Nigeria set to overtake South Africa as Africa’s top contributor to global growth in 2026

The International Monetary Fund (IMF) projects that Nigeria will account for 1.5 percent of total global real GDP growth in 2026, placing it among the world’s top ten contributors and making it the only African country on the list.

In previous IMF outlooksSouth Africa had ranked ahead of Nigeria in Africa’s share of global growth, supported by its larger nominal economy.

Nigeria’s weaker performance over the past two to three years, affected by currency instability, inflation, and policy uncertainty, had limited its contribution.

The 2026 projections mark a shift in Africa’s economic landscape, with Nigeria regaining momentum following recent reforms, while South Africa continues to face headwinds from low growth, power shortages, and trade pressures.

Nigeria’s Growth Outlook

The IMF forecasts Nigeria’s real GDP will expand by 4.4 percent in 2026, easing slightly to 4.1 percent in 2027.

The Fund attributes this outlook to exchange-rate adjustments, the removal of fuel subsidies, and efforts to stabilise public finances, supported by expanding domestic demand.

Despite this growth, key domestic indicators; including inflation, exchange-rate stability, real wages, employment, and purchasing power, remain under pressure.

While Nigeria’s projected 1.5 percent contribution to global GDP growth signals progress, structural and economic challenges persist.

The IMF stresses that these projections are conditional and subject to revision, not a full endorsement of domestic policy success.

South Africa’s Growth Outlook

South Africa, Africa’s largest economy by nominal GDP, is projected to grow 1.4 percent in 2026 and 1.5 percent in 2027.

Growth remains constrained by power shortages, logistical bottlenecks, weak private investment, and high unemployment, which have weighed on industrial output and domestic consumption.

Chronic underinvestment in Eskom (power) and Transnet (logistics), along with trade frictions and tariff-related uncertainty with major partners, including the United States, have further limited growth, particularly in manufacturing and mining.

In comparison to Nigeria, South Africa’s larger, more mature economy means that modest domestic gains translate into smaller contributions to global growth.

Consequently, its projected real growth of 1.4 percent in 2026 is expected to contribute far less to global expansion than Nigeria, which is forecast to grow 4.4 percent over the same period.

Market Reaction

The projections have drawn attention from global business figures. Tesla CEO Elon Musk shared the IMF data on X, commenting that “the balance of power is changing.”

The remark was widely interpreted as highlighting a gradual shift in economic momentum away from Europe and the United States, historically driven by consumption, toward emerging economies such as China, India, and Nigeria, which are increasingly shaping global output.

What factors are driving Nigeria to overtake South Africa as Africa’s top contributor to global growth in 2026?

Nigeria Set to overtake South Africa as Africa’s Top Contributor to Global Growth in 2026

Nigeria is poised to become Africa’s leading economic powerhouse in 2026, surpassing South Africa in its contribution to global growth. This shift isn’t a sudden development, but the culmination of several factors aligning to propel the Nigerian economy forward. While South Africa has historically dominated the continent’s economic landscape, a combination of demographic advantages, strategic investments, and evolving economic policies are reshaping the narrative.

The Demographic Dividend: A Young and Expanding Population

A key driver of Nigeria’s ascendance is its rapidly growing population. With a median age of 18.9 years in 2026, Nigeria boasts a significantly younger demographic than South Africa’s, which has a median age of 29.8 years. This translates to:

* A larger workforce: A youthful population means a larger pool of potential workers, fueling productivity and innovation.

* Increased domestic demand: A growing population drives demand for goods and services, stimulating economic activity.

* Potential for long-term growth: A young population represents a sustained period of economic expansion as these individuals enter their prime working years.

This demographic dividend is a powerful engine for economic growth,offering Nigeria a ample advantage over its southern counterpart. Population growth projections indicate Nigeria will continue to expand at a faster rate, further solidifying this advantage.

Sectoral Growth: Diversification Beyond Oil

For decades, the Nigerian economy has been heavily reliant on oil revenues. Though, recent years have witnessed a concerted effort to diversify the economy, with promising results.Key sectors driving this diversification include:

* Financial Services: Nigeria’s financial sector is rapidly expanding, driven by fintech innovation and increased access to financial services. The rise of mobile money and digital banking is notably noteworthy.

* Telecommunications: A booming telecommunications sector, with high mobile penetration rates, is fostering connectivity and enabling economic activity across various sectors.

* Agriculture: Investments in agricultural technology and infrastructure are boosting agricultural output and reducing reliance on imports.Focus areas include rice production, poultry farming, and aquaculture.

* Manufacturing: While still developing, the manufacturing sector is showing signs of growth, particularly in food processing, textiles, and cement production. Government initiatives aimed at improving the ease of doing business are attracting foreign investment.

These sectors are not only contributing to GDP growth but also creating employment opportunities and fostering a more resilient economy. The diversification strategy is crucial for mitigating the risks associated with fluctuating oil prices.

Government Policies and reforms: Creating a More Favorable Business Surroundings

The Nigerian government has implemented several policies aimed at attracting investment and fostering economic growth. These include:

1. Ease of Doing Business Reforms: Streamlining business registration processes, reducing bureaucratic hurdles, and improving infrastructure are key priorities.
2. Investment Incentives: Tax breaks, subsidies, and other incentives are being offered to attract foreign direct investment (FDI) in key sectors.
3. Infrastructure Development: Significant investments are being made in infrastructure projects, including roads, railways, and power generation, to address critical infrastructure gaps. The Lagos-Kano railway modernization project, for example, is expected to significantly boost trade and economic activity.
4. Monetary Policy Adjustments: The Central Bank of Nigeria (CBN) has been implementing policies to stabilize the exchange rate and control inflation, creating a more predictable economic environment.

These reforms are gradually improving the business climate and attracting both domestic and foreign investment.

South Africa’s Challenges: A Slowing Growth Trajectory

While South Africa remains a significant economic force, it faces several challenges that are hindering its growth potential. These include:

* High Unemployment: South Africa’s unemployment rate remains stubbornly high, particularly among young people.

* Energy Crisis: Frequent power outages, caused by aging infrastructure and inadequate investment in energy generation, are disrupting economic activity.

* Political Instability: Political uncertainty and corruption are deterring investment and undermining investor confidence.

* structural Issues: Deep-rooted structural issues, such as inequality and skills shortages, are hindering long-term growth.

These challenges are contributing to a slowing growth trajectory for the South African economy, creating an prospect for Nigeria to take the lead.

Real-World Example: The Dangote Refinery

The Dangote Refinery, a 650,000 barrels-per-day integrated refinery and petrochemical complex, exemplifies Nigeria’s potential for large-scale industrial development. this multi-billion dollar project, upon full operation, will not only reduce Nigeria’s reliance on imported petroleum products but also generate significant export revenues and create thousands of jobs. It’s a tangible demonstration of the country’s capacity for aspiring infrastructure projects and its commitment to economic diversification.

Benefits of Nigeria’s Economic Leadership

Nigeria’s emergence as Africa’s top economic contributor will have several positive implications:

* Increased Regional Influence: A stronger Nigerian economy will enhance its regional influence and leadership role in Africa.

* Attraction of Investment: Nigeria will become an even more attractive destination for foreign investment, boosting economic growth and creating jobs.

* Improved Living Standards: Economic growth will lead to improved living standards for Nigerians,reducing poverty and inequality.

* Greater Economic Stability: A diversified and resilient economy will be better equipped to withstand external shocks and maintain economic stability.

Practical Tips for Businesses Operating in Nigeria

For businesses looking to capitalize on Nigeria’s economic growth, consider the following: