Here is a quick look at the richest countries in Africa by GDP:
1. Nigeria ($446,543 Billion)
A key component of the African economy, Nigeria has a population amounting to half of West Africa (just over 202 million). With an abundance of natural resources, it remains Africa’s number one producer in terms of GDP output.
The country is Africa’s largest crude oil exporter, recording production about 1,6 million barrels a day in December of 2019. Petroleum exports account for 10% of GDP and exceed 80% of export revenue. Apart from petroleum, Nigeria’s other natural resources include natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc and arable land.
Between 2000 and 2014, Nigeria grew its GDP year-on-year by 7%, one of the fastest rates in Africa. However, growth has since slowed to around 2% due to oil and production shocks and with political instability in the region and a growing young and unemployed population, Nigeria is expected to grow slowly and living conditions to worsen.
However, with the 2020 crude oil price war between Saudi Arabia, Russia and the US, and the impacts of Covid-19, it’s possible Nigeria won’t hit its growth target of 2%.
2. South Africa ($358,839 Billion)
South Africa holds on to the second spot, after a difficult 2nd half of 2019. South Africa went into a recession after 2 consecutive quarters of negative GDP growth. The main reason, among others, power outages from ageing operations at its main power producer, Eskom.
South Africa has diversified its offering over the past two decades away from mainly raw material exports such as gold, iron ore and platinum group metals, to financial services and manufacturing. Financial services, mining and personal services were the only industries to post positive growth in the 4th quarter, however, 4th quarter growth ended at -1,4%. South Africa only grew its GDP by 0,2% in 2019.
With the entire global economy experiencing a slowdown, and its main iron ore trade partner, China, having to close factories and slow construction, South Africa could face a difficult road ahead. Covid-19 will have a profound part to play in South African growth, not only suppressing industries such as tourism and travel, but also mining and personal services.
3. Egypt ($302,256 Billion)
The Government of Egypt recently concluded an economic reform program backed by the IMF in order to bolster economic growth. Real GDP growth reached 5,6% in 2019, up from 5,3% in 2018. Unemployment has also fallen to 7.5% in the 4th quarter, from 9.9% a year before. By sector, gas extractives, tourism, wholesale and retail trade, real estate and construction have been the main drivers of growth.
With more than 50% of GDP being derived from service-based employment, Egypt has done well to diversify itself from raw material exports. However, with 32,5% of the population living below the poverty line and the imminent global slowdown, Egypt could face some socio-economic headwinds in the years to come.
4. Algeria ($172,781 Billion)
Algeria is a country highly exposed to the performance of hydrocarbons, including oil and natural gas. In fact, hydrocarbons make up nearly 70% of total GDP. However, in mid-2019, many high ranking executives in the hydrocarbon industry were detained on investigations of corruption. This political uncertainty has slowed down hydrocarbon growth, with growth in the sector contracting by 7%.
By sector, commercial services, industrial, construction and public works, and agriculture sectors continue to drive non-hydrocarbon growth, reaching 5.6%, 4.6%, 3% and 2.7% in Q1-2019, respectively. However, in an economy so highly correlated to oil and natural gas prices, the current war in oil production could have detrimental impacts on its economy.
5. Morocco ($119,04 Billion)
Moroccan real GDP growth slowed to 2.7% in 2019, missing the World Banks’ estimate of 2.9%. Morocco derives just under 15% of its GDP from agriculture, 30% from industry and the remainder from services. Domestic demand remains strong with average salary increases outpacing the low inflation of 0.6%.
Before mention of Covid-19, the World Bank estimated an average growth rate of 3.3% for 2020/21 due to increased investment in the Moroccan automotive industry. One such investment was made in their Peugeot plant which hopes to double production capacity.