Standard Chartered Plc, the British bank with operations in 13 African countries, said Nigeria may overtake South Africa to become the continent’s largest economy in just over a decade.
“Assuming South Africa grows by 4 percent and Nigeria by 7 percent, Nigeria will become the larger economy in 2023,” Razia Khan, Standard Chartered’s regional head of research for Africa, said in a report released from London today.
Nigeria has a population of more than 150 million, three times as many as South Africa. Moreover, about 42 percent of that population is under the age of 14, compared with 31 percent in South Africa. The size of Nigeria’s domestic market, its oil and gas reserves and sales of bank stakes have been attracting investors, including banks such as Standard Chartered and Africa’s largest, Standard Bank Group Ltd..
While Nigeria’s demographic outlook is positive and its projected growth offers “huge” opportunities, it’s “not without risks,” Khan said. “The capacity of the economy to absorb a rapidly growing working-age population will be key”.
Renaissance Capital said in September that Nigeria may overtake South Africa as the continent’s biggest economy as early as 2011. Standard Chartered used the purchasing power parity measure of gross domestic product to make its calculation, while RenCap used basic GDP predictions.