IMF Predicts Nigeria to Lose Status as Africa’s Biggest Economy, New Country Emerges

IMF Predicts Nigeria to Lose Status as Africa’s Biggest Economy, New Country Emerges

  • Nigeria’s economy will reportedly lose its top spot as Africa’s biggest in 2024, a new IMF report says
  • Nigeria will come fourth place on the continent behind South Africa, Algeria and Egypt as its gross domestic product declines
  • The IMF says Nigeria’s naira devaluation is to blame for the decline in its GPD, which places it fourth on the continent’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Nigeria’s economy, which is ranked as Africa’s largest economy in 2022, is predicted to fall to second place behind South Africa due to naira devaluation, according to the International Monetary Fund (IMF).

The IMF’s Economic Outlook projects that Nigeria’s gross domestic product (GDP), currently at $253 billion, will trail behind Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion, based on current pricing in 2020.

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Nigeria's economy to shrink, Naira
President Bola Tinubu's naira devaluation costs Nigeria its position as Africa's largest economy. Credit: KOLA SULAIMON / Contributor
Source: Getty Images

South Africa to overtake Nigeria

The IMF data said South Africa will remain Africa’s largest economy until Egypt reclaims the top spot in 2027, while Nigeria remains fourth place for many years.

Nigeria and Egypt’s chances have dimmed amid high inflation and currency depreciation.

Nigeria’s President, Bola Tinubu, announced vital reforms, including floating the naira, ending the chaotic petrol subsidy and addressing forex shortages.

Naira depreciation causes Nigeria a great deal

Analysts believe that despite the naira's rebound, it is still 50% weaker against the US dollar than before Tinubu became president.

Egypt is one of the world’s most indebted countries and the IMF’s biggest debtor after Argentina. It has also floated its currency, leading to a 40% decline in the Egyptian pound’s value against the dollar.

Egypt to rank third in Africa

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Bloomberg reports that the IMF has called for a flexible regime for months and increased the size of Egypt’s loan scheme, which was approved in 2022, to $8 billion.

The approval is a move for a further influx of about $14 billion in financial aid from the EU and the World Bank

Unlike the Nigerian currency and the Egyptian pound, South Africa’s rand value has been set in the financial markets. It lost about 4% of its value against the dollar in 2024.

Improvements to its emergency supply and plans to tackle logistic issues are expected to benefit South Africa's economy.

Algeria has benefitted from high oil and gas sales caused by Russia’s invasion of Ukraine. The country has stepped in to ease Europe’s gas troubles after Russia reduced supplies.

The development comes after speculations swirled that Nigeria's central bank defended the naira with foreign reserves, leading to a $2 billion loss.

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The loss is projected to be the country's biggest in two years as the naira began its freefall against the US dollar.

World Bank ranks Nigeria as Africa’s largest economy for 5th year earlier reported that Nigeria retained its position as Africa’s largest economy for five consecutive years in 2022, with a Gross Domestic Product (GDP) of $477.4 billion.

Africa’s largest economy accounted for 17.4% of the continent’s economy in 2022, with a combined GDP of $2.7 trillion.

Data released by the World Bank shows that Nigeria has remained the continent’s biggest economy since 2018, when it overtook South Africa as the largest.


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