Analysts Express Mix Feelings about Nigeria’s Return as Africa’s Largest Economy


Kunle Aderinokun

Coming two months after Nigeria was displaced by South Africa as the largest economy in Africa, there is a reversal of fortune and Nigeria has regained its number one position. With her Gross Domestic Product (GDP) $415.08 billion, Nigeria has been placed ahead of South Africa, with a GDP of $280.36 billion, by the International Monetary Fund (IMF). This is despite the economic recession plaguing the country.

The GDP is the total value of a country’s goods and services over a period of time.

According the IMF World Economic Outlook for October, Nigeria’s GDP currently stood at $415.08 billion, having dropped from $493.83 billion in 2015, with that of South Africa put at $280.36 billion, from $314.73 billion in 2015.

While the current value for Egypt’s was not available, its 2015 figures was $330.159 billion and that of Algeria, one of the largest economies on the continent, was put at $168.318 billion

Only in August, South Africa reclaimed the topmost position it lost to Nigeria in 2014, when the later rebased its gross domestic product (GDP), to increase the size of its economy to $510 billion, using 2010 as the base year to replace 1990 previously used.

According to reports, the appreciation of South Africa’s rand, placed the country ahead of Nigeria, which had the naira, her national currency, devalued following the introduction of a flexible foreign exchange regime in June. Specifically, in the wake of the flexible foreign exchange regime, the naira was devalued 30 per cent, wiping off about $150 billion of its GDP, which enabled South Africa to be in the second position, overtaking Egypt and moved closer to Nigeria. Even though the South African economy shrank as the rand weakened, Nigerian economy also witnessed serious challenges, which narrowed the gap between the two economies. But South African economy gained traction following the appreciation of rand, while the Nigerian economy continued to be depressed.

But by its estimation, IMF has, few days ago, placed the Nigerian economy ahead of that of South Africa, placing it on top of the ranking of the biggest economies in Africa.

The news has attracted the attention of economic watchers and analysts, who are mainly indifferent to the development and regarded it as nothing to be excited about when other indices of measurement are not looking up.

According to the Executive Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, “I’m Just like it wasn’t a big deal when the country lost the position to South Africa few months ago, it is also not an important development that Nigeria is now back to becoming the biggest economy in Africa.”

While acknowledging that these classification may put the country on the global investment map as the demography and the size of the consumer market attract investors, Ademola contended that, “the size of the economy doesn’t really matter as much as what it does to the citizens.”

Pointing out that, “the important indicators are the unemployment rate, GDP per capital, the level of inflation, the level of infrastructure development, domestic productivity and exchange rate stability,” he noted that, “Good human development indicators would also include the level of school enrolment, access to healthcare services and financing and also availability of basic necessities like housing.”

“I don’t think Nigeria is the largest in Africa in these indicators; hence our focus should be on that one,” he stated.

Ademola urged the government and the relevant authorities to “turn this nomenclature into a positive one by starting to put the right policies in place to attract private investment both local and international to enhance domestic productivity and stimulate economic growth.”

For the Chief Executive Officer, Global Analytics Consulting, Tope Fasua, who found it difficult to believe the IMF, wondered “what metrics they are working with.”

“If the Naira has lost value against the Dollar in this type of magnitude, and GDP is measured in Dollar terms, I wonder what has happened lately to make our GDP leap ahead of that of South Africa,” he said.

Fasua, however, added that, “even if it is true, we should be careful of quickly latching on to any praise and running to town chest-beating as we’ve always done.” According to him, “GDP as a figure is actually meaningless for an economy like Nigeria. There are better indices that will tell us more about our economy. We have only refused to consider those indices despite consistent advice in that regard.”

But an economic analyst , Adetola Odukoya, who described the development as a positive one, asked if Nigeria was optimising her status as the biggest market in Africa, and also possessed the right policies to drive economic activities and engender growth. According to him, it’s not just enough to have the biggest economic size.

“It’s a positive development. Meanwhile, looking at the continent, Nigeria remains a key investment destination and market. However, beyond the size, the critical questions include: are we optimising the fact that we are the biggest market in Africa? Do we have policies that will drive economic activities to much higher levels? I believe if we can address the key issues that border on fiscal and monetary policies with a view to driving growth, the Nigerian economy can grow to multiples of what we have at present,” Odukoya stated.