Nigeria is turning into the toast of investors globally as South Africa (Africa’s historical investor magnet), struggles with a weak currency, labour unrest and economic uncertainty, casting doubt on the ability of Africa’s largest economy to retain its role as a major economic force on the continent.

While Nigeria steadily becomes the beautiful bride on the African continent, analysts say investors are not so enthusiastic about South Africa and worry the African National Congress (ANC) that country’s ruling party, is not pushing reforms as successfully as Nigeria.

“We believe Nigeria will be the unrivalled dominant country on the continent over the coming decades, and financial markets appear to be investing on that assumption too,” Charles Robertson, economist and head of macro strategy at Renaissance Capital tells BusinessDay.

“Fund managers globally are excited by Nigeria, and no longer feel that way about South Africa.”

The NSE, the main stock market index in Nigeria, is up 18 percent year to date, compared to a 2.72 percent gain in the FTSE/JSE all share index, South Africa’s main stock index.

The rand’s 8.2 percent fall against the dollar this year is the worst of 25 emerging markets monitored by Bloomberg.

The naira has outperformed the rand on a relative basis weakening 1.7 percent against the dollar this year.

South African bonds face the risk of a sell-off by foreign investors as the rand’s plunge dims the allure of the nation’s debt, according to Societe Generale.

Risks for foreign investors have increased as South Africa posted a current-account deficit close to a four-year high in the fourth quarter after mining strikes and slower growth in Europe cut exports.

The current-account gap reached 6.5 percent of gross domestic product (GDP), down from a revised 6.8 percent in the third quarter, which was the biggest shortfall since the same period in 2008, the Reserve Bank said on March 12.

The nation’s debt of all maturities longer than one year has lost 7.4 percent for dollar investors this year, while Nigeria’s bonds have gained 19.38 percent in dollars for the same period, according to data from Access Banks FGN bond index.

Investors are impressed by an excellent reformist team including Ngozi Okonjo-Iweala, the finance minister and Lamido Sanusi, the Central Bank governor, and see that Nigeria’s economy will double in size every ten years due to its higher growth rate, Robertson said.

Nigeria’s economy expanded by 6.5 percent in 2011 compared to 3.1 percent for South Africa, according to World Bank data. Growth averaged 8.8 percent in the past decade, compared to 3.5 percent in South Africa.

South Africa’s $390 billion economy is 43 percent larger than Nigeria’s whose economy is estimated at $272 billion by the IMF, however both countries may be contending with a looming role reversal akin to China and Japan.

“There are probably similarities in the sense that Nigeria has a much larger population than South Africa and her potential is still largely untapped, as was the case with China 30 years ago, “ said Samir Gadio, an emerging markets strategist at Standard Bank London, in a response to questions.

The rebasing of Nigeria’s GDP this year will bring both economies closer and Nigeria may snatch South Africa’s crown as the continent’s economic champion within two years, just as China eclipsed Japan in 2010.

Nigeria’s dollar reserves have increased 39 percent to $48.4 billion in the past year, compared to flat gross reserves of $50.4 billion, in South Africa, at the end of February.

The rand also faces threats from labour disputes, a widening budget shortfall and a potential credit-rating downgrade, Peter Attard Montalto, a London-based emerging- markets economist at Nomura International Inc., said in a note released March 18.

South Africa’s credit outlook was kept at negative by Standard & Poor’s (S & P) this month. Fitch Ratings cut the debt rating one level to BBB in January, following downgrades by Moody’s Investors Service and S&P last year.

Nigeria was upgraded to BB- with a stable outlook, by Standard & Poor’s last year.

Nigeria’s budget deficit will narrow to 1.85 percent of GDP in 2013, from 4 percent in 2009, while total debt to GDP ratio stood at 18.8 percent, compared to 35.6 percent for South Africa.

The country attracted $8.9 billion of FDI in 2011, the largest in Africa.

S & P released a bullish note on the nation’s banks this month and as diverse global investors from first rand to P&G rush in, Nigerian conglomerates like Dangote Cement are expanding rapidly across the continent.

No wonder at a recent conference in Lagos, the minister of trade, industry and investment, an ex Goldman Sachs banker brimming with confidence said, “We have taken our investment case to 31 countries around the world, and they are buying our story, Nigeria is open for business.”


BusinessDay


https://www.facebook.com/photo.php?fbid=525393544180225&l=f00a31d1d2

really? Is Nigeria's Economy that stable?

Nawa o, wit all dis bombing here nd there in Nigeria? What if there is peace all over Nigeria?

cogitoErgo: Nawa o, wit all dis bombing here nd there in Nigeria? What if there is peace all over Nigeria?

Err..We'll over take uk

I guess they see Eko Atlantic City as an investment opportunity. Arent you see that the map of African continent is like a pistol when its rotated and Nigeria is at the very triggering point? I dont know what you see o but thats what I see 'cos by 2015, Nigeria will be the most desired nation to live in. God bless Nigeria

Realy!

And now the South Africans are gonna be hating on us as if we caused their predicament!


Anyways........

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We can only strive if we had a good head. Personaly speakin. Gej is a bad one.

Its not necessarily that nigeria is stable only that its GDp growth projection is anticipated to surpass that or South Africa that is maxing out on ingenuity and new markets to tap into.

All i see are oil hunters buying oil wells and making a few nigerian elites richer

When some of us were saying these same stuff here, some GOONS here would be spitting Thrash- the ONLY thing they know how to do.

I have ALWAYS asked on this forum what area has deteriorated since GEJ took over (apart from Security, perhaps- which is unfortunate by the way). Every index indicate some level of PROGRESS on all other ares/sectors- Rails, Power, Roads, Cost of Governance, Elections, Inland ports, Transparency in Government, Airports, Seaports, Education etc etc; some of these areas may admittedly not be fast enough (like Education) and we CERTAINLY have not even gotten close to where we ought to be as a nation in each of these areas- BUT there is PROGRESS, and afterall, an Admin CANNOT be expected to clear the INCREDIBLE MESS which have been ACCUMULATING for some Decades and which it met, in less than 3 years; BUT the point is that PROGRESS is clearly been made in MOST of these areas.

- Nigeria is presently undertaking what have been described as the 'largest Privatization and Reforms in the Power Sector in the world', a relatively Transparent process that is in its concluding stages; as well as building almost 500 Power related projects (in Generation, Transmission, Distribution) SIMULTANEOUSLY, as well as the associated Gas infrastructure;

- In less than 3 years, Nigeria is Resuscitating 3000kms of its old Railways system (Lagos-Kano, PH-Maiduguri and their may associated Spur Lines) which had been deteriorating since the 1980s and which was virtually DEAD for about 10-15 years, as well as building new Standard Lines in pats of the country (by both the FG and some State Govts like Lagos);

- Nigeria is almost SIMULTANEOUSLY Remodeling/Reconstructing its entire Decrepit Domestic Airports, building new Cargo terminals and on the verge of building 5 new Standard International Terminals; just as it is significantly upgrading Airport Related facilities, especially in terms of safety (Total Radar Cover, VHF Communication Systems, Dopplar Weather Systems, Alternative Power Supply System etc);

- Nigeria is fixing its key FEDERAL Roads at a pace not seen in years, with significant improvements already felt on some of these key roads;

- Nigeria is improving Services in Older Seaports as Private Concessioning of the ports deepen and the Time to Clear Goods in those ports (and hence Demorrage Costs) significantly reduces; just as 4 Inland Water ports are SIMULTANEOUSLY been built in the country, etc etc.

Investors know of some of these Infrastructure upgrades and many more (some of them ongoing); they know of the improved FISCAL environment been midwifed by people like Okonjo-Iweala, Sanusi and Aganga as they article also indicates. They know of the opportunities cropping up in the Agriculture sector cos of the REVOLUTION in that sector been midwifed by another Reformist, current Agric Minister (and personally, the best in the Cabinet) Dr Adesina, and many other areas opening up like Power, COnsumer Goods Industry, Manufacturing, Mining etc. In fact, they know that Nigeria's Infrastructural inadequacies are avenues for massive investments and profits, coupled with the large and Dynamic population of Nigeria- an investor, esp in Africa, would be 'Mad' not to seriously look towards Nigeria.

Those ENEMIES OF NIGERIA who have chosen to make the Govt of GEJ 'ungovernable' Or create that IMPRESSION, whether through Boko Haram Bombings or through a Shameless and unimaginable Media PROPAGANDA, are FAILING and would continue to FAIL.

God bless the President and his team; and God bless this our GREAT country, NIGERIA. May it continue to SOAR HIGHER, and fulfill that GREAT Promise it always was, in our Life time. AMEN.

Sky-walker:
really? Is Nigeria's Economy that stable?

Yes the economy is much stable that is because the investors are seeing what we locals are not seeing. For example: Mexico, one will say the country is full of drug trafficking, kidnapping, extortion, corruption etc which is at its increase, yet investors are seeing that Mexico economy is becoming vibrant by the day which even surpasses Brazil economy. This is the same way these investors are looking at Nigeria in Africa despite its ups and downs.

bid4rich: I guess they see Eko Atlantic City as an investment opportunity. Arent you see that the map of African continent is like a pistol when its rotated and Nigeria is at the very triggering point? I dont know what you see o but thats what I see 'cos by 2015, Nigeria will be the most desired nation to live in. God bless Nigeria

GEJ is working silently and haters are talking.


Waiting for the APC BB crew.

sweetcheecks: Really?
This looks more like a propaganda nonsense to me especially taking into considerstion the source which is the Nigerian Ministry of information maybe to make their goverment look good. Will only believe this when i get the businessday source, no offence but smell more like desparation.

You again! You hate to hear anything good about Nigerian economy but steamed up like locomotive train when somebody talks bad about yours. What a hypocritical view from you. Keep looking for the businessday.com sources. There is no problem with looking but you might not find them altogether!

This is great news, I always find it funny when otherwise educated people complain that the govt hasn't provided jobs for them. The fed govt can only employ a certain amount of people in its civil service which is already over bloated in Nigeria. The job of any responsible govt is to make the business environment friendly/conducive for investors both foreign and local. When the investors come in, then surely the multiplier effects will trickle down to the masses in the form of jobs both directly and indirectly.
We have to understand one thing though, a country that imports things as ordinary as matches and toothpicks is sure to have a disturbing unemployment problem. We have to learn to manufacture goods for ourselves which will boost the economy and not depend or call on the govt to provide jobs.

This results are based on economic activities in the south.

Hmmm, we still have hope

sweetcheecks: Really?
This looks more like a propaganda nonsense to me especially taking into considerstion the source which is the Nigerian Ministry of information maybe to make their goverment look good. Will only believe this when i get the businessday source, no offence but smell more like desparation.

Who's this wh0re that found the internet?

Nigeria's economy always looks good on paper.

I noticed the improvements in our economy index this year. This info just confirmed it, there's hope for this country. For this I'm thankful.

GEJ for 2015.All the enemies of Darkness inlcuding Atiku,Buhari and 8 PDP Governors should go to Hell.We are destined for a better Nigeria.All those criminals masquarading as Agent of changes can pack the bags and relocate to Mali.

We will resist any attempt to drag us back.Fresh Air till 2019 and years beyound.

all4naija: You again! You hate to hear anything good about Nigerian economy but steamed up like locomotive train when somebody talks bad about yours. What an hypocritical view from you. Keep looking for the businessday.com sources. There is no problem with looking but you might not find them altogether!

Hade joe! Was just stating the obvious. Dont people usually demand credible sources when creating threads with questionable info. You being hormonal. Pseeeeww


Besides, does anything good about nigeria has to be built on the back of something untruthful about SA? I am not disputing but I have a right to mu opinion and to a credible source when you are misrepresanting my country. Deal with it

Sky-walker:
really? Is Nigeria's Economy that stable?

Relatively stable. Plus our GDP has been moving up the curve since the global financial crises. Same with Zambia and Botswana. Investors top-choice cities are Lagos and Nairobi.

The crux of the matter is that poor regulation and corruption has prevented these economic boom from changing peoples life.

An investor could make a direct investment like a factory, would pay nigerians peanut while his 'brothers' earn six times what nigerians earn because they are 'supervisors' in that department.

The saddest thing is that chinese are competing with locals on the same product. A nigerian sells a locally-made candle for 20naira while a chinese would import candles from China and sell the same for 15naira in Balogun market! Just imagine the free-hand foreigners have in this country, which is not permitted in theirs. In Dubai for instance, if u're a foreign investor, a local must be a member of the board of directors and he's entitled to 15% of your total profit.

We need to re-structure the labour laws for nigerians to really enjoy these economic boom.


Frawzey

Aifey: We can only strive if we had a good head. Personaly speakin. Gej is a bad one.

Mumu-ish, did you read the article at all??

We are already thriving; and, GEJ is the Head that is making that happen...