Giant of Africa: Nigeria loses first place as another African country becomes largest in GDP terms
- Nigeria has lost $310 billion in GDP during the last ten years, largely due to stagflation, low productivity, and currency depreciation
- When Nigeria's GDP was rebased in 2014, it was the largest economy in Africa; currently, it ranks fourth, behind South Africa, Egypt, and Algeria.
- Africa's most populous nation's economy plummeted from $510 billion in 2014 to $199.7 billion in 2024, according to the International Monetary Fund
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The depreciation of the naira, low productivity, and stagflation—a confluence of high inflation, slow economic development, and high unemployment—have all contributed to Nigeria's $310 billion GDP loss over the past ten years.
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The economy, which was previously the biggest in Africa when Nigeria's GDP was rebased in 2014, is now in fourth place, behind South Africa, Egypt and Algeria.
According to the International Monetary Fund, the economy of Africa's most populous country shrank from $510 billion in 2014 to $199.7 billion in 2024.
CFG Advisory, a Lagos-based research and advisory firm, stated in its report titled, ‘From Reform Fatigue Quagmire to Sustainable Growth’:
“Nigeria’s GDP at $195 billion has declined over the last decade losing over $300 billion in value due to devaluation, low productivity, and stagflation,”
“The country is no longer the largest economy in Africa, ranking fourth behind South Africa, Egypt, and Algeria. This is owing to the prolonged policy inconsistency since the economy came out of the post-COVID recession,” it stated.
According to Adeola Adenikinju, president of the Nigerian Economic Society in a BusinessDay report, Africa's most populous country must diversify its economy and boost productivity in order to regain its status as an African superpower.
“Rebasing will lead to a significant increase in the value of GDP because new sectors will be added, hence GDP will be higher than what it presently depicts. However, in the long term, Nigeria will have to find a way to improve the economy and diversify productivity,” he said.
According to him, Nigeria's GDP has increased in naira terms but decreased in dollar terms as a result of the depreciation of the exchange rate.
“Exchange rate has reduced significantly in the last two years, contributing to the decline in GDP measured in dollar terms. In real terms, Naira GDP has grown albeit at a very slow rate,” Adenikinju stated.
Can Nigeria become biggest in Africa again?
Although analysts say Nigeria is on track to rebase its economy, it might not become the largest in Africa.
According to Muda Yusuf, director and CEO of the Centre for the Promotion of Private Enterprise, exchange rate depreciation may be to blame for Nigeria's $300 billion GDP loss since it has caused the country's GDP to shrink in terms of its dollar worth.
“The main reason for the decline is the exchange rate depreciation and that is in dollar terms. If we are using a lower exchange rate like it was before, then our GDP would have increased. However, with the depreciation in the exchange rate, converting GDP Naira value to dollars will significantly lead to a major contraction in GDP value,” he said.
“Nigeria’s economic activities have not contracted that much and GDP growth has been positive, apart from the COVID period where we recorded a negative,” he noted.
He stated that more industries that have expanded over the past ten years will be included in the GDP rebasing, and that even in dollar terms, the country's GDP is expected to rise significantly.
According to Yusuf, Nigeria's economy must expand and overcome all barriers that are preventing it from being the largest in Africa once more, as well as any issues that are harming investment and productivity.
Experts predict more attention on pension funds
Legit.ng reported that experts have said that the inclusion of the activities of pension fund administrators in the rebased Gross Domestic Product will lead to more interest and scrutiny in the sector.
Experts have commended the National Bureau of Statistics (NBS) for incorporating the activities of pension fund administrators into the rebased Gross Domestic Product (GDP).
They noted that this will draw greater attention and scrutiny to the sector.
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Source: Legit.ng
