Once, again South Africa has reclaimed a title it had been synonymous with for long; Africa’s biggest economy. A title it had lost for two years to Nigeria in West Africa. The latest data by the IMF, showing a recalculation of the current exchange rate puts South Africa ahead of Nigeria, given the Rand strengthening against the Dollar.
On the other hand, Nigeria Naira has been going downhill since the dropping of a peg to the dollar. Nigeria problem starts and ends in the fact that its economy relies to an enormous extent on oil exports. With the nose dive international crude oil prices have been taking in recent times, there has been less and less petrodollar cash flows into Nigeria. Unlike South Africa, whose economy is more diversified.
However, BBC Africa Business Report editor, Matthew Davies doesn’t find much cause for excitement in either South Africa or Nigeria. In fact, he believes that the two countries are actually on the verge of a recession.
When Nigeria rebased (update the measure of the size of its economy) back in 2014. It added new industries that were previously uncounted such as, the now vibrant film industry, telecoms, IT, music, e-commerce, and airlines. Typically, most countries do rebase their economy at least one in three years; Nigeria had not rebased since 1990.
Looking at the numerical data, there not much difference between Nigeria and South Africa; the former has an economy worth about $296 billion, while the latter is $301 billion. When the calculations are done based on IMF’s last year’s and this year’s figures and currency exchange number. South Africa is technically ahead of Nigeria.
Looking beyond the figures and numbers, to determine who has the biggest economy in Africa, there seems to be no clear cut winner between the two countries. Even then, things get somewhat bleaker considering that the two economies are on the brink of a recession.
Experts’ forecasts indicate that it is highly unlikely economic growth rate to hit more than 1% in South Africa this year, and a couple more to come. The country’s Reserve Bank puts the forecast at zero. There is a high unemployment rate in South Africa, and credit rating is just around the corner at the end of 2016.
That said, the race to determine Africa’s biggest economy looks more like a neck and neck race between the two countries. The race itself is a disappointing race with both contenders looking fatigued and in need of sustenance.