03 May 2015, Abuja – Nigeria is set to be the first African country with an economy larger than $1 trillion, according to the latest projections from the U.S. Department of Agriculture.
Africa’s most populous nation, which recently held peaceful elections, revamped its gross domestic product data in 2014 and pulled ahead of South Africa to become the continent’s largest economy with a GDP of $469 billion. Between now and 2030, experts predict annual growth rates as high as 7.92% resulting in a GDP of $1.05 trillion.
“A lot of Nigeria’s growth will come from agriculture and services are huge in Nigeria,” says Charles Robertson, global chief economist at Renaissance Capital. He adds that he actually expects the country’s GDP to reach $1 trillion before 2030. “Banking, retail, telecoms and Nollywood has been an explosive growth story in past couple of years.”
As a source of employment for 70% of Nigeria’s population in 2013, the country’s $56 billion agriculture sector currently accounts for 24% of GDP and the country’s minister of agriculture, Akinwumi Adesina, has said “the new millionaires of Nigeria will be in agriculture.”
These are huge numbers by Nigerian and African standards — however, they look less impressive next to others from around the world.
By 2030, the U.S. economy is expected to reach $24.8 trillion, China’s GDP will approach $22.2 trillion and Indian output will be at the $6.6 trillion mark.
Closest behind Nigeria, when it comes to economic clout on the continent in 2030, is South Africa with a projected GDP of $810.6 billion.
Given that power shortages have caused the country to cut its economic growth forecasts for 2015 by 0.5%, this will be a key area of the country’s infrastructure which number crunchers will be watching.
In February, during his first full budget speech, finance minister Nhlanhla Nene identified the need to focus on the country’s power crisis, saying “electricity constraints hold back growth in manufacturing and mining, inhibit investment in housing and raise costs for businesses and households.”
Egypt is due to follow South Africa, with the continent’s third largest GDP of $471.5 billion. The U.S Department of Agriculture foresees annual grow rates consistently surpassing 4.2% in the next 15 years and Renaissance Capital is bullish on the North Africa country.
“Only 10% of Egyptians have bank accounts,” says Robertson, “so we can image banking will be a big story [In Egypt] in the coming years.”
Problem with projections
While these numbers suggest significant growth is on the cards, projections for African economies have been revised in the past.
“Forecasting tends to be optimistic, especially in underdeveloped countries,” says Morten Jerven, author of ‘Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It’.
“Models often over-predict GDP and under-predict inflation…U.S. Department of Agriculture is predicting a stable growth pattern for Nigeria, and that is curious given that we have not seen that pattern in the past.”