Following the recent value attrition of the naira against the United States’ dollar due to the floatation of the currency, Nigeria could be upstaged by South Africa as the largest economy on the continent.
Nigeria’s 2015 Gross Domestic Product (GDP) at $521.8 billion prior to Wednesday’s trading at the inter-bank foreign exchange market may have lost about $157 billion or 30 percent of its value due to the drastic drop of the naira rate against the dollar from N197 to N282. This has threatened Nigeria’s position as the leading and biggest economy in Africa.
Specifically, at Monday’s dealing, the first in the wake of the new forex policy, the naira crashed 30 percent to N280 to the dollar, with dealers and market watchers admitting there is yet room for the currency to weaken further. And this played out on Tuesday when the value further dipped to N284.
With a 30 percent loss in value of the naira, the country’s GDP would have shaved off about $157 billion to a new level of $365.3 billion, just $14.7 billion ahead of South Africa’s national output of $350.6 billion.
Nigeria’s economy surpassed South Africa’s as the largest on the continent in 2014 after a rebasing exercise of its GDP for the first time in two decades.
Should the naira depreciate further, Nigeria may fail to lay claim to the position of it being the continent’s biggest economy midway into the next rebasing as it would have been overtaken by South Africa with a more stable currency where a US dollar is purchased with 14.8 rand.