Country will overtake South Africa's as continent's largest economy; 10% annual growth rate targeted
Nigeria, Africa's biggest oil producer, will be the next “gold rush” on the continent as investors take advantage of a booming economy, former South African central bank Governor Tito Mboweni said.
Nigeria's gross domestic product will overtake South Africa's in the next three decades, Mboweni, who is now an adviser for Goldman Sachs Group Inc., said in an interview in Johannesburg on Oct. 8. Its economy of $169 billion compares with South Africa's $286 billion, according to World Bank data.
“Nigeria is going to be Africa's growth story for the next 15 to 20 years,” Mboweni said after returning from a visit to Nigeria's capital, Abuja, and the commercial hub, Lagos, as part of a delegation from Goldman Sachs.
The West African nation, the continent's most populous with 140 million people, is targeting economic growth of 10 percent in the coming years as it boosts spending on power plants and attracts more investment, Finance Minister Olusegun Aganga, a former Goldman Sachs executive, said Sept. 3. The government is preparing to sell its first Eurobond of $500 million this year.
Goldman Sachs, which doesn't have an office in Nigeria, is bidding to advise on the sale of state-owned power-generation and distribution companies, the Bureau of Public Enterprises said on Aug. 31. The government hasn't said who will manage the Eurobond sale yet.
Mboweni is also chairman of Nampak Ltd., Africa's biggest packaging maker, which is benefiting from its business in Nigeria, he said. Nampak manufactures bottles for Guinness beer and cigarette packages in the country.
Nigeria has previously failed to convert its oil wealth into economic development. In its latest crisis, central bank Governor Lamido Sanusi, who took office in June last year, fired the chief executive officers of eight of the 24 commercial lenders and pumped 620 billion naira ($4 billion) to bail out 10 of them as the industry risked collapse. Sanusi said on Sept. 21 that the economy will probably expand 7.8 percent this year, up from 7 percent in 2009.
Nigeria has oil production capacity of more than 3 million barrels a day, Oil Minister Diezani Alison-Madueke said on Sept. 27, making it the Organization of Petroleum Exporting Countries' sixth-largest supplier. Oil accounts for more than 80 percent of government revenue, according to the Finance Ministry.
There are a number of good, young technocrats in Nigeria's government who will help sort out the “chaos” in the country, Mboweni said.
A former labor minister in President Nelson Mandela's first Cabinet in 1994, Mboweni, 51, left the South African Reserve Bank in November after a decade at its helm, declining President Jacob Zuma's offer to serve a third term. He was named chairman of AngloGold Ashanti Ltd., Africa's biggest gold producer, on Feb. 24, three weeks after he was appointed to the same position at Nampak.
Mboweni, who is a patron of the South African Ballet Theater, is currently raising $130 million for a planned specialist children's hospital in Johannesburg.
The Reserve Bank of South Africa is doing a “good job,” Mboweni said. Interest rate increases between June 2006 and June 2008 helped to curb price gains, he said.
Inflation has been inside the central bank's 3 percent to 6 percent target range since February, easing to an annual 3.5 percent in August.
Mboweni was criticized by South African labor unions for not cutting interest rates fast enough in 2009, which they said prolonged the economy's first recession in 17 years. He lowered the benchmark rate six times to 7 percent between December 2008 and August 2009. His replacement, Gill Marcus, has cut the rate by 1 percentage point since then.
In his new role at Goldman Sachs, Mboweni said he has met with foreign investors, who raised concerns about calls from the youth wing of the ruling African National Congress to nationalize the country's mines. His response to them is that the “center will hold” in the ANC, he said.
The ANC agreed at its National General Council meeting, which ended on Sept. 24, to study nationalizing mines and other key industries over the next two years. The ANC Youth League, led by Julius Malema, argued at the meeting that South Africa didn't derive enough benefit from mining, which generates 30 percent of export revenue in the country.
