IMF predicts South Africa could overtake Nigeria as Africa’s largest economy

The International Monetary Fund (IMF) has predicted that South Africa may become Africa’s largest economy, surpassing Nigeria in the near future.

The IMF’s recent World Economic Outlook suggests that South Africa, one of Africa’s most industrialized nations, is expected to reach a Gross Domestic Product (GDP) of $401 billion by 2024. In comparison, Nigeria and Egypt, at current prices, are estimated to have GDPs of $395 billion and $358 billion, respectively.

The IMF foresees South Africa briefly taking the top spot from Nigeria, the most populous African country, for a year before falling behind again. The report also warns that South Africa might slip to third place, trailing Egypt by 2026.

This development aligns with Nigeria’s President, Bola Tinubu, implementing substantial policy reforms. These changes, combined with decreased oil production, have posed challenges for Nigerians, including inflation and a devaluation of the naira.

Tinubu’s administration’s efforts to revitalize the economy through measures like eliminating fuel subsidies and addressing issues in the foreign exchange system aim to mitigate dollar shortages and boost tax revenue.

Although these measures are causing initial challenges in Nigeria, they are expected to yield more significant benefits in the future. The IMF projects a GDP growth of 3.1% next year, compared to 2.9% in 2023.

Daniel Leigh, the division chief in the IMF’s research department, explained during the fund’s annual meetings in Marrakech, Morocco, that these reforms are anticipated to lead to “robust and more inclusive economic growth.”