The recent movements in the dollar-naira exchange rate, following the removal of the currency peg, has stimulated ongoing debate in the media that South Africa has regained its position as the largest economy in Africa. The prevailing notion is that the depreciation of the naira and simultaneous appreciation of the rand against the US dollar implies that South Africa’s GDP has surpassed that of Nigeria. However, this argument needs some re-examination, given that the value of the GDP (in current US$) is sensitive to the choice of exchange rate and GDP figures used for its computation. This piece situates the present argument in the context of recent commodity market crisis and its implications for the two largest economies in Sub-Saharan Africa
Policy Brief & Alerts
Nigerias Bonny light price declined by 7.1 percent from $40.19 per barrel on March 24, 2016 to $37.32 per barrel on April 1, 20162. OPEC weekly basket price also decreased by 3 percent from $35.81 per barrel to $34.74 per barrel within the same period3. The remerged downward trend in crude oil price is traceable to concerns over the likely failure of the oil production freeze deal between Saudi Arabia and Iran4. The outcome of the oil production freeze meeting which is scheduled to hold on April 17, 2016, will give further direction for oil supply regulation.
Power sector statistics indicates a huge decline in power generated in the week under review (June 23, 2017 to June 30, 2017). Power generated, attained a peak of 4,305 MW on June 23, 2017 but fell significantly by 33.1 percent to approximately average of 3,000 MW as at June 30, 2017. The huge decline is attributable to continued poor payment and inability of most GENCOs to pay for gas supply and a system collapse. Consequently, power sector lost huge prospective funds; and daily power supply reduced to 4.5 hours per day7. Going forward, improvement in energy supply is critical to domestic production, job creation, and diversification agenda of the government.