.
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