Business
Nigeria set to be Africa’s largest economy
JOHANNESBURG – South Africa could soon lose its status as Africa’s biggest economy to Nigeria, but in the race to be the continental powerhouse, being biggest may not be everything.
Nigeria, Africa’s top oil producer, will complete a rebasing of its gross domestic product (GDP) by next month, its statistics office says, which economists estimate could expand the size of its economy by between 20 and 60 percent.
This exercise, which has missed a string of previous deadlines, looks set to transform Nigeria into the continent’s most important economy measured in terms of GDP size.
With a current economic output of around $290 billion, the West African country – whose population is more than three times the size of South Africa’s 51 million – already boasts faster growth.
While it has expanded by an average of seven percent annually over the past decade, South Africa has averaged three percent growth, held back by rigid employment laws and recurring labour unrest.
But even if it slips from the top spot, South Africa can still claim the crown of being the more diversified and sophisticated economy. Its financial markets are among the world’s most advanced and while its $350 billion economy is smaller than Mexico and Indonesia, its stock market is larger.
For Nigeria, the aim of the rebasing exercise is to change the base year for calculating output to 2008 from 1990 to reflect sectors of the economy that have since grown in importance, such as telecoms and IT.
However, it is still heavily reliant on oil exports, accounting for some 80 percent of government revenue, and an enlarged GDP will do little to immediately improve life for nearly 100 million of its citizens who live on less than $1 a day.
While agriculture and power sector reforms would improve Nigeria’s fortunes, turbulent politics and a resilient and bloody Boko Haram insurgency in its north take some of the shine off its positive growth story.
Whenever it happens, Nigeria overtaking South Africa as Africa’s economic top dog is “kind of everything and nothing,” said David Cowan, Citigroup’s Africa economist.
“It is everything because you are then the largest economy in Africa so there’s a lot of kudos attached to that. But the reality remains that, on the ground, for every Nigerian there’s no difference … South Africa can still call itself the most sophisticated economy in Africa.”
South Africa’s expected retreat in the GDP ranking will nevertheless be a big psychological adjustment for a country that has often taken its lead position for granted.
It may also have geopolitical implications, raising questions about whether South Africa should be the sole African representative in the G20 and the Brics group of the most powerful emerging economies, alongside Brazil, Russia, India and China.
Nigeria has been included in the freshly coined Mint group of emerging economic giants, along with Mexico, Indonesia and Turkey.
INVESTOR APPEAL
Michael Power, investment strategist at Investec Asset Management, likens South Africa’s situation to that of the United States, whose economic power is expected to be superseded by faster-growing and more populous China eventually.
“Just as the United States is contemplating the prospect of what it’s going to be like to be number two in the world, South Africa (will) have to contemplate what it’s going to be like to be number two in Africa,” he said.
The rise of Nigeria has taken many South Africans by surprise, said Kevin Lings, chief economist at Stanlib, as the country, burdened with an image of corruption and violence, is often portrayed negatively in the media.
“Every time I’ve raised this discussion in the last year, that it looks inevitable that Nigeria will become Africa’s biggest (economy), most audiences are shocked,” he said.
“People have had a certain mindset about the role of South Africa. They haven’t updated that in terms of more recent developments.”
The GDP rebasing is likely to enhance Nigeria’s appeal to investors looking for high growth and alternative markets, while South Africa, with its anaemic economy and faltering currency may appear less compelling, analysts say.
“South Africa’s good infrastructure and sophisticated services industries provide a much easier business environment for investors than Nigeria, but relatively low growth rates, market size and saturation are areas of concern that may turn investment to Nigeria,” said Dianna Games, chief executive of business advisory Africa @ Work.
Still, Simon Freemantle, a senior analyst at Standard Bank, believes multinationals looking for a base from which to expand into the continent will continue to choose South Africa given its effective financial and legal systems.
For investors who may need to seek redress when things go wrong, its enduring, more independent and transparent institutions are a plus.
Decades from now, the gap in size between the two economies will be even wider. By 2050, Nigeria’s GDP will be just under $6 trillion in today’s money as its population heads towards 400 million, predicts Charles Robertson of Renaissance Capital.
South Africa, by contrast, would have 57 million people and a $1.5 trillion economy.
Yet that would give Nigeria a per capita GDP of about $15,000, to South Africa’s $27,000, underscoring the huge development challenges faced by the former.
“Even with the very good trajectory that we see for Nigeria it’s going to take a long time for 170 million people to benefit from this,” said Robertson. “It’s the same in China. You’ve still got hundreds of millions earning virtually nothing and that’s after an extraordinary 30 years.”
– EYE WITNESS NEWS
The Nigerian authorities have been called upon to focus on strengthening domestic refining capacity.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made the call in a communiqué issued at the end of the three-day PENGASSAN Energy and Labour Summit (PEALS 2026).
It stressed the need for adequate protection for refineries operating in the country.
The PENGASSAN said Nigeria must reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products by creating an environment that supports domestic refining and other value‑adding activities.
The communiqué, signed by the union President, Festus Osifo, and General Secretary, Jerry Amah, stressed the need to protect refineries, including Dangote Refinery and Waltersmith Refinery.
The association said the expansion would enable Nigeria to retain a greater share of the value generated from its petroleum resources while creating jobs, conserving foreign exchange and stimulating industrial development. PENGASSAN linked the growth to wider opportunities in petrochemicals, gas processing and other downstream activities.
READ ALSO: Umar Cautions Against Irregular Policies in Nigeria’s Oil Industry
The communiqué reads in part: “The summit called for sustained policies and investments to expand Nigeria’s domestic refining capacity and reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products. The need to protect refineries (such as Dangote Refinery, Waltersmith Refinery, etc.) within Nigeria’s jurisdiction was emphasised.
“Nigeria must progressively retain more value from its petroleum resources through domestic refining, petrochemicals, gas processing and other value‑adding activities capable of generating employment, conserving foreign exchange and stimulating industrial growth.
“Ultimately, the strength of Nigeria’s oil and gas industry will not be measured merely by the resources beneath the ground, but by the projects delivered, the value created, the Nigerian capabilities developed, the decent jobs sustained and the prosperity generated for the Nigerian people.”
The association also warned that abrupt policy changes, overlapping mandates, repetitive approvals and conflicting directives increase the cost of doing business and weaken Nigeria’s competitiveness for global energy capital.
The PENGASSAN called for faster regulatory approvals, digitalised processes and clearer timelines, arguing that the effectiveness of regulation should be measured by its impact on investment, production, government revenue, job creation and national value rather than simply by the number of licences or approvals issued.
On gas, the PENGASSAN advocated an integrated approach to developing Nigeria’s more than 215 trillion cubic feet of proven reserves, including investments in processing facilities, pipelines, storage, LNG, LPG and CNG infrastructure. It said gas should be deployed more aggressively for power generation, manufacturing, transportation, fertiliser and petrochemical production.
The association also urged stronger protection of workers’ rights, occupational safety and employment during mergers, acquisitions, divestments and asset transfers, saying sustainable investment requires skilled and fairly treated workers and that increased production must not come at the expense of workers’ lives and wellbeing.
In addition, the PENGASSAN said the next phase of Nigeria’s petroleum industry must focus on execution with measurable targets and clearly assigned responsibilities to ensure policies translate into projects, production, investment and sustainable employment.
Two key stakeholders in Nigeria’s oil and gas industry have resolved to work closed to unlock three million barrels per day (bpd) of crude oil by 2030.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), according to the new President of former, Comrade Bosun Olabiyi-Agoro, would be working closely with each other to attain the objective.
He made the disclosure on Wednesday while on a visit to the NUPRC corporate headquarters.
The Head, Media and Corporate Communications, NUPRC, Eniola Akinkuotu, who made the disclosure in a statement, also credited the PENGASSAN President with declaring that inasmuch as the union is open to negotiations, issues bordering on the rights of workers to freely associate and join the union are non-negotiable.
READ ALSO: Tinubu Banks on NLNG Train 7 to Boost Nigeria’s Gas-led Economy
He made it public that issues surrounding contract staffing will be one of the key issues his administration will address.
“The President of Nigeria has an ambition which he runs through the CCE which is to make sure that by 2030 we are able to produce three million barrels per day. All of us have to work to make that happen. It will be our happiness to make sure that that target is actually attained. We can assure you that we are here to collaborate. We will be very reasonable,” Olabiyi-Agoro assured.
On her part, the Commission Chief Executive, Oritsemeyiwa Eyesan, said the President Bola Tinubu-led Federal Government had been working assiduously to increase production as evidenced by the latest executive order which is targeted at deep offshore investments. She noted that production had risen from a low of 1.1mmbopd a few years ago to an estimated 1.755mmbopd in 2026.
Seeking the support of PENGASSAN to achieve this target, Eyesan, said industrial stability remained critical to hitting higher production targets.
“As you settle into your new role, be assured that the commission will give you 150 per cent cooperation. In addition to the support we will give you, we want to ask that we work very closely to actualise government objectives.
“We want to grow production from our current level to 3 million barrels in 2030. For gas, we are still doing under 8bcf and we want to grow that to 12bcf by 2030. So, let’s make that happen,” she stated.
As the multi-billion-dollar Nigeria LNG Limited (NLNG) Train 7 Project reaches more than 90 percent completion, President Bola Tinubu has described it as critical to Nigeria’s gas-led economic agenda.
According to Tinubu, the successful delivery of the project would help expand Nigeria’s gas exports, create jobs, deepen local capacity and strengthen investor confidence in the country’s oil and gas sector.
The President spoke at the State House, Abuja, on Thursday when he received an NLNG delegation led by its Managing Director and Chief Executive Officer, Adeleye Falade.
The delegation briefed the President on the progress of Train 7, prospects for further expansion and challenges affecting the company’s operations and contributions to the national economy.
The discussions also covered the pricing and accessibility of liquefied petroleum gas (LPG), trucking along the Bonny-Bodo Road corridor, NLNG’s contribution to public revenue, its investments in the Bonny-Bodo Road and other social-impact projects, and the need for a more enabling business environment.
Tinubu congratulated Falade on his appointment, describing his assumption of office as coming at a defining period for the NLNG and Nigeria’s gas development ambitions.
Tinubu expressed the view that the completion of the Train 7 project must translate the country’s vast gas reserves into jobs, increased exports, industrial growth and long-term economic value.
“I congratulate you, Leye, on your appointment. Train 7 is at the centre of our national gas agenda. Its success matters not only to NLNG, but to Nigeria’s economic future,” the President said.
Tinubu commended the progress recorded on the project, describing Train 7 as a benchmark for project delivery, partnership, Nigerian content development and investor confidence.
He assured the NLNG management that the Federal Government would continue to improve the business environment, provide greater regulatory clarity and remove bottlenecks affecting major oil and gas investments.
“Nigeria is open for business, but it must be business that creates value at home — building capacity, supporting communities, protecting the environment and contributing to national prosperity. NLNG must continue to lead by example,” he added.
Responding, Falade thanked the President for his administration’s support for NLNG and the broader gas sector, assuring him that the company remained committed to the safe and successful completion of Train 7.
“With the project now over 90 percent complete, our immediate priority is to deliver the remaining work safely, efficiently and to the required quality, while preparing the plant for reliable and sustainable operations,” Falade said.
He said the project would increase Nigeria’s LNG production capacity, support export growth, create opportunities for Nigerian workers and businesses, deepen local participation and generate greater long-term value from the country’s gas resources.
Falade also restated NLNG’s commitment to supporting the domestic LPG market and improving access to cleaner cooking fuel for households and businesses.
He, however, called for coordinated action among the Federal Government, regulators and industry operators to increase domestic supply, improve storage and distribution infrastructure, eliminate avoidable costs and create a more transparent and efficient LPG market.
“Improving LPG accessibility is important to Nigeria’s energy transition and to the wellbeing of millions of Nigerian households. NLNG remains committed to supporting the domestic market, but improving affordability requires coordinated action across the entire LPG value chain,” he said.
The NLNG chief also sought the President’s intervention in addressing ease-of-doing-business challenges, particularly the proliferation of taxes, levies, charges and regulatory demands imposed by different tiers and agencies of government.
According to him, multiple and sometimes conflicting fiscal and regulatory obligations raise operating costs, create uncertainty and could discourage existing operations and future investments.
Falade assured the President that NLNG was ready to align more closely with the Federal Government’s development agenda and explore additional areas of partnership.
The meeting ended with a renewed commitment by the Federal Government and NLNG to sustain momentum on Train 7 as the project enters its final phase.
Both sides also agreed to strengthen their partnership to support the project’s successful delivery and NLNG’s broader contribution to Nigeria’s gas development and economic growth.
2027: ‘Do I Look 80’ — Atiku Fires Back at Critics Over His Age
‘I’ll Control Him’ — Ayra Starr Reveals What Happens If She’s Richer Than Her Partner
Norway’s King Harald Dies at 89, Son Haakon Becomes King
‘Your Problem Is That a Son of a Nobody Was Invited’ — VDM Fires Back at Falana
PENGASSAN Urges Strategic Focus on Local Refining Expansion
Umar Cautions Against Irregular Policies in Nigeria’s Oil Industry
Trump’s Family Unveils New Cryptocurrency Platform
Senate Denies Receiving Petitions Against Tinubu’s Ambassadorial Nominees
Dangote Cement Lights Up Benue Host Communities With CSR Initiatives
Reps Recommend 3-year Jail Term For Aviation minister
Tems Sets New Record On Billboard Hot 100 Chart
