- Size does matter: The fortunes of Africa are tightly bound to those of its two largest economies, South Africa and Nigeria, and the continent will not prosper unless they succeed
- Global economic shocks, notably the commodity price crash, have hit both of these countries and they must learn from the setbacks and set about fostering growth in new ways
- Switching from a heavy reliance on foreign investment to more intra-African trade is a clear priority
- Follow the 2017 World Economic Forum on Africa at http://wef.ch/af17
Tackling Africa’s massive social challenges is impossible without harnessing and coordinating the power of its two largest economies, South Africa and Nigeria, said Kuseni Douglas Dlamini, Chairman of Massmart Holdings, South Africa, at the World Economic Forum on Africa, which opened today in Durban. Dlamini pointed out that the two economic powerhouses together contribute 60% of the gross domestic product of sub-Saharan Africa. “Africa cannot succeed unless they succeed,” he added.
However, neither South Africa nor Nigeria is currently on a high-growth path. The global slowdown has clearly had a profound effect, but the countries’ leaders need to consider whether they have fully applied the principles of inclusive and sustainable growth. One example of effective leadership would be a redoubled effort at regional integration. At present, only 10% of all Africa’s trade is intra-African – the lowest ratio of all continents in the world. If this could be boosted to 20% it would make meaningful inroads into creating jobs and tackling poverty.
Haruki Hayashi, Executive Vice-President and Regional Chief Executive Officer, Europe and Africa, Mitsubishi Corporation, United Kingdom, said that South Africa and Nigeria should be “leaders, drivers and role models” for other African countries. This does not necessarily mean they shouldn’t be competitive – after all, the African market is a huge one with many trade and development opportunities for both. Hayashi said that policy consistency, political stability and turning back the tide of corruption are imperatives to South Africa and Nigeria assuming a leadership and mentoring role on the continent.
Danladi Verheijen, Co-Founder and Chief Executive Officer of Verod Capital Management, Nigeria, said that diversification of economies is a priority for many countries, but particularly for Nigeria, given its heavy reliance on its oil resources. He said oil has been seen as fuelling the Nigerian economy, but it should instead be seen as “lubricating” it. “Quick wins” are important to kick-starting growth away from current low levels.
Geoffrey Qhena, Chief Executive Officer of the Industrial Development Corporation of South Africa, said that Africa’s larger economies could, counter-intuitively, benefit from global moves towards protectionism. Rather than remaining reliant on imports in many sectors, countries like South Africa and Nigeria with the capacity to build new industry and manufacturing sectors could do so – with obvious long-term benefits for themselves and their neighbours. It might be important to collaborate on such initiatives and leaders need to engage and iron out their differences regarding impediments to cooperation.
The 2017 World Economic Forum on Africa takes place on 3-5 May in Durban, South Africa, under the theme Achieving Inclusive Growth through Responsive and Responsible Leadership. The meeting convenes regional and global leaders from business, government and civil society to explore solutions to create economic opportunities for all. It will also provide insight from leading experts on how Africa will be affected by the onset of the Fourth Industrial Revolution, particularly in terms of safeguarding the region’s economies from negative disruption and exploiting opportunities for further growth and development.