Dollar Rates Blur Winner in Battle for Africa's Biggest Economy

(Bloomberg) -- The call on which African economy is the biggest depends on what exchange rate is used to measure Nigeria’s gross domestic product.

In dollar terms, the West African nation took the top spot in 2018, but that’s only when using the central bank’s official exchange rate of 306 naira to the greenback, which few Nigerians can access and some investors say is artificially strong. When doing the conversion with the more commonly used market-determined price for the naira, South Africa’s economy is the leader, even though it went through a recession last year.

Nigeria has been using a system of multiple exchange rates to try curb severe shortages of foreign exchange following the 2014 crash in oil prices. While there has been some convergence between official and market rates, the International Monetary Fund says the system should be scrapped to boost investment.

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