South Africa has toppled Nigeria and reclaimed its status as the largest economy in Africa. This comes two years after Nigeria rebased its GDP calculation and advanced to the top spot. South Africa was also temporarily relegated to the third position after Egypt climbed to claim the second spot.
How is this ranking calculated?
The ranking is made on the basis of the size of the gross domestic product (GDP) of the three countries in question, namely South Africa, Egypt and Nigeria. The GDP is a measure of total economic activity in a country in a specific period (for example a year). GDP is measured in the domestic currency of the country, which is the rand in the case of South Africa, the naira in Nigeria and the Egyptian pound in Egypt’s case.
For purposes of international comparison, the GDP values are converted at the prevailing exchange rate to a common international currency such as the US dollar. Owing to the increase in the exchange rate value of the rand, the US dollar value of the South African GDP increased. Given the change in the value of the country’s currency, its GDP exceeded the value of Nigeria’s GDP. The same applies to Egypt: owing to the increase in the exchange rate of the rand, South Africa’s GDP is now larger than the GDP of Egypt when converted to US dollars.