Ranking Africa’s largest economies

In the ever-evolving landscape of Africa's economies, the question of which country holds the title of the largest economy remains a topic of debate among economists. A recent discussion on CNBC Africa brought together two seasoned economists, Charlie Robertson, Head of Macro Strategy, FIM Partners UK Ltd, and Benedicte Baduel, Senior Economist at the World Bank, to shed light on this complex issue. The conversation delved into various measures used to assess economic performance and rank countries, with a focus on key African economies such as South Africa, Nigeria, and Egypt. The dialogue explored different metrics, from Gross Domestic Product (GDP) to government revenues, to provide a comprehensive view of the economic landscape on the continent. Benedicte Baduel highlighted the significance of decomposing economic components to gain a nuanced understanding of economic performance. She emphasized the importance of real GDP growth as a key indicator and noted South Africa's underperformance in this aspect over the last 15 years. Despite being one of the top economies in Africa, South Africa has struggled to achieve robust growth rates, with GDP growth contracting since the mid-2000s. On the other hand, Charlie Robertson took a closer look at nominal GDP figures to offer a different perspective on ranking Africa's largest economies. He predicted a shift in rankings for 2024, with South Africa poised to take the top spot, followed by Egypt and Nigeria. Robertson also highlighted the importance of government revenues as a measure of economic prowess, emphasizing that the ability to mobilize revenue reflects a government's effectiveness in delivering services and driving growth. The conversation then turned to the complex issue of measuring the informal economy, which presents challenges in terms of standardization and comparability across countries. Both economists acknowledged the difficulty in accurately quantifying the informal sector's contribution to the overall economy, with Baduel noting that South Africa's informal sector is relatively smaller compared to other African nations. Looking ahead, Robertson shared insights on the economic outlook for the rest of the year, highlighting Egypt's potential as a growth leader in the short term. He also commended African nations for adopting more sensible currency policies and engaging in strategic borrowing practices to bolster economic resilience. While South Africa faces numerous challenges, including transport bottlenecks and structural constraints, Baduel projected modest growth rates for the country in the coming years. Overall, the discussion provided a comprehensive analysis of Africa's largest economies, emphasizing the multifaceted nature of economic performance and the need to consider a range of indicators beyond GDP. As African nations navigate the complex economic landscape, the insights shared by these leading economists offer valuable perspectives for policymakers, investors, and analysts seeking to understand and evaluate the continent's economic dynamics.