Nigeria leads Africa in GDP value gains as currency stabilises, economy grows

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Read History Go to My Account Log Out Enhanced by Google Africa Nigeria leads Africa in GDP value gains as currency stabilises, economy grows …Africa’s largest population adds nearly $100bn to the country’s 2026 dollar-denominated economic value, but slower growth and low per-capita output

Listen to this article Share …Africa’s largest population adds nearly $100bn to the country’s 2026 dollar-denominated economic value, but slower growth and low per-capita output temper gains.

Nigeria recorded Africa’s largest increase in nominal Gross Domestic Product (GDP) value this year, as relative naira stability and continued economic expansion lifted the dollar valuation of its economy by nearly $100 billion.

BusinessDay analysis of the International Monetary Fund’s (IMF) 2025 and October 2026 estimates shows that the West African nation’s GDP rose from $290.5 billion to $386.7 billion in October 2026, an increase of $96.2 billion (33.1 percent).

The increase was the largest in absolute dollar terms among the 52 African countries in the comparison, ahead of Egypt, whose estimated GDP rose by $78.3 billion to $442.9 billion, and South Africa, which added $61.98 billion to reach $489.1 billion.

However, the increase does not make Nigeria Africa’s largest economy. South Africa remains in first place, followed by Egypt, with Nigeria ranking third. The figures instead show that the country recorded the continent’s biggest dollar-value gain over the period.

Analysts say the improvement reflects the combined influence of currency movements and domestic economic performance. When a country’s GDP, measured in local currency, is converted into dollars, a stronger exchange rate can increase its international dollar value even without an equivalent increase in real output.

“The appreciation of the naira will play a role because when you convert Nigeria’s GDP from naira to dollars, the stronger exchange rate increases its dollar value,” said Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE).

“The second factor is GDP growth. Our growth rate has generally been around four percent. Apart from the first quarter, when growth was slightly below four percent, the subsequent quarters have largely been around that level,” he added.

Yusuf noted that the combination of economic expansion and naira appreciation explained the increase in Nigeria’s GDP value. He said that sustaining reforms, exchange-rate stability and economic growth could put the country in a stronger position to challenge for Africa’s largest economy in the future.

Despite the increase in its economic value, Nigeria’s growth rate remains modest compared with several African peers.

The IMF projects that the economy will expand by 4.2 percent in 2026, up from 4.0 percent in 2025, before accelerating slightly to 4.3 percent in 2027. The country ranks 23rd among sub-Saharan African economies by projected growth, while the region is expected to expand by 4.5 percent in 2026.

Ethiopia, for instance, is projected to grow by 9.2 percent in 2026 and 7.8 percent in 2027. Its population is slightly more than half of Nigeria’s, highlighting the difference between the size of an economy and the speed at which it is expanding.

Nigeria’s population of more than 240 million also puts its $386.7 billion GDP into perspective. The figure translates into an estimated economic output of roughly $1,600 per person, illustrating how a large national economy can still have relatively low output per capita.

“The country has the largest population in Africa, so an increase in the dollar value of its economy is encouraging, but we must also consider how that translates into economic output per person,” said Adeola Adenikinju, former president of the Nigerian Economic Society.

The distinction is important because aggregate GDP does not show how economic output is distributed across a population or whether households are experiencing improvements in income and purchasing power. A larger GDP may strengthen a country’s position in international rankings without necessarily improving the everyday economic conditions of its citizens.

Adenikinju said the improvement in Nigeria’s economic value was nevertheless positive, pointing to the contribution of the Dangote Refinery.

“The truth is that the Dangote Refinery has contributed significantly to the economy. It is helping to improve our trade balance, reduce dependence on imports, generate foreign exchange through exports and strengthen the country’s external position,” he said.

He added that government support was important in bringing the refinery to reality, arguing that private investment alone might not have delivered an industrial project of that scale.

The professor said policymakers needed to recognise when government intervention was necessary to support strategic industries and when market forces should be allowed to operate.

Nigeria’s increase comes amid a period of relative stability in the foreign exchange market following the volatility that accompanied the exchange-rate reforms introduced in 2023 and 2024.

After two years of sharp depreciation, the naira stabilised in the second half of 2025 and appreciated against the dollar. It subsequently exited Africa’s 10 worst-performing currencies in October 2025.

The improvement reflected stronger foreign-exchange liquidity, higher external reserves and policy measures aimed at improving the functioning of the FX market.

By November 5, the official exchange rate stood at N1,348.8 to the dollar, providing a firmer basis for converting domestic economic output into dollar terms than during much of the preceding two years.

External liquidity has also strengthened. The Central Bank of Nigeria reported that foreign-exchange reserves reached $50.45 billion in February, a 13-year high at the time. By October 8, reserves had risen to $55 billion, an 18-year high, providing a larger buffer against external shocks.

Nigeria’s improving external position and stronger financial-market performance have also contributed to a more favourable investment outlook.

The statement identified fuel subsidy removal and foreign-exchange market liberalisation as major structural reforms shaping the investment environment, although it described the early signs of recovery as a “fragile stabilisation”.

Nigeria’s stock market has also delivered strong returns. The market recorded a 74.7 percent year-to-date return in dollar terms as of October 6, the highest in Africa, according to African Markets.

The country also rose four places in Bloomberg Economics’ 2026 Investment Risk-O-Meter to become Africa’s eighth-most-investable market, ahead of Rwanda, Tanzania, Kenya and Namibia.

International rating agencies have similarly issued more favourable assessments. Moody’s Ratings revised Nigeria’s sovereign outlook to positive from stable in August 2026 while affirming its B3 rating. Fitch Ratings followed on October 9, revising its outlook to positive while affirming its B rating. S&P Global Ratings upgraded the country’s rating to B from B- in May, retaining a stable outlook.

Nigeria’s economic expansion provides another explanation for the increase in its estimated GDP.

The Federal Ministry of Finance’s macroeconomic dashboard reported real GDP growth of 4.43 percent year-on-year in the second quarter of 2026, compared with 4.23 percent in the corresponding quarter of 2025. The economy had grown by 3.89 percent in the first quarter.

Abimbola Adewale, a Lagos-based analyst, said nominal GDP increases should be treated cautiously because they do not adjust for price changes in the same way as real GDP. “There are indications that Nigeria’s economic growth could average more than four percent in 2026.”

The exchange-rate improvement matters because the West African nation’s GDP is measured in naira domestically but converted into dollars for international comparisons. When the naira strengthens against the dollar, the same amount of economic output translates into a larger dollar value, all else being equal.

However, currency appreciation is only part of the explanation. Economic growth, changes in domestic prices and revisions to national accounts can also influence nominal GDP estimates. The 33.1 percent increase in dollar-denominated GDP should therefore not be interpreted as equivalent real economic growth.

Across the 52 countries in the comparison, combined nominal GDP rose from $3.11 trillion in 2025 to $3.63 trillion in October 2026, an increase of about $520 billion.

Egypt and South Africa recorded the next-largest absolute increases after Nigeria. Egypt’s estimated GDP rose from $364.6 billion to $442.89 billion, while South Africa’s increased from $427.1 billion to $489.08 billion.

Algeria recorded the fourth-largest increase, adding $46.19 billion to reach $331.89 billion. The Democratic Republic of the Congo followed, adding $23.45 billion to reach $122.28 billion.

Among smaller economies, Guinea recorded a notable increase of $18.09 billion, or approximately 66.5 percent, taking its estimated GDP from $27.22 billion to $45.31 billion. Zambia’s GDP rose by $13.5 billion to $42.38 billion.

Of the 52 countries, 51 recorded higher October 2026 estimates than their 2025 values, while Sudan’s estimate declined from $39.72 billion to $30.86 billion.

For Nigeria, the challenge is to translate improving macroeconomic conditions into sustained real growth, job creation and higher household incomes. Exchange-rate stability can improve the predictability of business costs and investment decisions, but durable gains will also depend on productivity, infrastructure, access to finance and stronger output across sectors beyond oil.

The IMF’s October 2026 figures are estimates and projections rather than final national accounts and will be revised as new information becomes available.

Nigeria’s $96.2 billion increase is significant in the continental comparison. But the more consequential measure of economic progress will be whether the country can turn a higher dollar GDP valuation into faster growth, greater productivity and improved living standards for its approximately 240 million people.