John Campbell

Africa in Transition

Campbell tracks political and security developments across sub-Saharan Africa.

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Showing posts for "Economy"

Home Truths About the Size of Nigeria’s Economy

by John Campbell
Traders work at the Nigerian Stock Exchange in Lagos, February 13, 2015. The naira has crashed through the key level of 200 to the dollar this week in a rout sparked by weak oil prices and escalating tension over the postponement of a presidential election in Africa's biggest economy. (Reuters /Joe Penney) Traders work at the Nigerian Stock Exchange in Lagos, February 13, 2015. The naira has crashed through the key level of 200 to the dollar this week in a rout sparked by weak oil prices and escalating tension over the postponement of a presidential election in Africa's biggest economy. (Reuters /Joe Penney)

In 2014, following the first revision of Nigeria’s gross domestic product data in two decades, Abuja announced that its economy had overtaken South Africa’s as the largest in Africa. Using the rebased data, the International Monetary Fund (IMF) reported that that Nigeria’s economy grew at 12.7 percent between 2012 and 2013. Thereafter, there was some triumphalist rhetoric about the size and strength of the economy from personalities in then-president Goodluck Jonathan’s administration in the run up to the 2015 elections and among those promoting foreign investment in Nigeria. However, in 2016, reflecting the dramatic fall in petroleum prices and the value of the national currency, the naira, the IMF concluded that Nigeria’s GDP had fallen behind that of South Africa. The Economist noted that foreign investors are likely to be discouraged by the latest figures. Read more »

Illegal Mining and the Role of “Zama Zamas” in South Africa

by Guest Blogger for John Campbell
A miner is seen underground at Lonmin Plc's Karee mine in Marikana, Rustenburg 100 km (62 miles) northwest of Johannesburg, March 5, 2013. (Reuters/Siphiwe Sibeko) A miner is seen underground at Lonmin Plc's Karee mine in Marikana, Rustenburg 100 km (62 miles) northwest of Johannesburg, March 5, 2013. (Reuters/Siphiwe Sibeko)

Nathan Birhanu is an intern for the Council on Foreign Relations Africa Studies program. He is a graduate of Fordham University’s Graduate Program in International Political Economy & Development.

In recent years, the mining industry has struggled to turn a profit due to a slowdown in demand from China’s economy and an oversupply from producers. South Africa’s mining companies, who export primarily platinum, iron ore, gold, coal, and manganese, have been heavily affected by the downturn. Read more »

Africans in China: The Pivot Back

by Guest Blogger for John Campbell
African traders buy clothing at a shopping mall in Guangzhou July 31, 2009. (Reuters/Tyrone Siu) African traders buy clothing at a shopping mall in Guangzhou July 31, 2009. (Reuters/Tyrone Siu)

This piece has been co-authored by Nathan Birhanu and Bochen Han. Nathan is an intern for the Council on Foreign Relations Africa Studies program and is a graduate of Fordham University’s Graduate Program in International Political Economy & Development. Bochen is an intern for the Council on Foreign Relations Asia Studies program and is an undergraduate majoring in political science at Duke University. Read more »

BREXIT and Africa

by John Campbell
People chat in front of an electronic board displaying movements in major indices at the Johannesburg Stock Exchange building in Sandton Johannesburg July 9, 2015.
(Reuters/Siphiwe Sibeko) People chat in front of an electronic board displaying movements in major indices at the Johannesburg Stock Exchange building in Sandton Johannesburg July 9, 2015. (Reuters/Siphiwe Sibeko)

It is early to assess the long term consequences for sub-Saharan Africa of the United Kingdom’s (UK) vote to leave the European Union (EU) on June 24. However, in the short term, it is useful to look at the performance in the exchange rates and stock exchanges of Nigeria and South Africa since the referendum. They provide something of an indication of the wider impact Brexit had on Africa. Nigeria and South Africa together account for more than half of sub-Saharan Africa’s gross domestic product. Both have long had close ties with the UK, especially with respect to trade and financial services. In addition, there are myriad other ties between the UK and Nigeria and South Africa. For example, there is a large British expatriate community living in South Africa. The Nigerian expatriate population in the UK is also significant, and wealthy Nigerians have long favored the UK for education, health services, and second homes. Read more »

Nigeria Devalues its Currency

by John Campbell
A trader changes dollars with naira at a currency exchange store in Lagos, February 12, 2015. (Courtesy Reuters/Alessia Pierdomenico) A trader changes dollars with naira at a currency exchange store in Lagos, February 12, 2015. (Courtesy Reuters/Alessia Pierdomenico)

In the face of low international oil and gas prices, the domestic and international business community, academics, and journalists have all urged President Muhammadu Buhari to devalue the national currency, the naira. Buhari steadfastly refused. Based on his 1983-85 experience as head of state, also a period characterized by falling oil prices, he seems to believe that in an economy as dependent on imports as Nigeria, devaluing the naira would increase the cost of living for the poor, the majority of Nigeria’s citizens. Buhari famously observed that “Nigeria even imports toothpicks.” Read more »

Nigeria Sacking Senior Military Officers

by John Campbell
Nigerian army chief-of-staff General Kenneth Minimah (C) leaves a closed door meeting with senators at the national assembly in Abuja, Nigeria, May 15, 2014. (Reuters/Joe Penney) Nigerian army chief-of-staff General Kenneth Minimah (C) leaves a closed door meeting with senators at the national assembly in Abuja, Nigeria, May 15, 2014. (Reuters/Joe Penney)

A Nigerian army spokesman said on June 10 that “quite a number” of senior military officers have been fired, and some have been turned over to the Economic and Financial Crimes Commission (EFCC) for investigation of charges of corruption. The spokesman, Colonel Sani Kukesheka Usman, is quoted in the media as saying, “. . . not too long ago some officers were investigated for being partisan during the 2015 General Elections. Similarly, the investigation by the presidential committee investigating defense contracts revealed a lot. Some officers have already been arraigned in court by the EFCC.” He went on to say: “The military must remain apolitical and professional at all times.” Read more »

Nigeria’s Oil Production Down by 40 Percent

by John Campbell
Ships and tankers seen on the horizon off the coast of the Apapa port Lagos, Nigeria, Febuary 25, 2016. (Reuters/Afolabi Sotunde) Ships and tankers seen on the horizon off the coast of the Apapa port Lagos, Nigeria, Febuary 25, 2016. (Reuters/Afolabi Sotunde)

Oil is the property of the Nigerian state. Most of it is produced through partnerships between the Nigerian National Petroleum Corporation, which is owned by the state, and private oil companies. Oil provides the Nigerian state with about 70 percent of its revenue and roughly 90 percent of its foreign exchange. President Muhammadu Buhari’s current national budget is expansionary, not least because of the struggle against Boko Haram. The budget is based on the production of 2.2 million barrels per day at $38 per barrel. He has also declined to officially devalue the national currency, the naira, which trades at an official rate of about 200 to the U.S. dollar and about 345 to the U.S. dollar on the black market. Read more »

South Africa’s Currency Falls Again on Rumors of Finance Minister’s Arrest

by John Campbell
South African Finance Minister Pravin Gordhan gestures during a media briefing in Sandton near Johannesburg, March 14, 2016. (Reuters/Siphiwe Sibeko) South African Finance Minister Pravin Gordhan gestures during a media briefing in Sandton near Johannesburg, March 14, 2016. (Reuters/Siphiwe Sibeko)

On May 15, the Sunday Times (English, Johannesburg) published rumors of the impending arrest of Finance Minister Pravin Gordhan over alleged revenue service irregularities. However, on May 16, Beeld (Afrikaans, Johannesburg) reported that President Zuma denied the Sunday Times report. Nevertheless, the South African national currency, the rand (ZAR), fell the following two days, reaching its weakest level in two months; it has fallen 2.1 percent against the U.S. dollar since March 15. Read more »

South Africa Moves Against Secretly-Owned Companies

by John Campbell
Demonstrators carry placards as they march to protest against corruption in Cape Town, September 30, 2015. (Reuters/Mike Hutchings) Demonstrators carry placards as they march to protest against corruption in Cape Town, September 30, 2015. (Reuters/Mike Hutchings)

The Tax Justice Network-Africa has issued a press release praising the South African government’s commitment to register and make public the “beneficial owners” of all companies incorporated in the country. “Beneficial owners” are those who ultimately benefit from a company. In many countries, governments do not require such information, resulting in anonymously owned companies that may be used by corrupt politicians or others who want to hide their identity. The “Panama Papers” highlight the role such companies play in activities ranging from money laundering to tax evasion. Read more »

South Africa and Iran Aim to Resume Strong Trade Relationship

by Guest Blogger for John Campbell
Iran's President Hassan Rouhani speaks during a news conference in Islamabad, Pakistan, March 26, 2016. (Reuters/Faisal Mahmood) Iran's President Hassan Rouhani speaks during a news conference in Islamabad, Pakistan, March 26, 2016. (Reuters/Faisal Mahmood)

Tyler Falish is an intern for the Council on Foreign Relations Africa Studies program, and a student in Fordham University’s Graduate Program in International Political Economy & Development.

South African President Jacob Zuma was in Iran for a two-day state visit on April 24 and 25. While in Tehran, Zuma and Iranian President Hassan Rouhani signed eight bilateral trade agreements as part of a commitment to increase non-oil trade between the two countries. Trade between the two nations plummeted after the imposition of expanded sanctions on Iran by the U.S., EU, and UN. According to UN Comtrade, in 2012—the most recent year of significant trade between the two countries—trade was valued at approximately $1.3 billion. By comparison, bilateral trade in 2015 totaled only $30 million. Read more »