Egypt has surpassed South Africa to become Africa’s second biggest economy.
The International Monetary Fund in its latest economic outlook report noted that Egypt overtook South Africa because of the depreciation of it currency: the rand.
The rand depreciated by more than 50 percent last year.
Nigeria remains the continents biggest economy. The country overtook South Africa in 2014 after it rebased its economy to become the biggest economy on the continent.
Though it has fallen behind Egypt, South Africa still remains the “continent’s most developed economy,
and has a more diversified economic base than the Egyptian economy… its fall from first and now second place amongst the continent’s giants is of great concern,” KPMG Financial Risk Manager Christie Viljoen said, adding “especially as this development is largely attributed to weakness in the rand that, in turn, has largely been as a result of domestic issues”.
South Africa, Nigeria, and Kenya remains investors’ favoured destinations in 2015; with 36 per cent of the startups that raised funding based in South Africa, 24 per cent in Nigeria, and Kenya in third place with 14.4 per cent of deals, according to disrupt Africa African tech startups funding report 2015.
The top three highest amounts of funding also went to these three locations. South African startups raised in excess of US$54,568,000 throughout the year; Nigerian startups received over US$49,404,000; and Kenyan startups brought home over US$47,365,000.
Meanwhile, according to a KMPG report, Egypt’s nominal US dollar GDP expanded by an average of 7.5% p.a. during 2012-15. The Egyptian pound’s depreciation during 2012-15 was at a notably slower pace compared to that of the rand. Since early in 2011, the Central Bank of Egypt (CBE) has tightly managed the pound, resulting in a milder depreciation compared to the free-floating South African currency.
This contributed to Egyptian GDP eclipsing its South African counterpart during 2015. Were it not for the rand’s slump, South Africa would not have surrendered its second place during 2015.
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