A COMPARATIVE ANALYSIS OF NIGERIA AND

SOUTH AFRICA

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Contents
Introduction:........................................................................................................................ 3
NIGERIA:........................................................................................................................... 3
Economy:...................................................................................................................... 3
South Africa...................................................................................................................... 7
Economy....................................................................................................................... 7
Comparison and Contrast of South Africa with Nigeria......................................................10
Human Development Index:........................................................................................... 10
Logistic Performance Index:........................................................................................... 13
CAGE Analysis:.................................................................................................................. 14
Cultural Factor:............................................................................................................... 15
Administrative Factor:.................................................................................................... 16
Geographical Factor:...................................................................................................... 16
Economical Factor:......................................................................................................... 16
What are the prospects of being in the Cocoa industry in Nigeria?...................................18
CHOSEN BUSINESS: Cocoa Industry...............................................................................18
Why is Tourism a good business to be in at South Africa?..............................................19

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Introduction:
NIGERIA:
The Federal Republic of Nigeria is located in the North Western part of Africa. It is
the most populous country of Africa with approximately 184 million people
inhabiting it; it is also the 7th most populous country in the world. With 36 states,
and more than 500 ethnic tribes inhabiting this country it is also known as the
multinational state. These ethnic groups speak over 500 different languages,
however the official language is English.
Economy:
As of 2015, Nigeria is the 20th largest economy with its GDP touching $500 Billion
and PPP almost a trillion dollars! It is considered to be an emerging economy
according to World Bank - in fact, it is said to be the next "BRICS". How? Nigeria is
part of a group of countries called MINT - which is Mexico, Indonesia, Nigeria and
Turkey - which are the next set of emerging economies after the BRICS.
Since 2002, there has been continuous tension in the North Eastern part of the
country has been ravaged by the Boko Haram group which is an Islamist group
trying to usurp the secular government to establish the Sharia Law in Nigeria.
Economy - GDP info, main source of income, type of economy, ease of doing
business, GCI, LPI, CIA data etc
Nigeria is on the brink of some exciting development and where it has a larger
section of its population in the middle income group which places it at the 21st
place in terms of nominal GDP is also the 20th largest economy in terms of
Purchasing Power Parity.

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GDP Contributors for Nigeria

Agriculture; 18%

Services; 56%

Industry; 26%

Key Indicators: Population (millions)178.7

GDP (US$ billions)490.2
GDP per capita (US$)2742.86
GDP (PPP) per capita (US$)6108.41
GDP (PPP) as share (%) of world total0.96
Nigeria has scored 3.46 points out of 7 on the 2015-16 Global Competitiveness
Report(GCI) published by the World Economic Forum(WEF). In Competitiveness
Index Nigeria has average score of 3.57 Points from 2007 until 2016, with an alltime high of 3.81 Points in 2009 and an all-time low of 3.37 Points in 2011.
According to GCI there are three stages of development namely- Factor Driven
Stage, Efficiency Driven Stage and Innovation driven stage. These three stages
consist of twelve pillars. Nigeria is presently in transition from Factor Driven Stage
to Efficiency Driven Stage.
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Nigeria has improved by 3 places to 124th from 127th last year. There has been an
increase in market size (up by eight places to 25th), lesser government debt and
deficit, and reduced national savings. There has been Improvements in the
effectiveness of the legal framework to resolve and challenge disputes, property
rights and the answerability of the private sector has led to lift of countrys
institutions up by 5 places, although remaining low overall (124th). Nigeria is
ranked 100th in efficiency of the goods market, and a less competitive local
environment offsets developments to encourage foreign competition; it is ranked
79th the financial market, and the labour market, is ranked 18th but is pulled down
by an unproductive use of talent which is ranked 68th and a reasonably little
female participation rate with 87th position. Major concerns include investment in
infrastructure with a ranking of 133rd and can be singled out as the most
problematical factor for doing business and human resources, where health in the
workforce is ranked at 134th and ineffective higher education which is ranked
128th is holding the country from achieving its potential.

Spider graph representing the level of development in each of 12pillars for Nigeria
Source: World Economic Forum
The key indicators of human development include the Gender Development Index
(GDI), Human Development Index (HDI), the Inequality-adjusted Human
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Development Index (IHDI), the Multidimensional Poverty Index (MPI) and the
Gender Inequality Index (GII).
Nigeria is ranked 152nd in Human Development Index with a score of 0.514. they
have a GNI per capita of 5341 US$ (in terms of PPP). Nigeria has HDI value of
0.514 which puts the country in the low human development category placing
it at 152nd out of 188 countries. Between 2005 and 2014, Nigerias Human
Development Index value has increased from 0.467 to 0.514, an upsurge of 10.1
% or an average annual increase of around 1.07 %. Between 1980 and 2014,
Nigerias life expectancy at birth improved by 7.2 years, mean years of education
improved by 0.7 years and expected years of education improved by 2.3 years.
Nigerias Gross National Income(GNI) per capita improved by about 88.5 %
between 1980 and 2014.

Trends in Nigerias HDI component Index Source: HDI report

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South Africa
South Africa, officially known as the Republic of South Africa (RSA), is the
southernmost country in Africa marked by several distinct ecosystems. South
Africa is the 25th largest country in the world by area, and has a population close
to 53million people. It is the only country that borders both the Atlantic Ocean and
the Indian ocean South Africa is a multi ethnic society incorporating a wide variety
of cultures, languages, and religions. The constituition has recognized 11 official
languages, which is among the highest number of any country in the world
showing its diversity. South Africa is the one of the founding members of the AU
(African Union), and has the 2nd largest economy among the other countries. The
country is rich with promise. South Africa joined the BRIC group of countries of
Brazil, Russia, India and China (now known as BRICS) in 2011.
Economy
The South African economy is Africas second-largest, behind Nigeria. South Africa
still has a relatively high poverty rate and unemployment, and is also ranked in
the top 10 countries in the world for income inequality according to the Gini
coefficient. South Africa accounts for 24% of Africa's GDP in terms of PPP
(Purchasing Power Parity), and World Bank has ranked South Africa as an uppermiddle-income economy one of the four such countries in Africa (alongside
Gabon, Botswana and Mauritius). Since 1996, after the end of over 12 years of
international sanctions, South Africa's GDP has grown over three times to $400
billion, and foreign exchange reserves have increased to nearly $50 billion from $3
billion; creating a diversified economy with an increasing and large middle class,
within two decades of establishing democracy and ending of apartheid. High
levels of income inequality, unemployment, growing public debt, low levels of
education, access to electricity, political mismanagement, and crime has severely
impacted the South African economy. Research by World Bank shows that South
Africa has one of the broadest gaps between per capita GNP (Gross National
Product) versus its HDI (Human Development Index) ranking, with only Botswana
showing a bigger gap.
In 1948 the National Party(NP) won the national elections, and started
implementing Apartheid, which lead to dividing of economy into a privileged white
one, and an underprivileged black one. The policy was widely criticised and led to
sanctions being placed against the country in the 1980s. South Africa held its first
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elections after apartheid era in 1994, leaving the just elected African National
Congress (ANC) government a difficult task of restoring order to an economy that
was hurt by sanctions, while also integrating the previously underprivileged
segment of the population into it. The 1994 government inherited an economy in
distress due to long years of internal conflict and external sanctions.
The high levels of unemployment, and inequality are the most salient economic
problems facing the country. South Africa has an advantage in the production of
manufacturing, agriculture, and mining products. South Africa has shifted from a
primary and secondary sector driven economy in the mid-20th century to the
tertiary sector driven economy. The country's economy is diversified with key
economic sectors including mining, vehicle manufacturing and assembly,
agriculture and fisheries, food processing, clothing and textiles, energy,
telecommunication, transportation, real estate, wholesale and retail trade,
tourism, financial and business services.
As per latest data from World Economic Forum the Key Indicators of South Africa
Population (millions)55.0
GDP (US$ billions)313.0
GDP per capita (US$)5694.57
GDP (PPP) per capita (US$)13165.16
GDP (PPP) as share (%) of world total 0.64
The Global Competitiveness Index(GCI) explores the factors that drives the
productivity and prosperity in 140 countries, representing 98.3% of world GDP.
According to GCI there are three stages of development namely- Factor Driven
Stage, Efficiency Driven Stage and Innovation driven stage. These three stages
consist of twelve pillars. South Africa is presently in Efficiency driven stage.
In the 2015-16 Global Competitiveness Report(GCR), South Africa is ranked 49 th
(climb of 7places) in its Global Competitiveness Index(GCI) out of 140 economies,
up from 56th in 2014-15 Global Competitiveness Report with an overall score of
4.4 out of 7. South Africa is ranked 29th in market size with a score of 4.9 out of 7,
33rd in business sophistication with a score of 4.4 out of 7 and 38th in innovation
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with a score of 3.8 out of 7 (improvement of five places from previous report), out
of 140. South Africa is the most innovative economy in African region. South Africa
has the Africas most efficient financial market in which is ranked 12 th with a score
of 5 out 7. and is ranked 38 th in goods market, 28th in high domestic competition
and 29th in efficient transport infrastructure (29th). It has been ranked as 38 th in
strong institutions, 24th in property rights and a robust and independent legal
framework. Factors which are not in favour of South Africa are corruption (76th)
and the burden of government regulation (117th) and the security situation
(102nd). Some improvements in these factors would improve institutions. South
Africa needs to address its inefficient supply of electricity (116th) and inefficient
labour market (107th). It is ranked at bottom with 140 th place in employee- labour
relations. The more worrying factors for South Africa is it is ranked 128 th in health
and it is ranked 120th in the quality of education, where higher secondary
enrolment rates are not high enough to create the skills needed for a competitive
economy. Raising the education standards and making its labour market more
effective will be critical in view of the countrys high unemployment rate more
than 20 percent, with its youth unemployment rate estimated to be more than 50
percent.

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Spider graph representing the level of development in each of 12pillars for south
Africa
Source: World Economic Forum

Comparison and Contrast of South Africa with Nigeria

Human Development Index:
The children of South Africa are disproportionately poor and are also very much
concentrated in the poorest households.
South Africa is ranked 116th in the Human Development Index among the 188
countries. They are on the lower 50% of the spectrum. South Africas HDI value is
0.666. Between 1990 and 2014, South Africas HDI value has increased from 0.621
to 0.666, an increase of 7.2 % or a mean annual increase of about 0.29 %. The
rank is shared with El Salvador and Viet Nam. Between 1980 and 2014, South
Africas life expectancy at birth improved by 0.5 years, mean years of education
improved by 5.0 years and expected years of education improved by 2.2 years.
South Africas GNI per capita improved by about 11.8 % between 1980 and 2014.
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Trends in South Africas HDI component Index Source: HDI report

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The poverty among children is very high than adults and in the richest segment,
the children who are rich are way lower than the adults who are rich. This will
create a greater income gap in the future. Hence, it will be a crucial factor in
determining the human development index.
South Africa has the value of unpaid work around 15 percent, which is pretty much
higher than the other developed countries.
Around 15 percentage of the people of South Africa does not have access to
electricity and around 150 thousand people have installed home solar systems.
GNI per capital rank for South Africa is far better than HNI rank. This means that
South Africa has to work more on Human Development.

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Logistic Performance Index:

LPI index is the weighted average of the countrys score on the six key
dimensions:
1. Efficiency of the clearance process (like simplicity, speed etc.) by border
control agencies including customs.
2. Quality of trade and transport related infrastructure like roadways, ports,
railways, information technology etc.
3. Ease of arranging competitively priced shipments.
4. Competence and quality of logistics services.
5. Tracking and tracing of consignments.
6. Timeliness of consignments reaching destination on delivery time or
expected time.
NIGERIA:
The overall LPI score of Nigeria is 2.63 and ranked 90th.
The efficiency of clearance process by customs of Nigeria is poor and has a score
of 2.46 and ranked 92nd in the world. The performance percentage is 50% of the
top scorer. It means Nigerias clearance efficiency is only 50% that of Singapore
which is ranked number 1.
Nigeria does not have good quality of transport related infrastructure and has a
score of 2.4 and it is ranked 96th in the world.
The ease of arranging competitively priced shipments score is 2.43 and it is
ranked 118th in the world.
The logistics quality and competence has a score of 2.74 and it is ranked 74th in
the world.
The tracking and tracing of consignments is not efficient and has a score of 2.70
and it is ranked 82.
Nigeria is not efficient in timely delivery of consignments and has a core of 3.04
and ranked 95th in the world.
South Africa:
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The overall LPI score of South Africa is 3.78 and ranked 20th.
The efficiency of clearance process by customs of South Africa is poor and has a
score of 3.6 and ranked 18th in the world. The performance percentage is 50% of
the top scorer. It means South Africas clearance efficiency is only 86% that of
Singapore which is ranked number 1.
South Africa does not have good quality of transport related infrastructure and has
a score of 3.78 and it is ranked 21st in the world.
The ease of arranging competitively priced shipments score is 3.62 and it is
ranked 23rd in the world.
The logistics quality and competence has a score of 3.75 and it is ranked 22nd in
the world.
The tracking and tracing of consignments is not efficient and has a score of 3.92
and it is ranked 18.
South Africa has a score of 4.02 in timeliness and is ranked 24th in the world.

CAGE Analysis:
CAGE
Factor
Cultural

Factor

South Africa

Nigeria

Populatio
n
Diversity
Ethnicity

Comparatively
diverse

less Highly diverse

Religious
norms

Mainly sub Saharan

Africans,
European
whites, Asian Indians
Islam 1.5%,
Hinduism 1.2%
Christianity 86%

Language 11 official language

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Highly
different
ethnic groups
Northern
part
predominantly
by
Muslims
and
southern
by
Christians
Only
1
official
language with 500
different languages

Administrat
ive

Geographic
al

Economical

Lack
of
common
Currency
Economy
Institutio
ns
Political
Stability
Coastline
Not
landlocke
d
Internal
Navigabil
ity
Transport
ation
Geograph
ic
Remoten
ess
Governm
ent

South
(Zar)

African

Open economy
Race oriented

spoken
Rand Nira

Open economy
High corruption

High

Low (Boko Haram

issue)
Longer coastline Comparatively
Advantageous for sea smaller
coastline
trade.
and has a scope for
sea trade.
High
and
well Low
and
poorly
connected
connected
Highly connected
Low

Not
very
connected
High

well

Republic form - Good Federal Republic

business environment Ease
of
doing
business is high
3.5% GDP Growth rate 7.4% GDP Growth
rate

GDP
Growth
rate
GDP Per High GDP per capita Low GDP per capita
capita
of $11,300
of $2,600
Economy
Inflation
Unemplo
yment
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Service
economy
5.8%
24.5%

oriented Industry-based
Economy
8.7%(High Inflation
rate)
23.7%

rate
Transport
ation
Governm
ental
Factors
Rich-Poor
differenc
es
Economic
Size
Natural
Resource
s
Infrastruc
ture

Very well connected

Poorly connected

Multi-racial elections

High corruption and

mismanagement

Low

High

595 billion GDP

478 billion GDP

Gold, platinum
other metals
High

and Natural
petroleum

gas,

Low

Cultural Factor:
Nigeria has around 500 ethnic tribes and 500 different languages are spoken in
the country. The Northern part of the country is predominantly occupied by
Muslims, whereas the Southern part of Nigeria is occupied by Christians. Amidst
all these, the National language is English. This creates a lot of cultural chaos in
the country and the ease of doing business in the country is really low in terms of
cultural diversity.

Administrative Factor:
Currency:
There is a lack of common currency among the nations.
Economy:
Both has open economy. But the ease of doing business is comparatively higher in
Nigeria.
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Geographical Factor:
Location:
South Africa is located at the southern tip of African continent, which is greatly
surrounded by sea area with a coastline of 2798 kms, whereas Nigeria is located
in the Western Africa between the countries Benin and Cameroon, bordering the
Gulf of Guinea with a coastline of 853 kms.
Transportation:
South Africa has around 20 thousand km of railways, whereas Nigeria has only 3
thousand kms. South Africa has around 566 airports, where Nigeria has around
only 54 airports. Hence, connectivity is high in South Africa compared to Nigeria.

Economical Factor:
Government:
Both the countries have a republican form of Government.
GDP Composition by Sector:
Nigeria is a highly industry based economy, where the contribution of industry to
GDP is around 43%. Next stands the agriculture, where the contribution to GDP is
around 31%. The services stands the least, where it contributes to around 26%
only.
On the contrary, South Africa is highly service oriented economy, where the
contribution to GDP is around 69%. The industry sector is around 29% and
agriculture is around 2.6%. Hence, this clearly portrays South Africa is more
developed than Nigeria, because when the countries develop, the service sector
contribution to GDP increases drastically.

Inflation Rate:
Nigeria has high inflation rate compared to South Africa, where Nigeria has to
work upon it to reduce for having a higher real economic growth.

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GDP Contributors for Nigeria

Agriculture

Industry

Services

18%
56%

26%

GDP Contributors for South Africa

Agriculture Industry Services

3%
32%
66%

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What are the prospects of being in the Cocoa industry in

Nigeria?
CHOSEN BUSINESS: Cocoa Industry
Why? Cocoa is the leading agricultural export of the country. It is currently the
world's 4th largest cocoa producer in the world.
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How Cocoa farming is a sought after business in Nigeria. High unemployment rate
(23.7%) and poverty levels have guided the government towards recapturing the
economical benefits of Cocoa production. With over 3 million hectares of cultivable
lands - the government has started to urge its farmers to tap on the potential of
the savannah grasslands . Because of continuous investments in oil production,
this was a neglected industry - and now with the realization of the benefits of
cocoa production and the drawbacks of oil production (large investments, too
much supply and not enough demand).
With collaboration from expert US chocolate maker - the cocoa beans of Nigeria
can be turned into premium cocoa beans. With the government handing out
disease resistant seeds - more and more farmers are encouraged to revive this
forgotten source of income to the nation.
With the improvement in their ease of doing business rankings, and their median
age being 17.9, where there is plenty of young labour available - it is quite a
conducive atmosphere to make the most of their cocoa industry.

Why is Tourism a good business to be in at South Africa?

Tourism supports as much as 10.5% of the jobs in South Africa - 1 out of every 12
South African is employed in the tourism industry. The regional African market is
one of the major sources of revenue for the South African Tourism industry. There
are various other sub-industries associated, including:
- Business tourism
- Cultural Tourism
- Paleo - Tourism
- Adventure Tourism
- Sports Tourism

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Apart from the above mentioned sub-sectors, the wine tourism in this country is a
fast growing sector. Also, gourmet tourism is another very forward looking subsector. These areas would really boost the boundaries of the tourism industry.

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