Nigeria Drops To 4th Place As The Continent's Largest Economy

THE International Monetary Fund (IMF) has projected that Nigeria, which was the largest economy in Africa in 2022, will fall to fourth position in 2024.

As a result of multiple currency devaluations, Egypt—which held the top spot in 2023—is predicted to drop to second place, behind South Africa.

Nigeria's GDP is expected to reach $253 billion this year, based on current prices, according to the IMF's World Economic Outlook. With $267 billion in GDP, Algeria comes in first, followed by Egypt ($348), South Africa ($373), and Nigeria ($164). 

According to previously revealed data, until Egypt reclaims the top spot in 2027, the most industrialized country in Africa will continue to hold the title of greatest economy on the continent. For the foreseeable future, Nigeria is expected to remain in fourth place.

The economies of Nigeria and Egypt have suffered due to rising inflation and a decline in their respective currencies.

Since assuming office as president of Nigeria at the end of May 2023, President Bola Tinubu has made major policy announcements, such as removing expensive energy and gasoline subsidies, enabling the currency to float more freely, and addressing the dollar shortage.

Even with the recent upswing, the value of the naira relative to the US dollar is still 50% lower than it was before to the current administration.

Egypt, the second-biggest borrower from the IMF after Argentina and one of the most indebted emerging nations, has also permitted its currency to float, which last month caused the value of the pound to fall by about 40% in order to draw in investment.

The global lender greatly expanded Egypt's loan program size to $8 billion, nearly triple its initial sanction in 2022, in response to the IMF's months-long advocacy for a flexible currency policy. An extra $14 billion in financial aid from the World Bank and the European Union was provided as a result of this action.

The value of South Africa's rand is determined by financial markets, unlike the naira and pound in Nigeria and Egypt, and it has depreciated by almost 4% compared to the US dollar in 2024. Its economy is anticipated to gain from measures to address logistical bottlenecks and upgrades to its energy supply.

Russia's invasion of Ukraine and current Middle East tensions have resulted in high oil and gas prices, which have benefited Algeria, an OPEC+ member. After Russia cut supply due to its conflict in Ukraine, it intervened to help alleviate some of Europe's gas shortages.