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Nigeria’s economy may overtake South Africa’s by 2025 to become the biggest on the continent as oil prices climb and consumer spending in Africa’s most populous nation expands, Morgan Stanley said.

Gross domestic product, which will probably reach $400 billion by the end of the decade, is forecast to increase 8.4 percent in 2011 and 8.5 percent in 2012, Andrea Masia and Michael Kafe, economists at Morgan Stanley in Johannesburg, wrote in an e-mailed report today.

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STANDARD Bank yesterday said it would use its competitive advantage “to the full” to dominate in Africa, where rivals were threatening to topple its position as the continent’s largest bank.

One of the bank’s deputy CEOs, Sim Tshabalala, said in a presentation at the Gordon Institute of Business Science that Africa had become the hunting ground for banks and other foreign investors. They were being attracted by Africa’s growth potential.

Estimates showed Africa would grow 6% next year, up from about 4% this year, while seven out of 10 fastest-growing economies in the world over the next five years would be in sub-Saharan Africa. For this reason, Standard’s strategy of being an African-based regional player was no longer a unique strategic position.

This was because of growing interest in Africa, not only by South African banks, but by Nigerians and even Malians as well . Standard is the largest bank in Africa based on assets of R1,34-trillion as of December last year, with operations in 17 African countries.

“We aspire to build the leading African financial services organisation using all our competitive advantages to the full,” Mr Tshabalala said. “We will focus on delivering superior sustainable shareholder value by serving the needs of our customers through first- class, on-the-ground operations in chosen countries in Africa.”

Standard this year announced it had revised its global emerging-markets strategy and would now deploy its cash-flush balance sheet to invest in Africa.

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S&P Indices has launched a new index to cater for a growing appetite to invest in Africa, coinciding with bullish earnings growth forecasts for the continent.

According to S&P, the Access Africa index is made up of the largest and most liquid equities issued by companies that operate purely in Africa or derive over 50 per cent of their revenues from the continent.

“Rising global demand for natural resources, improvements in infrastructure and the emergence of the consumer classes have turned Africa into an increasingly popular destination for investors,” said Michael Orzano, associated director of global equity indices, S&P Indices.

The access Africa index will support tradeable products, focusing on blue chip African companies, as well as offshore firms with significant exposure to African economies.

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But there are dangers and immense challenges too. One consultant, Deloitte, has set up an “Africa Risk Map” — a complex chart with scores of variables that can go wrong, from theft and corruption to climate change and hyperinflation.

By neglecting a full analysis of the African risks, many companies “have either under-achieved or failed in their African expansion endeavors,” Deloitte says.

It has produced a useful list of examples of the African challenges and obstacles. Here are some:

* The typical manufacturing firm in Africa is plagued with electricity outages for 56 days a year.

* African infrastructure is badly lacking, and an estimated $90-billion (U.S.) is needed over the next 10 years to help Africa catch up to other developing regions of the world.

* Africa has far fewer roads than other developing regions. It has only 152 kilometres of roads per 1,000 square kilometers of land area, and only a third of these roads are paved.

* Infrastructure services can be up to 10 times more expensive than the amount paid by consumers in the rest of the world.

* Corruption is a huge problem. In Ivory Coast, for example, a survey found that 75 per cent of companies consider corruption to be a major constraint.

* Regulatory paperwork is a frequent headache. In Sudan, it can take 53 separate procedures to enforce a contract. In the Republic of Congo, it takes an average of 31 days for imports to clear customs.

* While urbanization is increasing, 70 per cent of African employment is still agricultural.