Nigeria’s Economy to Overtake South Africa by 2018

Nigeria’s economy has been projected to be Africa’s biggest economy by 2018, overtaking South Africa in the process. Head of Research Africa, Standard Chartered Bank, Mrs Razia Khan, stated this at the Africa Summit organised by the bank in Lagos, with the theme, “Africa in the Super-Cycle”.

In her words, “assuming normal GDP growth rates in line with post crisis trend, our simulation suggests Nigeria overtakes South Africa GDP size by 2018. Our own analysis suggests that Nigeria will overtake South Africa to become Africa’s largest economy.”

Khan explained that the country’s increasing urbanisation rates and declining dependency ratio which is coming from the share of working age population will help to derive economic growth. “Despite global uncertainty, Sub-Saharan Africa GDP still forecast to rise strongly, dominates list of world’s fastest growing economies,” she added.

Economic environment

Forecasting Nigeria’s economic environment in the nearest future, she stressed that by 2015 the country will become the fourth most populous country globally, lamenting the continual decrease in the country’s foreign exchange reserves, despite the regulations put in place in the oil sector.

She bemoaned the level at which the country’s budget spending rises, saying the country is spending beyond her means.  According to her, the country’s GDP went up by 7.3 per cent in the year on focus, half year 2011 compared to 7.5 per cent recorded in the first half of 2010.

She further noted that the non oil GDP went up by 8.7 per cent accounting for 84.1 per cent of the countries economic growth, agriculture also increased by 5.6 per cent, while year by year industrial sector witnessed an increase of three percent.

Khan said Nigeria has a lot going in its favour, adding that removal of fuel subsidies, banking sector reform, among others are reforms that can drive the super-cycle growth.

Also speaking at the event, CEO of Standard Chartered, Shayne Nelson, stated that the super-cycle period will soon return.  He said Japan has not done very well in the last 20 years, noting that they need structural reforms, adding that the United States is going through unemployment problem.

“We are worried but optimistic that Europe will solve these problems because it has a better economy than Japan and US,” he said.

The Summit was conveyed to articulate Africa’s place in the super-cycle: a period of historically high global growth, lasting generation or more. Africa bears characteristics of the current super-cycle, which will impact the world economy over the next few decades.

Standard Chartered estimates global GDP to be around $65 trillion, bigger than before the financial crisis and twice the size from a decade ago. It notes that the pace and scale of growth and change across emerging economies of the world is astonishing, with 70 per cent of global growth coming from the emerging markets in 2010.

Vanguard

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