Nigeria loses top spot as Africa’s largest economy

South Africa has recently taken back the coveted accolade of Africa’s largest economy after Nigeria has held the position for the last two years. The rankings are determined by looking at country GDP values from last year (2015) according to the IMF and converting those into USD, based on current exchange rates. This has seen South Africa’s GDP finish at $301bn and Nigeria’s not far behind at $296bn.

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By African standards, both these economies are behemoths, and for the last decade it has always been a two horse race between South Africa and Nigeria for the number one spot. Nevertheless, it has been a rocky road over the last 6 months for both countries economies, and we have seen the economies of these two African stalwarts contract. South Africa’s economy has struggled because of suppressed commodity prices and political instability. Nigeria’s economy has taken a huge hit due to plummeting oil prices, a commodity on which it’s economy relies almost entirely on.

Ultimately, the shift in rankings comes down to currency appreciation and depreciation. The growth of the South African economy has hinged on the Rand having gained over 16% against the dollar since the start of 2016. Conversely,  Nigeria’s Naira lost more than 30% of it’s value after the central bank removed a currency peg in June of this year.

Africa’s richest man, Aliko Dangote, still believes that Nigeria remains Africa’s largest economy. Dangote, who spoke at the Lagos Chamber of Commerce and Industry 2016 Presidential Policy Dialogue session, says the problem with the Nigerian economy did not start with the present administration adding that he does not believe the numbers that South Africa has overtaken Nigeria as the biggest economy in Africa.

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