Nigeria has overtaken South Africa as Africa’s largest economy after a rebasing of its gross domestic product doubled it to $509.9 billion from $264-billion, the Nigerian statistics office said on Sunday.
The new figures place Nigeria ahead of South Africa, whose GDP stands at $384-billion, and indicated the changing balance in economic climate across the continent. In east Africa, Ethiopia’s economy overtook Kenya’s as the region’s largest and the fifth in Africa after it experienced high economic growth rate for a number of years.
Nigeria, Africa’s most populous country and largest oil producer had not recalculated its GDP since 1990 despite a United Nations recommended five year period between each rebase. The new figures now confirms a wide expectation that the West African nation of more than 170 million people is the continent’s leading power house.
Reuters quoted Nigeria’s statistics chief Yemi Kale saying in the capital of Abuja that increasing attention from foreign investors had pushed the country to calculate its statistics more accurately, adding that the base year would now be rebased every five years.
Nigeria is about three times the size of South Africa in population and has new and fast-developing sectors such as e-commerce, mobile phones, music and Nollywood, that were considered in the GDP rebasing.
It has seen high rates of growth, despite widespread corruption, poor governance, rampant oil theft and a raging Boko Haram Islamist insurgency in the north. The annual growth rate averaged 6.8 percent between 2005 and 2013 and the International Monetary Fund (IMF) forecast it will pick pace to 7.4 percent this year, AFP reported.
In comparison, South Africa’s economy has been slowing down, only managing 5 percent between 2005 and 2009 which has dropped to a low of 3.5 percent since.
Effects of the shifting economic power on the continent are expected to be more psychological rather than tangible and will mostly influence investors’ perceptions about how to do business in Africa. It may also affect South Africa’s representation in the G20.
Nigeria’s credit rating is also expected to improve making it interesting as an investment destination.
Pat Utomi, professor of political economy at the Lagos Business School told AFP that South Africa was still better off in terms of GDP per capita, infrastructure and governance compared to Nigeria which faces huge huddles in terms of infrastructure deficits.
“To a very large extent, Nigeria remains a poor country with very serious infrastructural challenges,” Utomi said, adding that Nigeria’s focus should now move to transforming its human capital to valuable output that will help reduce poverty.
