Latest figures published by the International Monetary Fund (IMF) show that South Africa has reclaimed its top position as Africa’s biggest economy two years after it lost the position to Nigeria.
In April 2014, Nigeria displaced South Africa to rank as Africa’s biggest economic power house. Nigeria claimed the position after it rebased or updated its economic indices.
The new figures showed that the Nigerian economy was worth an estimated 80 trillion naira.
A Bloomberg report says the figures released by the IMF, which were calculated using data from 2015 gross domestic product (GDP), put the size of the Nigerian economy at an estimated $296 billion while the South African economy was worth an estimated $301 billion at the Rand’s current exchange rate.
South Africa recently regained its top spot largely because of the strong performance of the rand that has seen it appreciate against the dollar.
Since the start of 2016, the rand has gained 16 percent against the dollar while Nigeria’s naira has suffered a crash within the same time period, falling 60 percent against the dollar and losing more than a third of its value since the Central Bank of Nigeria (CBN) decided to float the exchange rate.
In addition to the effect of a floating exchange rate policy, the Nigerian economy has suffered from the impact of a slump in commodity prices, especially crude oil in the international market; Nigeria earns the bulk of its foreign exchange from the sale of crude oil.
Oil prices have fallen by 65 percent since 2014, and poor revenue from the sale of petroleum products in recent months has shrunk the inflow of petro-dollars into Africa’s most populous country.
In July, Nigeria’s Finance Minister, Kemi Adeosun, admitted to lawmakers that the country was in a recession. The Nigerian economy contracted by 0.4 percent in 2016, after experiencing two consecutive quarters of negative growth.
The South African economy has also contracted by 0.2 percent in 2016, suffering the impact of reduced commodity outputs in minerals and agriculture.
Answering questions from Bloomberg reporters, Alan Cameron, an economist with Exotix Partners LLP, added, “More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements.”