Latest preliminary numbers emerging from Nigeria’s Gross Domestic Product rebasing exercise are already suggesting that the nation’s economy could show as much as a 65 percent uplift in size, when the long awaited report is released.
This would show as much as $432 billion in GDP size, placing Nigeria as the largest economy in Africa.
The latest figures are way higher than earlier projections, suggesting that the Nigerian economy has been hugely underestimated over the years.
Reliable sources monitoring the exercise confirmed to BusinessDay that the figures which are still being validated, show an over 70 percent increase at the moment, but could on a worst case scenario, stay around 65 percent when the figures are filtered. The exercise is expected to be concluded in about four weeks time.
According to a source, this massive upward review is being pushed by almost all the sectors but major contributions are particularly seen in the services, sector, among others.
He noted that the numbers, yet to be validated, are showing major shifts in the structure of the economy – major sectors like agriculture, wholesale and retail trade are losing dominance in their contributions to GDP even though they have also expanded in absolute numbers.
The numbers also show that services, another major component of the GDP, has been hugely underestimated in many years but now shows significant share in output.
Another interesting finding, according to the source, is that entertainment, has been hugely underestimated in the present GDP estimations but has shown an over 200 percent jump in the current recalculations.
“Our records show that we are underestimating the entertainment sector by over 200 percent from the numbers that we are seeing so far,” he told BusinessDay.
Using the emerging numbers as a yardstick, the new rebased figures would show that Nigeria’s economy has not just overtaken South Africa at around $370 billion, but has done so with an overwhelming gap.
One significance of the new figures is also that the GDP per capita could increase to over $2,600 from around $1,700, taking Nigeria into the middle income class.
A possible reduction of growth rates to 5 – 6 percent from 6 – 7 percent had been projected, but analysts argue that this is unlikely, since Nigeria still has a huge potential to grow.
They think that the decline in growth is only possible if government halts ongoing reforms – especially in the power sector, which is expected to trigger a boom in economic activities.
Nigeria is rebasing its GDP for the first time 23 years, to capture input from various sectors of the economy and align them with present realities. The new base year is 2010.
The official release date is likely in February, Yemi Kale, Statistician General of the federation confirmed to BusinessDay last week. The new date is coming after several deadlines to implement the recalculations had been missed.
While Kale could not speak to the numbers that are emerging, since they are still being verified, he confirmed that the work is almost completed and that what is happening now is basically verification and validation. Institutions like the World bank, IMF and ADB, which have been working with the bureau in the exercise, are also taking part in the validation process.
Kale said, “The first level of analysis has been completed but the numbers are still going to be subjected to a lot of analysis. We have a rough idea of what the numbers look like.
“But so far, the numbers we are looking at are showing significant structural shifts in the economy, from what we thought. They are also revealing significant underestimation in almost all the sectors.
“I’m very impressed with the figures and work done so far, and our experts both locally and internationally have expressed satisfaction with what they have seen. This is a very important exercise and we are focused on ensuring that this time around, we get it right.
“From the preliminary figures that we have seen so far, which are still subject to validation and verification, I can only state that it is very clear that Nigeria’s GDP has been underestimated significantly but I cannot comment on the extent of under-estimation at this point.”
The head of statistics informed that the economy is no longer going to be dominated solely by agriculture, wholesale and retail trade. “They are still large in terms of absolute numbers, but their share of GDP is not going to be as domineering as before.”
According to him, agriculture; wholesale and retail trade; crude, petroleum and natural gas contribute 70 percent of the GDP in the current estimates, “but what we are seeing is that the shares of those three are going to be significantly less than 70 percent.
He also confirmed that the bureau has increased the number of activities used for GDP computation, from 33 presently to 46 in the rebased GDP.
Nigeria uses three broad sectors to calculate its GDP- Agriculture, (which includes, crop production, forestry, fishery, and livestock); Industry, (including oil and gas, manufacturing, mining etc); and Services- (hotel and restaurants, real estate, education, transport, entertainment, telecommunications, banking and finance etc).
Nigeria’s rebasing exercise has attracted a lot of interest, both locally and internationally.
The head of statistics had assured severally that the data bureau would be as transparent as possible in this exercise.
“When the numbers come out, we are going to publish full details of data sources. We are going to explain to everybody what has changed, and explain why the movement in different sectors.
“And that is what is delaying the release of the numbers- we want to be as transparent as possible,” he stated.
