South Africa could soon lose its status as Africa’s biggest economy to Nigeria, but the race to be the continental powerhouse being the biggest may not be everything.
Nigeria, Africa’s largest oil producer, will complete a rebasing of its Gross Domestic Product by next month, its statistics office says, which economists estimate could expand the size of its economy by between 20 and 60 per cent.
Reuters reports that this exercise, which has missed a string of previous deadlines, looks set to transform Nigeria into the continent’s most important economy measured in terms of GDP size.
With a current economic output of around $290bn, the West African country – whose population is more than three times the size of South Africa’s 51 million – already boasts faster growth.
While it has expanded by an average of seven per cent annually over the past decade, South Africa has averaged three per cent growth, held back by rigid employment laws and recurring labour unrests.
But even if it slips from the top spot, South Africa can still claim the crown of being the more diversified and sophisticated economy.
Its financial markets are among the world’s most advanced and while its $350bn economy is smaller than Mexico and Indonesia, its stock market is larger.
For Nigeria, the aim of the rebasing exercise is to change the base year for calculating output to 2008 from 1990 to reflect sectors of the economy that have since grown in importance, such as telecoms and IT.
However, it is still heavily reliant on oil exports, accounting for some 80 per cent of government revenue, and an enlarged GDP will do little to immediately improve life for nearly 100 million of its citizens, who live on less than $1 a day.
While agriculture and power sector reforms would improve Nigeria’s fortunes, turbulent politics and a resilient and bloody Boko Haram insurgency in the North take some of the shine off its positive growth story.