According to the International Monetary Fund (IMF), there is a significant shift on the horizon in Africa’s economic landscape. South Africa, known as the most industrialized country on the continent, is poised to surpass Nigeria as Africa’s largest economy. The IMF’s World Economic Outlook has brought this prediction to the forefront.
South Africa has set its sights on achieving a gross domestic product (GDP) of $401 billion by 2024. As of now, Nigeria and Egypt maintain GDPs of $395 billion and $358 billion, respectively, at current prices.
The IMF’s analysis suggests that South Africa may temporarily claim the top position in 2024 but is likely to fall behind Nigeria once again by 2026, potentially even slipping to third place behind Egypt.
This forecast coincides with significant policy changes implemented by Nigerian President Bola Tinubu’s administration, which are aimed at rejuvenating the economy. These reforms include the removal of fuel subsidies, foreign exchange system reforms to address dollar shortages, and improvements in tax revenue collection. The IMF anticipates that these measures will result in “stronger and more inclusive growth.”
Nigeria and Egypt, however, are not sitting idly by. Both countries have also enacted crucial economic policies that could propel them back to the top in the near future. According to Bloomberg, the IMF’s projections are indicative of where it expects meaningful reforms to take place.
South Africa’s potential ascent to become Africa’s largest economy in 2024 is largely attributed to the shrinkage of Nigeria and Egypt’s GDP in dollar terms due to significant currency devaluations.
Nonetheless, the long-term trajectory indicates that Nigeria and Egypt are likely to regain their top positions, with Nigeria taking the lead. To achieve the projected GDP expansion, Nigeria would need to restore oil output to its potential, address security concerns, and resolve bottlenecks in the power sector.
Source: Zawya