If you read investment briefs from Nigerian fund managers or broad capital market operators, you will see a version of this line: “We invite you to consider this investment in Africa’s largest economy”. Yes, everyone likes to remind global investors that Nigeria is Africa’s top economy.
Today, we’re learning that very soon, we will be unable to use that line because we are moving to the 4th position in the ranking of Africa’s largest economies, according to IMF Estimates:
- South Africa – $373 billion
- Egypt – $348 billion
- Algeria – $267 billion
- Nigeria – $253 billion
Nigeria’s economy, once the largest in Africa, is projected to slip to fourth place this year, according to the IMF. South Africa is set to overtake Nigeria, Egypt, and Algeria, with an estimated GDP of $373 billion, making it the continent’s largest economy. Nigeria’s GDP is expected to be $253 billion, lagging behind Egypt at $348 billion and Algeria at $267 billion.
Yet, the nation plans to hit $1 trillion in six years, a 4X multiple! A village boy does not understand how that will happen, considering that we have to even stop the bleeding before we talk of growing. The World Bank’s Macro Poverty Outlook for Nigeria: April 2024 just noted that we added another 10 million people into the poverty club in 2023: “Nominal earnings have not kept up with inflation, pushing another 10 million Nigerians into poverty in 2023.”
“Nigeria’s economic growth has been insufficient to raise living standards, weighed down by weak macroeconomic fundamentals and several structural constraints. Overreliance on the oil sector for fiscal revenues, exports, and FX inflows led macro stability to erode with the sector’s deteriorating performance in recent years. Low revenues—including due to a costly petrol subsidy, low tax rates, and weak tax administration—have limited state capacity and public service delivery.
“Inflation has remained high and escalating on the back of a relatively loose monetary policy and exchange rate depreciation. Structural factors holding back the country’s growth potential include lack of adequate energy and transport infrastructure, high domestic trade costs and foreign trade protectionism, widespread insecurity, weak institutions, and low levels of human capital development.”
Good People, if you look across all indicators, South Africa has won big. Its stock market value is more than $1 trillion larger than Nigeria’s. Its annual budget is close to $100 billion more than Nigeria’s. Its annual revenue hits close to $100 billion more than Nigeria’s annual budget. Of course, we’re more than 3X larger in population; so, we have small wins there…LOL.
