The emergence of a multi-polar world is becoming a reality. The old divisions between East and West, developed and developing are increasingly wearing thin. At a talk at Chatham House, the importance of this was emphasised. However, the emergence of multiple centres of power creates new rivals, and every region has them. China and India are competing for economic control of Asia, and the chance to be the world’s factory. In Latin America, a push towards sustainability has seen countries race each other to implement green energy sources. In Africa, business and trade are the key battlegrounds. The two belligerents in this conflict? Nigeria and South Africa. Nigeria surpassed South Africa to become Africa’s largest economy, with a GDP $170bn higher. The election of the purported reformer Muhammadu Buhari to the Nigerian presidency has led to Nigeria beginning to assert itself in Africa, and increasingly on the world stage. This is to the detriment of South Africa.
Nigeria has emerged as the undisputed giant of Africa. By GDP, it has the largest economy, exceeding half a trillion dollars. By population, its status as giant is confirmed. With a staggering 178 million, not only is Nigeria the most populous nation in Africa, but its population is slated to exceed the United States within a few decades. A large population provides a country with an invaluable resource – human capital. If a wealth of a nation is its people, then Nigeria is very wealthy indeed. Though South Africa leads in some aspects of development, these assets are increasingly tied to other countries. The case of MTN is a cruel reminder of this fact.
[via TV Newsroom]
South African business and the economy in general is the economic equivalent of an enclave state. Like Lesotho is surrounded by South Africa, a significant chunk of South Africa’s economy is dependent on another state. This state is Nigeria. The rising middle classes of the emerging world have begun to assert their financial power, and the consequences are beginning to be seen. MTN, the South African-based mobile network is currently in meltdown. The Nigerian Communication Commission fined the company $5.2bn for failing to register millions of network users. In a country plagued by terrorist insurgents, unregistered mobile numbers may pose a significant security risk. At 62.5 million subscribers, the number of Nigerians on MTN far exceeds the entire population of South Africa. The impact of such a fine has been astronomical.
The South African Stock Exchange banned all trading of the company’s shares. Since the announcement, 20% of the company’s value has been wiped off. The fine represents double the company’s annual profits. MTN CEO Sifiso Dabengwa was forced to resign in the wake of the scandal. More MTN chiefs are expected for the axe. Serious concerns over South Africa’s security as an investment target are flooding the financial world. Whether due to a genuine security concern or an act of economic subterfuge, the fine on MTN may have far-reaching consequences for South Africa’s economy. After a wave of popular discontent over the rising costs of education, and government corruption, an economic crisis could be the final death-knell for Jacob Zuma’s government. And with it, South Africa’s place as an economic player. If economics is the new global battlefield, Nigeria seems close to winning the war.