With Nigeria’s economy gradually taking a downward hill following the devaluation of its local currency, South Africa has overtaken Nigeria as Africa’s biggest economy in dollar terms.
This is as result of the falling value of the naira against the dollar occasioned by a flexible foreign exchange policy recently introduced by the Central Bank of Nigeria.
According to Bloomberg, the Gross Domestic Product (GDP) of Nigeria at the end of 2015 published by the International Monetary Fund was put at $296 billion while that of South Africa was $301 billion. The report stated that the rand has gained more than 16 per cent against US dollar since the start of 2016, while Nigeria’s naira has lost more than a third of its value.]
Nigeria’s economy have contracted in the first quarter of 2016 by 0.4 per cent. Recall that the Minister of Finance, Kemi Adeosun had told the Senate few weeks back that the economy is “technically in recession” after months of insisting that the economy was doing well.
Aside the falling oil price, Nigeria’s mainstay revenue earner, its oil output has also reduced drastically following the resurgence of militancy in the oil-rich Niger Delta region, while South Africa is sensitive to shifts in the commodity cycle.
Economists argued that in the short term, the ranking of both South Africa and Nigeria’s economies are likely to be determined by their exchange rate movements. They stated that Nigeria was unlikely to be unseated as Africa’s largest economy in the long run, but added that the momentum that took it there in the first place is no longer there.
Meanwhile, the Federal Government said it is already in the process of appointing two lead managers and a financial adviser to organize the issuance of $1 billion of Eurobonds this year to fund the 2016 budget.
According to the Debt Management Office, (DMO), the sale is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018. Two years ago, Nigeria rebased its gross domestic product (GDP) which pushed its economy above South Africa as the continent’s biggest economy