In 2022, Nigeria held the position of Africa’s largest economy. However, this ranking is expected to slip to fourth place this year, according to forecasts by the International Monetary Fund (IMF). This change is due to a series of currency devaluations experienced by the country.

According to a report by Bloomberg, based on the IMF’s World Economic Outlook, Nigeria’s gross domestic product (GDP) for the current year is projected to be $253 billion at current prices. This places Nigeria behind Algeria, with a GDP of $267 billion, Egypt at $348 billion, and South Africa at $373 billion.

The report also predicts South Africa will remain the continent’s largest economy until Egypt re-assumes the top spot by 2027. However, based on the data released by the IMF, Nigeria will remain in fourth place for the foreseeable future. 

Nigeria has encountered some economic challenges since President Bola Tinubu announced significant policy reforms, including the cessation of subsidy programs and the devaluation of the Naira. Despite a recent recovery, the Naira remains approximately 50% weaker than the US dollar compared to pre-reform levels following two rounds of currency devaluation.

Egypt, one of the most indebted nations in the emerging world and ranking as the IMF’s second-largest borrower after Argentina, also opted to allow its currency to float. This decision resulted in an approximate 40% depreciation of the Egyptian pound against the US dollar last month, aimed at attracting investment.

In contrast to the Nigerian naira and the Egyptian pound, the value of South Africa’s rand has traditionally been determined by financial markets. Although experiencing a marginal 4% depreciation against the US dollar this year, South Africa’s economy is expected to benefit from improvements in energy provision and initiatives aimed at addressing logistical impediments.

Source: Punch