According to a recent report by Bloomberg, Nigeria and South Africa are losing their exalted position as the largest economies in the continent to small countries, as low commodities price, currency volatility, rising inflation and interest rate and political instability continues to undermine growth.
While the economies of the two giants are hard hit by the aforementioned challenges, smaller African countries like Kenya, Rwanda, Tanzania and Uganda are all set to expand more than 5 percent this year, International Monetary Fund (IMF) projections show.
It seems the small fishes are swallowing the big ones in an ocean of unpredictability.
Uganda, Rwanda, Kenya, Tanzania recorded GDP growth of 5.30 percent, 6.3 percent, Kenya 6 percent, Tanzania 6.9 percent respectively, according to IMF.
This compares with Nigeria’s economy that contracted by 2.1 percent in the second quarter, as lower oil output, shortage of dollar stunt growth, according to the National Bureau of Statistics (NBS). The International Monetary Fund forecasts the economy will shrink by 1.80 percent by the end of the year.
Analysts blame the relapsed economy of Africa’s most populous nation on the capital controls imposed by the central bank that resulted in capital flight as investors jilted bonds on the fear that a sudden devaluation could lead to loss of significant revenue. Manufacturers are grappling with dollar shortages despite the adoption of a flexible exchange rate by the apex bank that saw the naira lose two thirds of its value against dollar.
Similarly, South Africa has been hard hit by lower demand for minerals and the war of attrition and belligerence in the country following the attempted arrest of Pravin Gordhan, Minister of Finance, for alleged irregularities. The ruling party Africa National Congress (ANC) is increasingly losing its clout, as voters voted opposition in the last Municipal elections, dealing further blow on embattled President Jacob Zuma.