For some months now, South Africa has been experiencing an economic crisis characterized by a very high unemployment rate, scandals related with its President Jacob Zuma, strikes in the oil sector and the failure of the ruling party namely the African National Congress (ANC) party at the Municipal Elections. The economy however just recovered its position as Africa’s largest economic power, which it lost two years ago to Nigeria.

According to estimates from the International Monetary Fund (IMF), based on GDP and the Nigeria-South Africa exchange rates, the rainbow nation beat the West African giant. While Nigeria’s GPD in 2015 at the actual exchange rate was $296bn, South Africa’s was $301bn thus $5 billion more. Given that the IMF determines the GDP of every country in its local currency before converting to US dollar, comparing economies has become much simpler and comprehensible.

Since the beginning of 2016, the Naira lost more than a third of its value to the dollar, thus 30%, while the Rand (South Africa’s currency) gained more than 16% in value over the same period. Additionally, South Africa’s GDP slumped by 0.2% while Nigeria’s plummeted by 0.4%.

Nigeria’s current ordeal is mainly due to Naira’s fall which is paired with a global slump in prices of oil, the economy’s main foreign exchange source (70% of earnings). Behind this, political troubles associated with insecurity in oil-extraction regions, spurred by attacks from the Niger Delta Avengers and Boko Haram militants.

For 2016, the IMF forecasts that growth will not exceed 0.6% for the continent’s most industrialized economy and for Nigeria, a drop of -1.8% in GDP, which should allow South Africa to keep its newly recovered position.

Nigeria snatched from South Africa its position as Africa’s leading economy in 2014 with a GDP of $568.499 billion against $349.873 billion for SA according to data from World Bank, following a change in GDP estimation methods. At the time, the National Statistics Bureau included sectors of activities which were previously not taken into consideration such as telecommunications, housing or Nigeria’s movie industry “Nollywood”.

Alain Okpeitcha