VENTURES AFRICA examines the 5 largest economies in Africa;
No African nation has yet joined the ranks of the developed nations in the Organisation for Economic Co-operation and Development (OECD), but there are some sizeable economies on the continent, and economies that are gradually increasing in size. Though South Africa is by far the continent’s wealthiest state in terms of GDP, accounting for 30 percent of the continent’s GDP, economies such as Egypt and Nigeria are on the rise and could overtake South Africa in coming years. And with seven of the fastest ten growing economies in the world in Africa, there is plenty of scope to suggest that the list of the 5 largest economies below may be an oft-changing one in years to come as Africa’s economic development continues apace.
Africa’s biggest economy has an estimated GDP of $524 billion. The main contributor to GDP is the services sector at 66.7 per cent, followed by industry at 30.8 percent. Agriculture is relatively unimportant compared to the rest of the continent, contributing just 2.5 percent to GDP. All is not bright for the South African economy, however. Of the country’s 50 million people an estimated 25 percent are out of work, with the World Bank concluding recently that rife inequality was a threat to economic growth. The richest 10 per cent of South Africans account for 58 percent of the nation’s income, while the bottom 10 per cent accounts for 0.5 percent, the global Bank said. The bottom half earns less than 8 percent of the nation’s income. Unemployment in the first quarter of 2012 rose to 25.2 percent, up from 23.9 percent in the previous quarter, and black people form the bulk of the jobless. Modest economic growth, which averaged 3.2 percent since 1995, had proved “insufficient to absorb the wave of new entrants to the labour market from dismantling apartheid’s barriers”, the report said.
Egypt has a GDP estimated at $497.88 billion, primarily driven by the services and industrial sectors. Agriculture contributes 14 percent. Though unemployment is relatively low at 9.7 percent, the economy faces challenges after last year’s Arab Spring and the election of a new government. Rising debt and lower growth may threaten to derail Egypt’s revolution even more than grasping generals do. New president Mohammed Morsy’s political fate may depend on whether or not he can turn around a staggering Egyptian economy, which saw growth plunge from 5.1 percent in 2009/10 to 1.8 percent last year, according to the IMF. The IMF expects growth to be just 1.5 percent this year. Poor education and feeble governance have scared off the foreign investment and stifled the private entrepreneurship that drove the economic miracles in China, India and Indonesia. Unless Morsy manages to create more jobs and boost incomes, the disaffected and disappointed youth of the nation could turn on their elected leaders in a destabilising cycle of perpetual unrest.
Nigeria is Africa’s most populous nation but its GDP has traditionally been well below that of South Africa. Its GDP of $377.9 billion is provided by industry, agriculture and services. But this looks set to change, according to a Renaissance Capital report. This year, Nigeria will change the base year for its GDP to 2008 from 1990. This looks likely to revise the size of its economy dramatically upwards. Depending on the scale of the revision, Renaissance Capital says Nigeria could surpass South Africa as the continent’s largest economy as soon as 2014. When Ghana’s GDP was rebased in 2010, the size of its economy was found to be 60 percent bigger than previously recorded – $31 billion, compared to $18 billion. Nigeria is expected to rebase its GDP sometime this year, having missed an earlier January target because of nationwide fuel protests. Rebasing involves changing the weighting of sectors of the economy to reflect changes in economic activity over the past three decades. The new figures would, for instance, put more weighting on the country’s telecommunications industry, which has grown strongly over the past 10 years.
The Algerian economy is expected to remain in relatively good condition in 2012 despite global economic uncertainties. It’s GDP of $251.1 billion, provided mostly by the industrial sector, is expected to grow by 3 to 3.5 percent. Economic growth remained strong in 2011 as oil prices strengthened the country’s foreign reserves and budget. “Public expenditure plans will keep growth in non-oil sectors at 5 percent and boost up GDP by 2.5 percent,” the IMF said. Increased food prices in international markets and the augmentation of public wages in Algeria was not reflected in inflation rates due to ongoing food subsidies, increased family savings, increasing demand for imports, and prudent monetary policy. “Budget deficit will likely remain at 4 percent of the total GDP as public expenditures as well as wage augmentation continue,” added the IMF.
These are not good times for Morocco, Africa’s fifth biggest economy, where in April the new Islamist government finally passed its 2012 budget, four months late. This saw protests outside parliament, previously unheard of in the stable and relatively prosperous North African country. Its budget is overstretched, its farm fields drought-stricken, its credit rating is wobbly, and economic crisis is hobbling its closest trading partners in Europe, even as protests by disgruntled Moroccans are on the rise. Abdelilah Benkirane’s government came in with a five-year plan predicting 5.5 percent growth, which it then had to revise downward at the beginning of the year to 4.2 percent. Then at the end of March, the central bank, noting the crisis in Europe and impending drought, cut its own predictions to less than 3 percent.