The economic landscape of Nigeria experienced a significant shift, yielding its position as Africa’s largest economy and sliding to fourth place behind South Africa, Egypt, and Algeria, according to the latest projections from the International Monetary Fund (IMF).
Nigeria’s gross domestic product (GDP) is forecasted at $253 billion, trailing behind Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion, based on current price levels for the year.
According to IMF projections, South Africa, as Africa’s most industrialized nation, is poised to maintain its lead until Egypt reclaims the top spot in 2027. Nigeria is expected to hold its fourth-place position for the foreseeable future.
The economic landscapes of both Nigeria and Egypt have been beset by challenges, including high inflation and currency depreciation.
President Ahmed Tinubu’s decision to float the naira last year, along with reforms aimed at tackling currency shortages and subsidy removals, has contributed to the volatility in the economic scenario.
In the first quarter of 2024, the naira further depreciated against the dollar, reflecting ongoing currency pressures. However, in March, the naira recorded a notable 50 per cent gain against the dollar, highlighting the currency’s volatility.
Egypt, grappling with substantial debt levels and currency devaluation, implemented currency floatation measures, resulting in a significant decline in the pound’s value against the dollar.
This move aimed to attract foreign investment, leading the IMF to expand its loan program to Egypt and garnering additional financial support from global institutions.
South Africa, boasting a well-established flexible currency regime, has seen a modest depreciation of the rand against the dollar this year. Efforts to enhance energy infrastructure and address logistical bottlenecks are expected to fortify South Africa’s economic resilience.
Meanwhile, Algeria, as an OPEC+ member, has reaped the benefits of surging oil and gas prices amidst geopolitical tensions. Its intervention to alleviate Europe’s gas shortages amid the Russia-Ukraine conflict has underscored its strategic significance in global energy markets.
