A Note on the Economic Downturn in Sub-Saharan Africa: The Nigeria-South Africa Comparison
Movements recently in the dollar-naira exchange rate, which followed the removal of the currency peg, has stimulated ongoing debate in the media that South Africa has regained its position as the largest economy in Africa. The prevailing notion is that the depreciation of the naira and simultaneous appreciation of the rand against the US dollar implies that South Africa’s GDP has surpassed that of Nigeria. This argument, however, needs some re-examination, given that the value of the GDP (in current US$)is sensitive to the choice of exchange rate and GDP figures used for its computation. This piece situates the present argument in the context of recent commodity market crisis and its implications for the two largest economies in Sub-Saharan Africa. It then sheds light on the present debate on the comparative size of the Nigerian and South African economies. It also searches through the looming recession in both economies and provides an outlook for the rest of the year.