The two largest African economies are beginning to emerge from the shadows of recession, but analysts believe that immediate growth could be slower than expected. After several months of stagnant economic output, the gross domestic product of Nigeria and South Africa showed year-over-year gains during the second quarter of 2017; however, both nations still have to deal with the uncomfortable factors of high unemployment in times of heavy population growth.
For South Africa, the end of its recession was marked by a GDP growth of 1.1 percent compared to June 2017. For Nigeria, a country that enjoys significant oil production, GDP growth is still under one percent, but the situation is clearly better than 1.6 contraction the country reported in 2016. Political instability has been a major causal factor in the recession experienced by both economies. In the case of South Africa, President Jacob Zuma has faced uncomfortable allegations of corruption due to his connections to the powerful Gupta business dynasty of Johannesburg. President Muhammadu Buhari of Nigeria has kept the country in the dark about his lengthy periods of medical leave, which he has spent in London; nonetheless, the country’s economy has experienced growth, in spite of his absences.
How These Economies Recovered
It is important to note that Nigeria has been forced to contend with the realities of the energy markets, which include lower crude oil prices and the ongoing shift towards renewable energy sources. Exploration and extraction operations in the Niger Delta region have been fruitful enough to boost growth in the Nigerian oil sector by 1.6 percent; still, the agricultural sector has posted even higher growth rates of three percent.
In South Africa, the agricultural sector has recovered significantly after terrible droughts. Scientists and farmers worked together to prepare the crops for the return of long-awaited rains; this collaboration has resulted in several bumper harvests that represent a 34 percent annual increase. The South African government has been promoting entrepreneurship as a means to deal with the stifling issue of unemployment rising as high as 28 percent.
A Future of Uncertainty
Although both Nigeria and South Africa have welcomed the aforementioned news, there are serious concerns about the futures of their respective economies. Should crude oil prices plummet again, Nigeria may once again fall into a recession; for the time being, the country is trying to attract more foreign direct investment in case this happens. South Africa could see another recession if the unemployment rate climbs to 30 percent, a situation that could result in problematic socioeconomic issues such as greater rates of poverty, crime and violence.