Fewer own goals

It was a nail-biter, but in the end, Bafana Bafana lost the Afcon semi-final to Nigeria on penalties. It was South Africa’s best showing at the continental competition since 2000, when it came third, and defied expectations of another poor run.

Well done Bafana! The reality, however, is that South Africa punches well below its weight in African football. It should be a regular semi-finalist – as Nigeria is – based on its resources and talent.

Similarly, South Africa’s economy also underperforms. It vies with Nigeria (and Egypt) for the title of largest economy on the continent. The holder of this somewhat meaningless crown depends on how it is measured. Nigeria is a bigger economy when measured in purchasing power parity terms in US dollars. This accounts for cost-of-living differences between the two countries – a dollar goes further in Nigeria. Similarly, on this basis, China is a bigger economy than the US. But measured at market exchange rates, the US remains much bigger, partly because of the strong dollar and weaker yuan. Nigeria recently devalued its naira by 40%, which puts South Africa in the lead again when measured this way.

The devaluation of the naira is part of a series of reforms under the new president Bola Tinubu to revitalise the struggling Nigerian economy. Its economy is also a chronic underperformer. With a massive population of 213 million and rich endowment of oil and gas and other natural resources, it should be one of the biggest economies on earth, never mind Africa. But years of corruption and mismanagement means most Nigerians are still very poor, and real income per head has not grown over the past decade.

Chart 1: Real GDP per capita, PPP US$

Source: World Bank

Click here to read more...