Nigeria, Africa’s most populous nation with 170 million people, could overtake South Africa as the continent’s largest economy in the next two years lifted by a strong domestic demand and high levels of agriculture and services activity after its rebased, according to Leadership reports citing a Reuters poll.
Nigeria’s gross domestic product will receive an enormous boost when it is rebased later this year to more accurately reflect changes in the economy over the last two decades. The much-delayed rebasing could add up to 50 percent to Nigeria’s economy, giving it a nominal GDP of around $375 billion which is almost the size of South Africa’s.
Most developed countries overhaul their GDP calculations every five years to reflect changes in output and consumption. This is particularly true in emerging economies, where measurement techniques tend to be less developed.
But Nigeria’s economic output data is still calculated using 1990 as the base year, which fails to capture booming sectors like mobile telecommunications and the “Nollywood” film industry that have emerged since then.
High unemployment and a slowdown in the euro zone, South Africa’s main trading partner, make it vulnerable to losing its number one spot. It is set to grow at just 2.6 percent this year. South Africa will however still enjoys a better GDP-per-capita ratio compared to Nigeria, and therefore a slightly better standard of living.
The Nigerian economy has been growing faster than the South African economy for some years. In 2012 Nigeria’s economy grew by 6.6 percent while South Africa’s grew only between 2-3 percent..
Nigeria’s 170 million people make it the seventh-biggest in the world. This creates a massive market, attracting investment from across its borders.
In contrast, South Africa’s population is estimated at 51.1 million, making it the fifth most populated country in Africa.