The International Monetary Fund has projected South Africa will top Nigeria and Egypt to emerge Africa’s largest economy next year. The IMF in its World Economic Outlook for October released last week, said that South Africa’s gross domestic product will reach $401bn based on current prices in 2024, compared to Nigeria’s $395bn and Egypt’s $358bn.
According to the Fund, South Africa is expected to fall back behind Nigeria shortly after and eventually slide to the third position behind Egypt by 2026. The report which was obtained by The PUNCH reads in part, “In sub-Saharan Africa, growth is projected to decline to 3.3 per cent in 2023 before picking up to 4.0 per cent in 2024, with 0.2 percentage point and 0.1 percentage point downward revisions for 2023 and 2024, respectively, and with growth remaining below the historical average of 4.8 per cent.
The projected decline reflects, in several cases, worsening weather shocks, the global slowdown, and domestic supply issues, including, notably, in the electricity sector.
“Growth in Nigeria is projected to decline from 3.3 percent in 2022 to 2.9 per cent in 2023 and 3.1 per cent in 2024, with the negative effects of high inflation on consumption taking hold,” the report said.
The report further explained that growth is projected to decline from 3.3 per cent in 2022 to 2.9 per cent in 2023 and 3.1 per cent in 2024, with the negative effects of high inflation on consumption taking hold. The IMF noted, “The forecast for 2023 is revised downward by 0.3 percentage points, reflecting weaker oil and gas production than expected, partially as a result of maintenance work.”
“In South Africa, growth is expected to decline from 1.9 percent in 2022 to 0.9 per cent in 2023, with the decline reflecting power shortages, although with a 0.6 percentage point upward revision thanks to the intensity of power shortages in the second quarter of 2023 being lower than expected,” it concluded.
In the second quarter of 2023, Nigeria’s GDP grew by 2.51 per cent, according to the National Bureau of Statistics. Inflation figure for September pegs at 26.72 per cent, signalling an increase of 0.92 per cent points when compared to the August inflation figure of 25.80 per cent.
In contrast, Statistics South Africa revealed in its latest report that the economy surpassed expectations, growing by 0.6 per cent in Q2 2023, and both consumer and core inflation slightly rose in August, reaching 4.8 per cent year-on-year.
South Africa is the one of the world’s largest producer of platinum, vanadium, chromium, and manganese, while Nigeria ranks among the top oil producing nations. In October 2023, Nigeria’s oil export production rose to 1.7 million barrels per day, a 30.8 per cent increase from September, aiming for two million bpd by December.
The Minister of State for Petroleum, Heineken Lokpobiri, last week, said, “Our target is to see how we can get to two million barrels per day and beyond by the end of the year.
“The reason why we are underperforming is because of insecurity and we are gradually tackling those problems.”
Nigeria boasts approximately 205.83 trillion cubic feet of gas, constituting 33 per cent of Africa’s total reserve of 620 TCF. However, the challenge persists due to escalating production costs, compounded by operators paying tariffs in dollars.
The Managing Director and Chief Executive Officer, Niger Delta Power Holding Company, Chiedu Ugbo, said, “Gas tariff we are paying for is denominated in dollars that means for instance if the tariff is $2, the payment which is allowed in naira is at the equivalent rate of dollars as of the time of payment and because of fluctuation in dollar rate.
“It means the power we consume will go up and it will be a huge burden on Nigerians. Good news is the government is stepping in and they are working out some modalities so we are waiting for official pronouncement on that,” he said.
The Chief Executive Officer of Fame Oyster, Olufemi Oyedele told The PUNCH that in a nation considered the poverty capital of the world, where the number of poor and vulnerable citizens far exceeds those who are financially comfortable, increasing interest rates may not be the most effective remedy.
Source: Punch
