The International Monetary Fund (IMF) World Economic Outlook (WEO) report for October 2024 has projected that Nigeria will end the year with a Gross Domestic Product (GDP) of $199.72 billion. This development places Nigeria as the fourth largest economy in Africa, trailing behind South Africa, Egypt, and Algeria.
Nigeria’s GDP projection reflects the ongoing economic challenges the country has faced in recent years, including inflation and currency devaluation, which have significantly impacted its growth trajectory. This is a steep decline from the $474 billion GDP the nation recorded in 2019. Despite its immense potential as Africa’s most populous country, these economic hurdles have taken a toll on its global standing.
Top 10 Economies in Africa by GDP (2024)
- South Africa: $403.05 billion
- Egypt: $380.04 billion
- Algeria: $260.13 billion
- Nigeria: $199.72 billion
- Morocco: $157.09 billion
- Ethiopia: $145.03 billion
- Kenya: $116.32 billion
- Angola: $113.29 billion
- Tanzania: $79.87 billion
- Ghana: $75.31 billion
South Africa remains the largest economy in Africa, with a projected GDP of $403.05 billion, followed closely by Egypt at $380.04 billion. Algeria ranks third with a GDP of $260.13 billion, while Nigeria’s $199.72 billion GDP ranks it fourth.
Economic Challenges for Nigeria
Nigeria’s drop from a GDP of $474 billion in 2019 to a projected $199.72 billion in 2024 underscores the severe economic challenges facing the country. Several factors have contributed to this sharp decline, including high inflation rates, a weakened currency, and a lack of diversified revenue streams.
The country has grappled with inflationary pressures due to rising food and fuel prices, exacerbated by global economic disruptions and internal inefficiencies. Additionally, Nigeria’s reliance on oil exports as its primary revenue source has made it vulnerable to fluctuations in global oil prices. The naira’s continuous devaluation against major foreign currencies has also eroded the country’s purchasing power and affected its economic output.
Currency Devaluation and Inflation
One of the major contributors to Nigeria’s economic woes has been the consistent depreciation of the naira. The exchange rate has steadily weakened over the years, causing imported goods to become more expensive, further driving inflation. According to economic analysts, the currency devaluation has been worsened by the lack of a stable foreign exchange market and the over-reliance on crude oil exports, which account for more than 80% of Nigeria’s foreign exchange earnings.
Additionally, the country’s inflation rate has remained persistently high, hovering above double digits for several years. The rising cost of living has had a negative impact on consumer spending, business growth, and investment, further stalling Nigeria’s economic recovery efforts.
Outlook for Nigeria’s Economy
Despite these challenges, there is cautious optimism that Nigeria’s economy could rebound in the coming years if structural reforms are implemented. Economists have called for the diversification of the economy away from oil dependency, increased investment in infrastructure, and policies aimed at stabilizing the currency and curbing inflation.
The IMF’s recommendation for Nigeria to adopt a unified exchange rate system could also help streamline the country’s foreign exchange market and bring in more investment. However, achieving significant growth will require long-term commitment to economic reforms and tackling corruption, which remains a major hindrance to Nigeria’s development.
As Nigeria enters 2025, the focus will be on restoring investor confidence, creating a more stable business environment, and improving the overall standard of living for its citizens.
