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Nigeria surpasses South Africa as Africa's biggest economy


Data from Renaissance Capital already shows that Nigeria has surpassed South Africa as the biggest economy in Africa- by about $50 billion dollars. “This means Nigeria, at $405 bn in 2013 would be the largest economy in Africa, ahead of South Africa at around $370 bn”, says Renaissance Capital analysts led by Charles Robertson, its global chief economist and head of macro strategy.


The last decade has been great for the BRICS - Brazil, Russia, India and China. GDP and stock prices for the group have surged, while BRIC-focused funds have -like the SPDR S&P BRIC 40 - swelled in assets. However, the last few years haven’t been filled with much of the same euphoria for the BRICs. In fact, the nations of Brazil, India, China, and Russia have actually been some of the worst performers out there. To that end, many investors have begun to look for the next group of emerging markets that will take a leadership position.
Look no further than the MINTs or Mexico, Indonesia, Nigeria and Turkey. And like the BRICs, the MINTs feature many of the same positives that the original bloc had.
First is a growing and young population. The new four emerging market horsemen have a combine total population size of nearly 623 million people- the bulk of which are under 25 years old. That young and sizable workforce will help the MINTs prevail as an aging population in Europe, Japan and United States begins to hinder economic output in these nations. Even more so as the MINTs are set-up as vast exporters of raw and finished goods. 
In about three weeks from now, when the National Bureau of Statistics (NBS) releases the rebased Gross Domestic Product (GDP) it will show that Nigeria has overtaken South Africa as Africa’s largest economy, which will have great economic and geopolitical implications.
This is according to emerging markets focused investment banking firm Renaissance Capital, whose team of analysts were in Abuja, last month.
“We are revising up our estimate of Nigeria’s GDP by 53 percent. The NBS has nearly completed its work, and our new estimate is that a 45 percent  to 60 percent uplift is likely, and we are taking 53 percent as the mid-point figure. We expect the data in January,” said Renaissance Capital analysts led by Charles Robertson, its global chief economist and head of macro strategy, in a research report released yesterday (Dec 18).
“This means Nigeria, at $405 bn in 2013 would be the largest economy in Africa, ahead of South Africa at around $370 bn.”
Other impacts of the rebasing include the possible reduction of growth rates to 5 – 6 percent from 6 – 7 percent, and an increase in GDP per capita to $2,400 from around $1,700, in essence moving Nigeria into middle income economy territory.
“Sectors that may show the biggest upward revision range from Nollywood to IT and telecoms, while we think agriculture will shrink from around 40 percent of GDP to 25 – 30 percent of GDP,” said Robertson.
The rebasing will show public debt shrinking  to 13 percent of GDP from 20 percent of GDP. Public external debt would be below 2 percent of GDP, while the current account surplus may still be 5 percent of GDP which will leave the sovereign in a good position to borrow if needed.

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