The International Monetary Fund (IMF) has projected that South Africa could surpass Nigeria to become Africa’s largest economy in 2024.
According to the IMF’s World Economic Outlook, South Africa — the most industrialised country on the continent — is expected to record a gross domestic product (GDP) of $401 billion in 2024. In comparison, Nigeria and Egypt currently have GDPs of $395 billion and $358 billion respectively.
The report indicates that South Africa is likely to hold the top spot for just one year before falling behind Nigeria again, and potentially slipping to third place behind Egypt by 2026.
The development comes amid major economic reforms in Nigeria under President Bola Tinubu, whose administration has implemented significant policy changes aimed at revamping the economy. These include the removal of fuel subsidy, the unification of the foreign exchange market, efforts to address dollar shortages, and measures to boost tax revenue.
While these reforms have caused short-term hardship through rising inflation and a weakened naira, the IMF expects them to yield positive results in the long run. The institution forecasts Nigeria’s GDP growth at 3.1% in 2024, compared with 2.9% in 2023.
Daniel Leigh, Division Chief in the IMF’s Research Department, said during the fund’s annual meetings in Marrakech, Morocco, that the reforms should lead to “stronger and more inclusive growth.”
Bloomberg also noted that Nigeria and Egypt are undertaking crucial economic policies expected to help them reclaim their leading positions soon.
“We believe the IMF’s projections reflect where it believes meaningful reforms will take place,” Bloomberg stated. “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.”
The report added that, over time, Nigeria and Egypt are expected to regain their top spots, with Nigeria taking a strong lead if oil production is restored to full capacity, insecurity is addressed, and power sector challenges are resolved.
