Nobody saw it coming. Or did they? Nigeria, the giant of Africa, has stumbled down to fourth place this year in the ranking of Africa’s largest economies. Anybody shocked? No? Oh okay then. Well just behind South Africa, Egypt, and Algeria, Nigeria is expected to post a GDP of $253 billion, overshadowed by South Africa’s towering $373 billion.
Economic Shakeup
The continent has seen some major economic changes.
South Africa now holds the crown, according to the International Monetary Fund (IMF) predictions for 2024. Algeria sneaks ahead with $267 billion, and Egypt, last year’s leader with $348 billion, now trails at second place. The devaluation series has hit them hard, guys.
Here’s a breakdown. South Africa, besides being the most industrialized in the region, has its economic strength pretty much set by the markets. Its currency, the Rand, has slipped only about 4% against the dollar this year. They’ve got plans up their sleeve to boost their energy sector and fix some lingering logistic issues.
Meanwhile, Nigeria and Egypt are like two brothers struggling to hold onto their allowances. Nigeria’s President, Bola Tinubu, since his May 2023 inauguration, tried to turn things around with some major policy reforms that were cooked up with the help of IMF itself actually.
Pretty interesting, huh? The man has freed up the Naira to float more, ended some heavy subsidies, and tackled dollar shortages. But let’s be real, the Naira is still half the dollar value it was before Tinubu’s time. And NONE of his policies have worked, not even in the least.
Egypt is also in deep, sitting as the second highest global debtor right after Argentina. They let the Egyptian Pound free-fall almost 40% to lure in some investments. It worked sort of because the IMF boosted their loan to $8 billion which also unlocked about $14 billion more from the European Union and the World Bank.
The Currency?
Both Nigeria and Egypt are feeling the burn with their currencies taking a nosedive.
This year, the IMF projects that Nigeria’s GDP in dollars will keep shrinking, from a high of $477 billion in 2022 down to an estimated $253 billion in 2024. But, when you look at it in Naira, it sounds better. Up from N202.4 trillion in 2022 to N296.4 trillion in 2024.
Now let’s talk growth rates. Nigeria might see a 3.34% increase in GDP by 2024, better than the 2.86% last year. But that’s like celebrating a small lottery win when you’re about to lose the house — too little, too late. Egypt is also bracing for slower growth at 3.0%, down from 3.76% last year.
As for South Africa, it’s looking at a modest bump from 0.6% GDP growth in 2023 to 0.9% in 2024. Not exactly explosive, but steady does it.
Here’s the kicker—while Nigeria used to be the top dog since their 2013 GDP recalibration, they’ve been slipping ever since the Naira fell hard. The IMF puts them now behind Egypt, which had a GDP of $394 billion last year, and South Africa at $378 billion.
Remember, it’s all in the numbers. And right now, those numbers spell a clear message: Nigeria needs a new game plan, and fast. And South Africa? They might want to watch their back because Egypt is looking to reclaim the top spot real quick.
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