What People Are Saying About Nigeria Officially In Recession. Will Politics Send South Africa There Too?
Former Nigerian President Goodluck Jonathan is looking good to some Nigerians who commented on social media after learning today that the country’s economy is officially in recession, Naij.com reported.
“I’m weeping for those who voted against GEJ,” Jacob Amidyere Adombire commented.
South Africa’s economy contracted 1.2 percent in the first quarter with second-quarter growth figures expected next week.
The South African currency could sink as low as 19 rand to the dollar this year, economists say, according to Buzz South Africa.
The two countries often see each other as competition. They’re more like book ends, said Martyn Davies, managing director of emerging markets and Africa at the auditing and consulting firm Deloitte, in a Voice of America report.
Since Nigeria rebased its gross domestic product in 2013, the two countries have jockeyed for the economic top spot in Africa. South Africa recently regained the No. 1 position from Nigeria. But many global investors see them as part of the same Africa package.
“South Africa and Nigeria are the bookends, if you will, of the sub-Saharan economy. One’s misfiring, the other one’s in severe contraction,” Davies said.
Jonathan lost the 2015 election to President Muhammadu Buhari, in part because of perceptions of government corruption. Buhari campaigned by promising to end corruption, and in his 15 months in power, has launched aggressive action to investigate suspects in government fraud.
Now that the recession is official, some Nigerians have lashed out at each other and at Buhari, saying they didn’t vote for him, or that he employed archaic economic policies to drag down the economy. Some said the country was better off under Jonathan.
Nigeria has had two consecutive quarters of declining growth — the usual definition of recession, BBC reported. Latest growth figures show the Nigerian economy contracted by 2.06 percent between April and June.
It’s not like Nigerians were unprepared for economic recession. Falling global oil prices have slammed the government, which depends on oil sales for about 70 percent of its revenues.
Critics say government policies made things worse, according to a BBC analysis. Devaluing the naira meant many businesses couldn’t get foreign currency to pay for imports, which hurt the entire economy.
Under pressure, the government allowed the naira to float again this summer, which led to inflation. Nigeria says it hopes to attract foreign investors. It didn’t help that the country’s telecoms regulator fined South African mobile provider MTN $5 billion-plus, settling in the second quarter for $1.67 billion.
Here are some of the things Nigerians are saying about Buhari, Naij.com reported:
“You people conspired and foisted nomadic cluelessness without any iota of economic functions in this new world order…it’s a shame,” Macq Macxy commented.
“Until the Presidency in Africa cease to be old men’s exclusive
club, we will continue to sleep while the rest of the world continue to take off. #justsaying,” wrote Meribe Ndubuisi.
“The day Nigerians voted GEJ and his world class technocrats out of power is the day Nigerians start to loose it all. We are silently dying in pains and potential perpetual poverty,” said Enejere Mc Paul.
“The dictatorial and indecipherable attitude of the president has led to this colossally cataclysmic multiple uprising,” said Austine Ezeoma.
Nigeria was first in recession when Buhari was head of state from 1983-1985 and now, just one year into a four-year tenure, Nigeria is back in recession,” said Patrick Osikemhekhai Azelakeh, with the hashtag #BuhariResign!”
South African politics
In South Africa, political shocks have shaken investor confidence, such as President Jacob Zuma firing a respected finance minister, then firing his replacement, and now investigating the current finance minister.
Zuma himself tarnished South Africa’s image by using government money in excess to upgrade his home. Zuma said the improvements were necessary for security. Earlier this year, he was ordered to pay back $500,000, or about 3 percent, of the money.
Nigeria’s is not a short-term correction story, said Davies, a longtime proponent of the “Africa rising” narrative, according to Voice of America.
South Africa and Nigeria can rebound given the time and determination. Meanwhile, East African economies such as Tanzania and Ethiopia are growing and presenting alternatives for investors.
“I think what they both have in common is the governance story, Nigeria particularly so,” Davies said. “In South Africa’s case, we have the corporate muscle, we have incredible institutions, we have very, very deep capital markets, we have very well-run institutions at a business level. We have all the ingredients we need to be a successful emerging market economy. Unfortunately, we haven’t got the political alignment.”