Lagos- As oil rates plunge amid a tragic lack of security in the south, a massive humanitarian crisis in the north and a major power deficiency, Nigeria’s economy has collapsed within a 15-month time frame, losing the title of Africa’s biggest economy and number one oil producer.
Nigeria’s President Muhammadu Buhari on Thursday admitted in an Abuja press conference attended by U.N. representatives that the Nigeria had suddenly become a poor country.
He justified the collapsing economy with the plummeting oil rates, which when he rose to power was selling at a $100 per barrel and now had plunged to an all-time low of $37. Oil now averages between $40 and $45.
Nigeria’s economy depends by 70 percent on oil revenue. The oil giant lost its no.1 economy Africa title to South Africa. A recalculation using current exchange rates put South Africa on top because the rand has strengthened against the dollar.
Based on gross domestic product at the end of 2015 published by the International Monetary Fund (IMF), the size of South Africa’s economy is $301 billion at the rand’s current exchange rate, while Nigeria’s GDP is $296 billion. That is after the rand gained more than 16 percent against the dollar since the start of 2016, and Nigeria’s naira lost more than a third of its value after the central bank removed a currency peg in June.
Most countries do rebasing, updating the measure of the size of the economy, at least every three years or so, but Nigeria had not updated the components in its GDP base year since 1990.
Nigeria was assessed as the continent’s largest economy in April 2014 when authorities in the West African nation overhauled their GDP data for the first time in two decades. The recalculation saw the Nigerian economy in 2013 expand by three-quarters to an estimated 80 trillion naira.