South Africa vs Nigeria: Battle of Africa’s Economic giants

Less than three years after Nigeria replaced South Africa as Africa’s largest economy, South Africa is back on the number one spot.

According to Fin24, South Africa’s economic gross domestic product (GDP) at the end of 2015 was US$301 billion while Nigeria’s GDP stood at US$296 billion. Furthermore, following the removal of a currency peg by its central bank in June this year Nigeria’s Naira has lost more than a third of its value.

Some analysts have predicted that Nigeria is likely to regain the top position in the long run. However since the ranking of economies remains largely determined in relation to the United States dollar, South Africa’s rand seems to be in a safer position than the Naira.

With the ruling African National Congress (ANC) having experienced the lowest electoral support since 1994 in the August 3 South African local government elections there is speculation that the election results may push the ANC to make economic reforms in order to regain support. Reforms that may come from such electoral pressure can lead to the contraction of South Africa’s economy especially if mining and farming outputs decline. In that case it will be interesting to see if Nigeria’s oil production will serve as an economic advantage in the battle for the number one spot.