In the latest predictions by the International Monetary Fund (IMF), South Africa is poised to momentarily top Africa’s economy in 2024 with a Gross Domestic Product (GDP) of $401 billion. This forecast places South Africa ahead of Nigeria ($395 billion) and Egypt ($358 billion). However, by 2026, Nigeria and Egypt are projected to reclaim their positions, pushing South Africa back to third place.
Nigeria’s economic challenges are attributed to declining oil production, inflation, and a depreciating naira. To counter these issues, President Bola Tinubu has initiated policy changes which include an overhaul of the foreign-exchange system. These reforms aim to reinvigorate Nigeria’s economy and project a GDP growth of 3.1% in 2024. Daniel Leigh from the IMF’s research department supports these measures, stating they will lead to “stronger and more inclusive growth”. African economist Yvonne Mhango emphasizes the importance of improving oil output, managing insecurity, and addressing power sector issues for Nigeria’s GDP expansion.
Egypt is currently grappling with a foreign-exchange crisis which has led to three currency devaluations since 2022. As part of a $3 billion IMF package secured last year, Egypt is expected to adopt a flexible exchange rate system following the December elections where President Abdel-Fattah El-Sisi seeks to extend his rule until 2030. If Egypt passes IMF evaluations successfully, it could unlock $700 million in delayed loan tranches and a $1.3 billion resilience fund. This financial boost could potentially attract significant Gulf investments into Egypt.
operates on a free-floating exchange rate but has depreciated by 10% against the dollar this year due to concerns over the National Treasury missing its budget deficit targets and record power cuts. Should South Africa manage to improve its power situation and implement other reforms, it could reach a potential growth rate of 2.5% to 3%.
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