Nigeria now has the largest economy on the continent following the release of much-anticipated preliminary rebased GDP statistics. The previous base year of 1990 has become outdated due to changes in the structure of the economy.
The National Bureau of Statistics (NBS) now estimates Nigeria’s GDP at N80.22trn in 2013 compared to N42.4trn prior to the rebasing. The number of economic activities surveyed for the purposes of the calculation of GDP increased to 46 from 33 previously. Better coverage (including of the informal sector), the inclusion of new industries, and methodological improvements led to significant increases in the contribution of the services sector, manufacturing, construction, and water & electricity. On the other hand, value added by the agricultural and the oil & gas sectors declined notably relative to GDP.
The agricultural sector contributed 35% to GDP prior to rebasing, but is now only estimated to account for 22% of GDP. Meanwhile, the services sector’s contribution increased from 29% of GDP to 52% of GDP, with the telecommunications sector rising from 0.9% of GDP to 8.7% of GDP. The manufacturing sector is now estimated to contribute 6.8% to GDP, compared to just 1.9% previously, while the oil & gas sector’s contribution has been revised down to 14.4% from 32.4% before rebasing. Final rebased GDP figures are scheduled to be released by June 2014. The NBS plans to rebase GDP figures every five years to ensure that estimates remain up-to-date.
WHY DO WE CARE? The most important benefit of the rebasing exercise is that it provides a more accurate estimate of the structure and value of goods produced in Nigeria. The fact that many industries are larger than previously thought may pique investors’ interest, while the psychological boost of overtaking South Africa could give the country more influence on the world stage. Even so, Nigeria remains far behind South Africa when it comes to average wealth levels, quality of infrastructure, governance, and financial market development. And even though Nigeria’s GDP per capita is now estimated at close to $3,000 from $1,700 previously, poverty, inequality, and the inability of a large proportion of the population to benefit from economic growth, will remain key concerns.
Analyst: Melissa Verreynne