By Ayo Yusuf
The International Monetary Fund, IMF, has predicted that in 2024, South Africa will overtake Nigeria as Africa’s biggest economy.
According to the IMF World Economic Outlook, South Africa, the most industrialised country on the African continent, is reaching towards achieving $401billion gross domestic product (GDP) in 2024.
The global financial institution said on the other hand, that based on current prices, Nigeria and Egypt have GDPs of $395 billion and $358 billion respectively.
IMF however noted that South Africa is billed to top the chart for no more than a year before it once again trails Nigeria, the most populated African nation.
It said also that South Africa may even plummet to third place behind Egypt in 2026, according to the report, which was released last week.
This is coming as Nigeria’s President, Bola Tinubu, makes significant policy changes, even as a decline in the production of oil compels Nigerians to grapple with inflation and a severe fall in the value of the naira.
President Tinubu’s efforts to revamp the economy has included the removal of fuel subsidies, removing the parallel market for the foreign exchange system, taking steps to address dollar shortages and boosting tax revenue.
Those measures are causing initial pains in Nigeria, but are expected to increasingly pay dividends going forward. The IMF sees GDP expanding 3.1% next year, compared with 2.9% in 2023.
The reforms should lead to “stronger and more inclusive growth,” Daniel Leigh, division chief in the IMF’s research department, told reporters at the fund’s annual meetings in Marrakech, Morocco, last week.
According to Bloomberg, Nigeria and Egypt have embarked on vital economic policies that will bring them back to the top in the near future.
Bloomberg further stated that, “We believe the IMF’s projections reflect where it believes meaningful reforms will take place.
“South Africa’s transient emergence as Africa’s largest economy in 2024 is mainly due to the shrinking of Nigeria and Egypt’s GDP in dollar terms, following sharp currency devaluations.
“However, the long-term trajectory shows Nigeria and Egypt regaining their top spots, with the former taking a strong lead.
“For Nigeria to realise the GDP expansion projected by the IMF, we think oil output must be restored to its potential; insecurity needs to be tackled; and the bottlenecks in the power sector addressed.”
