Nigeria remains Africa’s No. 3 economy, but naira and poverty drag it down

Nigeria is projected to remain Africa’s third-largest economy in 2026, with a gross domestic product (GDP) of $386.67 billion, according to the International Monetary Fund’s (IMF) October 2026 World Economic Outlook, Business Insider Africa reports.

South Africa leads with $489.08 billion, followed by Egypt at $442.89 billion. Nigeria trails South Africa by about $102.41 billion and Egypt by $56.22 billion. It was once the continent’s largest economy, especially after a 2014 GDP rebasing expanded the estimated size of its economy.

Years of naira depreciation have cut the dollar value of Nigeria’s output, allowing South Africa and Egypt to move ahead. The 2023 foreign exchange reforms under President Bola Tinubu let the naira adjust more freely, but also raised the local cost of imports, foreign debt and business expenses.

Even so, the IMF expects real GDP to grow by 4.2% in 2026, outpacing South Africa but trailing Ethiopia, Tanzania and Uganda. Growth is supported by oil, financial services, telecommunications, agriculture and the digital economy.

Structural problems persist. Unreliable electricity, infrastructure gaps, high financing costs and weak purchasing power continue to hurt investment. The Dangote Refinery could reduce dependence on imported fuel and ease demand for foreign exchange.

In June 2026, the IMF acknowledged progress from reforms but warned that living conditions remain difficult for many households. It put poverty at an estimated 63% under Nigeria’s national measure.