Nigeriaâ€™s economy is now set to be announced mid-day tomorrow by the Coordinating Minister for the Economy, Mrs. Ngozi Okonjo-Iweala as the biggest in Africa and this is official.
She will be backed by the Chief Statistician of the Federation, Mr. Yemi Kale as well as IMF and World Bank officials who were as at last night, validating the figures.
The size of the nationâ€™s economy has now displaced that of South Africa in terms of GDP.
The country’s rebased GDP is now about $432bn (Â£260bn) compared with South Africa’s GDP of $370.3bn at the end of 2013.
This is according to the much-anticipated preliminary rebased nominal Gross Domestic Product (GDP) estimates for the Nigerian economy.
Sources confirmed to THISDAY that Nollywood, the nationâ€™s striving movie; the music industry and the telecommunication sector, all combined to push Nigeriaâ€™s economy over that of South Africa.
The National Bureau of Statistics (NBS) hinted that the new base year for arriving at this new rebased nominal GDP was 2010. It was based on the latest system of national accounts 2008 from 1993 previously; as well as the international standard of industrial classification 4.0 from the previous 3.1.
The list of activities captured under the new standard increased to 46 from 33 previously.
The addition areas of interest included in the exercise are telecommunications and information services, publishing, motion picture, sound recording and music production and broadcasting.
Others include arts, entertainment and recreation, financial institutions and insurance as well as real estate.
Also included are professional, scientific and technical services; administrative and support services; public administration, education, human health and social services and other services.
This rebasing has allowed for more accurately- reflected changes in the Nigerian economy in the last two decades.
The United Nations defines rebasing as the “process of replacing present price structure (base year) to compile volume measures of GDP with a new or more recent base year.”
Nominal GDP is the sum value of all produced goods and services at current prices. This measure does have its uses. But real GDP is more widely used and is slightly different. It’s the sum value of all produced goods and services at constant prices and is useful for showing how the economy changes in size and – with some further manipulation – how average living standards change over time. The constant prices are the ones from the base year.
Rebasing is necessary simply because economies change over time. Different goods are produced and new technology is introduced.
So, rebasing means that the statistics give the most up-to-date picture of an economy as possible. Most country do it at least every three years or so. But Nigeria’s old GDP base year is 1990.
â€œBack then, the country (Nigeria) had one telecoms operator with perhaps 300,000 phone lines. Now it has a whole mobile phone industry with tens of millions of subscribers. So without rebasing the statistics from the mobile phone sector, it would remain somewhat under-represented.
â€œLikewise, 24 years ago, there was only one airline. Now there are a whole plethora, the information of which needs to be captured better in the national figures,â€ reports the BBC.
Will growth in Nigeriaâ€™s GDP change anything?
To the man in the street, no. It will make no difference at all. But it’ll be of some interest to economists. Certain ratios will change. For example, the debt to GDP ratio will fall.
It will also make the country a more attractive investment destination in Africa. It will also enable the country to project its economic power in international affair and boost its campaign for a permanent seat in the security council if and when the expansion is implemented.
But some economists would point out that Nigeria’s economic output is underperforming because at 170 million people, its population is three times larger than South Africa’s.
And on a per-capita basis, South Africa’s GDP numbers are three times larger than Nigeria’s. So, while Nigeria can claim the crown of Africa’s largest economy, there are certain caveats.
Will Nigeria wait another 24 years before doing this again? It is hoped not. â€œIt is hoped that this will now become a more regular thing. Also, donors are keen for more African countries to do this regularly because it enables them to make better decisions when it comes to aid.
â€œThe United States has a system whereby GDP is constantly rebased, which gives the most up-to-date picture as possible. Given the resources most national statistics department have, this is just not possible, but at least every four years would be the target,â€ reports the BBC