The Nigeria government announced a long-overdue rebasing of the country's gross domestic product. The released rebased Gross Domestic Product for the country confirmed that Nigerian economy had surpassed South Africa and now stands as the biggest on the continent.The last time the exercise was carried out was in 1990. The new calculations take into account changes in production and consumption including an added focus on communications and the movie industry. The data indicated that the economy grew to $453 billion in 2012, instead of $264 billion as measured by the World Bank for that year. The same year, South Africa's economy was at $384 billion. Estimates for 2013 indicated further expansion to $510 billion. Nigeria has moved to be the largest economy by GDP size in Africa and has moved to be the 26th largest economy in the world. On a per capita basis, Nigeria is number 121 in the world. The next rebasing is planned for 2015, with the results out in 2016.
It is important that economies were measured accurately. It gives potential investors a good picture of activity. Being Africa's number one is definitely a great confidence booster for Nigeria, but it will not change much. GDP per capita is still the most important measure of the economy. South Africa's $7,508 GDP per capita, higher than Nigeria's $2,688 up from $1,555 in 2012 -- taking the Nigeria from 135th position in the world to 121st. Economists have warned not to take the new figures at face value, given that South Africa -the continent’s only G20 member -- has fewer people and is miles ahead in areas such as infrastructure and governance. With 170 million people, Nigeria is about three times the size of South Africa and has enjoyed high rates of growth, notwithstanding widespread corruption, poor governance, rampant oil theft and a raging Islamist insurgency in the north. South Africa will continue to remain the most competitive economy, despite Nigeria's new status.
The widely expected results are based on calculations taking into account a range of new sectors and industries that were negligible or non-existent in 1990. They include the mobile telephones market -- Africa's largest -- music and the hugely popular local film industry, Nollywood. For example, Nollywood was now worth 853.9 billion naira ($5.1 billion, 3.7 billion euros) or 1.2% of GDP.
The rebased GDP numbers imply that the level of economic activity is much higher than previously reported. The economy is becoming more driven by the service sector. It indicates a clearer picture of Nigeria’s economic landscape, and the significant opportunity for growth and wealth creation in the Nigerian economy.
The New GDP and Ordinary Nigerians
The rebased GDP figure will improve the country's balance sheet and its credit rating and promote it from being a low-income economy. it would help foreign investors to better understand the size and components of the nation’s economy. But for ordinary Nigerians, most of whom still live on less than $2 a day; the rebasing is likely to have little effect.
The new GDP figure had increased Nigeria’s per capita income from $1,500 in 2012 to $2,999.41, and this had classified the nation as a lower middle class income country. Nigeria still faces an immense challenge in terms of infrastructure deficits: Slow ports, bad roads and poor electricity supply. The new GDP would not change the pump price of fuel, the value of the Naira or conjure up more jobs; the people in Nigeria still buy goods at the same prices they bought them before the figures changed.
Nigerians are more interested in the direct impact of the new GDP on individuals. The man on the street wants to feel the effect of national statistics – improved working conditions, increased job creation, and wages as well as increased tax revenue from increased economic activities. The exercise would only be meaningful if it has positive impacts on the living standards of the people.