In a recent update from the International Monetary Fund’s (IMF) World Economic Outlook, it is projected that South Africa will briefly surpass Nigeria as the largest economy in Africa by 2024. The IMF anticipates that South Africa’s gross domestic product (GDP) will reach $401 billion by 2024, outstripping Nigeria’s GDP of $395 billion and Egypt’s GDP of $358 billion.
South Africa, known as the most industrialized nation on the continent, is expected to secure the top spot for just one year before ceding it back to Nigeria, eventually falling to third place behind Egypt by 2026, as outlined in the report. The IMF projects South Africa’s economy to grow by 0.9% in the current year and by 1.8% in 2024.
There is also potential for even more robust growth, ranging from 2.5% to 3%, provided South Africa successfully addresses its power supply issues, resolves logistical bottlenecks, and implements other necessary reforms.
Meanwhile, in Nigeria, economic growth is expected to slow to 2.9% in 2023, down from 3.3% in the previous year. However, the IMF estimates that the economy will grow by 3.1% in 2024. This slowdown is attributed to the effects of persistently high inflation, currently standing at 26.72%, and has remained in double digits since 2016. President Tinubu has introduced a wide range of policy reforms since taking office, which have garnered international acclaim. However, domestically, these reforms have caused hardship for Nigerians as the naira has depreciated by almost 50% and the cost of fuel has risen by over 200%.
A significant historical note is that Nigeria initially overtook South Africa to become Africa’s largest economy in 2014 after rebasing its GDP. This rebasing exercise nearly doubled Nigeria’s GDP, raising it to just over $500 billion, which placed it as the 26th largest economy in the world at the time.
Both South Africa and Nigeria have been grappling with internal economic challenges in recent years. While electricity issues are more recent in South Africa, it has been a long-standing problem in Nigeria, defying most solutions.
Both countries also face the issue of unemployment. A new methodology led to a sharp decline in Nigeria’s unemployment rate to 4.1%, while South Africa’s unemployment rate remains significantly higher, at almost 33%, with youth unemployment at a staggering 62% among 15- to 24-year-olds.
Nigeria also grapples with challenges in raising oil production, its major foreign exchange earner. The country has consistently failed to meet its OPEC oil production quota due to persistent crude oil theft in the Niger Delta region.