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According to the International Monetary Fund forecasts reported by Bloomberg, Nigeria, which held the position as Africa's largest economy in 2022, is projected to drop to the fourth spot this year due to a series of currency devaluations.
The country's gross domestic product for this year is estimated at $253 billion, placing it behind Algeria, Egypt, and South Africa.
The report also predicts that South Africa will continue to hold the top spot until Egypt surpasses it in 2027, while Nigeria is expected to remain in fourth place for the foreseeable future.
Nigeria has been battling economic challenges since President Bola Tinubu announced significant policy reforms including the end of the subsidy regime and the devaluation of the Naira. Despite a recent rebound, the currency is still 50% weaker against the greenback than it was before taking office after two currency devaluations.
Egypt, one of the emerging world’s most-indebted countries and the IMF’s second-biggest borrower after Argentina, has also allowed its currency to float, triggering an almost 40% plunge in the pound’s value against the dollar last month to attract investment.
Unlike Nigeria’s naira and Egypt’s pound, the value of South Africa’s rand has long been set in the financial markets and it has lost about 4% of its value against the dollar this year. Its economy is expected to benefit from improvements to its energy supply and plans to tackle logistic bottlenecks.
