The President of Dangote Group and Africa’s richest man, Aliko Dangote has said Nigeria remains the number one economy in Africa, despite recent economic challenges.
Speaking at the 2016 Presidential Policy Dialogue session, organised by the Lagos Chamber of Commerce and Industry Dangote said he is optimistic that Nigeria will soon overcome the challenges and remain stronger.
According to him the problem with the economy did not start with this current administration while he maintains faith that the country is still the best place to invest.
On Wednesday, Bloomberg reported that South Africa has now overtaken Nigeria to regain its position as Africa’s largest economy due to the continued depreciation of the naira against the dollar.
The news agency used the data by the International Monetary Fund (IMF) that as at the end of 2015, the size of South Africa’s economy was $301 billion at the rand’s current exchange rate, while Nigeria’s GDP stood at $296 billion.
In dollar terms, South Africa has emerged as Africa’s biggest economy more than two years after losing it to Nigeria largely due to dwindling value of the naira against the dollar.
The rand had gained more than 16 percent against the dollar since the start of 2016, and Nigeria’s naira lost more than a third of its value after the Central Bank of Nigeria (CBN) introduced a foreign exchange liberalisation allowing market forces to determine the value of the local currency against the dollar.
Analysts at the Lagos-based financial services firm, Cordros Capital, said Nigeria’s GDP fell short of South Africa’s primarily as a result of Nigeria’s inability to control the value of the naira.
To reverse the trend in the immediate, the analysts, said the naira would have to reverse its losses against the USD.
“To reverse its loss against the USD, the NGN would have to close N197 by Q4 2016, which is highly unlikely.”
They further said the possibility of naira reversing its losses against the dollar may well broadly depend on the decisions of both the monetary and fiscal authorities.
“In the long term, economic activities would have to return to the pre-recession levels, wherein growth per annum was in excess of 5 per cent,” they said.
Speaking on the development, Dr. Sale Ahmed, blamed the development on Nigeria running an oil-based economy.
“South Africa continues to strengthen its financial regulatory institutions, its production and manufacturing base,” he said.