South Africa to topple Nigeria as Africa’s largest economy

Nigeria is projected to lose its position as Africa’s largest economy to South Africa next year, according to the International Monetary Fund.

The IMF’s World Economic Outlook projects South Africa’s gross domestic product reaching $401 billion in 2024, exceeding Nigeria’s $395 billion and Egypt’s $358 billion based on current prices.

South Africa’s run is however expected to last just a year, as the country is again projected to fall to third place behind Nigeria and Egypt in 2026.

The IMF expects that recent reforms by the Tinubu administration, particularly the removal of petrol subsidy and the devaluation of the naira, will lead to faster growth for Nigeria in the coming years.

The IMF sees GDP expanding 3.1% next year, compared with 2.9% in 2023.

Nigeria’s inflation surged by 26.72% in September, the fastest rate in 20 years.

The IMF sees South Africa’s economy expanding 0.9% this year and 1.8% in 2024, with the potential to expand 2.5% to 3% faster should it improve the power situation, tackle logistic bottlenecks and institute other reforms.

“We believe the IMF’s projections reflects where it believes meaningful reforms will take place. South Africa’s transient emergence as Africa’s largest economy in 2024 is mainly due to the shrinking of Nigeria and Egypt’s GDP in dollar terms, following sharp currency devaluations,” said Yvonne Mhango, Africa economist quoted by Bloomberg.

“However, the long-term trajectory shows Nigeria and Egypt regaining their top spots, with the former taking a strong lead. For Nigeria to realise the GDP expansion projected by the IMF, we think oil output must be restored to its potential; insecurity needs tackled; and the bottlenecks in the power sector addressed.”