Nigeria’s economy, which ranked as Africa’s largest in 2022, is set to slip to fourth place this year and Egypt, which held the top position in 2023, is projected to fall to second behind South Africa after a series of currency devaluations, International Monetary Fund forecasts show.
According to a recent report from the International Monetary Fund (IMF), the country’s decline in economic ranking is due to the economic policies implemented by President Bola Tinubu. The IMF projects Nigeria’s GDP to be $253 billion this year, ranking behind Algeria ($267 billion), Egypt ($348 billion), and South Africa ($373 billion).
The report indicates that while Nigeria will likely remain in fourth position for several years, South Africa is projected to maintain its status as the continent’s largest economy, with Egypt potentially regaining the top spot by 2027.
This shift occurs as both Nigeria and Egypt face economic challenges, including rising inflation and significant currency depreciation. President Tinubu, who took office in May 2023, promised major reforms such as more liberal currency controls, the elimination of substantial energy and fuel subsidies, and addressing dollar shortages. However, the Nigerian naira has depreciated by 50% against the dollar following two devaluations under his administration.
Egypt, one of the most indebted emerging nations and the second-largest borrower from the IMF after Argentina, has seen its currency lose nearly 40% of its value against the dollar recently due to similar reforms aimed at attracting investments. This resulted in the IMF nearly tripling Egypt’s loan program to $8 billion in 2022, alongside an additional $14 billion in support from the European Union and the World Bank.
In contrast, the value of South Africa’s rand is market-determined and has fallen by approximately 4% against the dollar this year. The South African economy benefits from increased energy supplies and efforts to improve logistics.
Algeria, a member of OPEC+, has capitalized on high oil and gas prices driven by geopolitical tensions and has helped alleviate some of Europe’s gas shortages following supply cuts by Russia due to its conflict in Ukraine.
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