Nigeria has overtaken South Africa as the biggest economy in Africa as the latter slid into its second recession in two years, Bloomberg reports.
South Africa’s economy contracted 1.4 percent in the fourth quarter of 2019, and this far surpassed what economists anticipated.
Figures from Statistics South Africa (Stats SA) showed that agriculture, transport and construction contracted on a quarterly basis by 7.6%, 7.2% and 5.9% respectively, while electricity declined by 4% and retail 3.8%.
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Overall, the country’s economy grew only 0.2 percent in 2019, the least since the global financial crisis, and even less than the central bank and government estimated, reports Bloomberg.
Nigeria’s economy, however, rose by 2.27 percent in 2019 as the central bank took measures to boost credit growth while oil output increased.
The West African country’s economy expanded the most in four years in 2019, with its growth beating projections in the fourth quarter, said Bloomberg.
Nigeria and South Africa account for almost half of sub-Saharan Africa’s gross domestic product. To determine which of the two countries is the biggest economy on the continent has long depended on the exchange rate one uses for Nigeria.
“But now both the official naira rate of 306 per dollar and the weaker market exchange rate of around 360 that almost all investors use put Nigeria on top,” according to Bloomberg.
In the fourth quarter, Nigeria’s GDP stood at $476 billion or $402 billion, depending on the rate used while South Africa’s was $352 billion, based on an average rand-dollar exchange rate of 14.43 for the year.
South Africa has been in energy deficit since 2005 following the mismanagement of its power utility Eskom which has failed to meet demand. Frequent blackouts continue to have a toll on businesses, further impeding economic growth.
At the moment, Nigeria’s economy is expected to continue to grow faster than South Africa’s. The International Monetary Fund has cut its forecast for Nigeria’s 2020 growth to 2 percent while South Africa’s GDP is forecast to expand only 0.8 percent.
Meanwhile, Nigeria’s governing APC party has welcomed the news of the country’s reemergence as Africa’s biggest economy.
The National Publicity Secretary of the party, Mallam Lanre Issa-Onilu, in a statement, said since the Nigerian economy exited recession in 2017, the country’s economic growth has not been a fluke but a result of deliberate practices and policies of the Buhari administration.
He said this “has increased transparency in governance, diversification of the economy away from oil, improved fiscal management and a healthy protectionist approach which has aided the growth and increased the capacity of domestic producers and in turn, created jobs.”