South African economy falls to No 2 on continent behind Nigeria, but Pretoria is unfazed
Nigeria now continent's biggest economy but in terms of GDP per capita, South Africa remains far ahead and expects to retain that position
Nigeria's claiming of the title of Africa's biggest economy is being shrugged off by South African economists, who say their nation remains the driving force of the continent.
The change came on Sunday after the Nigerian government announced a long-overdue rebasing of the country's GDP.
"South Africa will remain one of the important economies of the continent, though this rebasing will be a significant step in establishing Nigeria as a true African powerhouse," said Investec portfolio manager, Roelof Horne.
Economist Dennis Dykes, at South Africa's Nedbank, said Nigeria's new position as Africa's largest economy should be "viewed positively".
"It's important that economies are measured accurately ... it gives potential investors a good picture of activity," he said. "The new figures should help South African investors identify new opportunities in Nigeria, especially in areas that were previously not factored in."
Dykes said South Africa's US$7,508 GDP per capita, far higher than Nigeria's US$2,688, was still the most important measure of the economy.
"Being Africa's number one is definitely a great confidence booster for Nigeria, but it won't change much," he said.
Nigeria's new GDP calculations take into account changes in production and consumption since the last time the exercise was carried out in 1990, including an added focus on communications and the movie industry.
The data indicated that the economy grew to US$453 billion in 2012, instead of US$264 billion as measured by the World Bank for that year.
South Africa's economy was at US$384 billion in 2012, according to the World Bank.
Estimates for 2013 indicated growth to US$510 billion, Nigeria's chief statistician, Yemi Kale, said in the capital, Abuja.
"Nigeria has moved to be the largest economy by GDP size in Africa and has moved to be the 26th largest economy in the world," Finance Minister Ngozi Okonjo-Iweala said.
"On a per capita basis, Nigeria is number 121 in the world. So, we have a total GDP size where we have moved up to 26th."
The widely expected results are based on calculations taking into account a range of new sectors and industries that were negligible or non-existent in 1990.
They include the mobile-telephones market, Africa's largest, music and the hugely popular film industry, known as Nollywood.
Nollywood, for example, was now worth US$5.1 billion, or 1.2 per cent of GDP.
"The rebased GDP numbers imply that the level of economic activity is much higher than previously reported," the finance ministry said.
"It indicates a clearer picture of Nigeria's economic landscape, and the significant opportunity for growth and wealth creation in the Nigerian economy."
With 170 million people, Nigeria is about three times the size of South Africa and has enjoyed high rates of growth, notwithstanding widespread corruption, poor governance, rampant oil theft and a raging Islamist insurgency in the north.
According to the IMF, Nigeria averaged 6.8 per cent annual growth from 2005 to 2013 and was projected to grow this year at a rate of 7.4 per cent.
That compares to a little over 5 per cent between 2005 and 2008-9 in South Africa, which has struggled to go beyond 3.5 per cent since.