ACCORDING to forecasts from the International Monetary Fund (IMF), Nigeria’s economy, which held the title of Africa’s largest in 2022, is set to slip to fourth place this year. Egypt, which claimed the top position in 2023, is also projected to fall behind South Africa. The IMF’s World Economic Outlook estimates Nigeria’s gross domestic product (GDP) at $253bn for this year, trailing behind energy-rich Algeria at $267bn, Egypt at $348bn, and South Africa at $373bn.
Both Nigeria and Egypt have faced challenges such as high inflation and currency devaluations, impacting their economic standings. Since assuming office at the end of May 2023, Nigerian President Bola Tinubu has implemented significant policy reforms, including allowing the currency to float more freely and addressing dollar shortages. Despite recent rebounds, the Nigerian naira remains 50 percent weaker against the dollar compared to pre-Tinubu administration levels after two currency devaluations.
Egypt, considered one of the emerging world’s most-indebted countries, has also allowed its currency to float, resulting in a nearly 40 percent decline in the pound’s value against the dollar. The IMF, which had advocated for a flexible currency regime, expanded its loan programme for Egypt to $8bn, attracting additional financial support from the European Union and the World Bank.
Meanwhile, South Africa’s rand has maintained a relatively stable value against the dollar, experiencing only a 4 percent depreciation this year. The country’s economy is expected to benefit from improvements in its energy supply and plans to address logistical bottlenecks.
Algeria, as an OPEC+ member, has seen positive economic outcomes due to high oil and gas prices, initially triggered by Russia’s invasion of Ukraine and ongoing tensions in the Middle East. The country has played a role in alleviating Europe’s gas shortages by increasing its gas exports amid Russia’s supply disruptions.
As Nigeria and Egypt grapple with economic challenges, South Africa and Algeria are poised to maintain their positions as key players in Africa’s economic landscape, driven by strategic policies and external factors influencing their respective economies.