Economy now more diversified as rebasing pushes GDP to $510bn

Nigeria showed a path to becoming a G-20 economy after its rebased GDP figures showed an economy that is more diversified than earlier thought, and surpassing South Africa’s to become the largest on the continent, and 26th in the world.

The new rebased data shows that the size of the Nigerian economy is now estimated at N80.3 trillion ($510 billion) for 2013, Yemi Kale,statistician-general, National Bureau of Statistics (NBS), said at a press conference to announce the results in Abuja, yesterday.

The data showed diverse sectoral economic activity including Agriculture which contributed N17.26 trillion, Trade N13.35 trillion, Crude Petroleum and Natural gas N11.55 trillion, Telecoms N6.97 trillion, Real estate N6.43 trillion, Manufacturing N5.47 trillion, Food Beverages and Tobacco N3.70 trillion, Finance and Insurance N2.64 trillion, and motion picture, sound recording and music production N1.13 trillion.

The nine sectors listed above contributed 85.4 percent of total GDP.

 “The economy’s structure has changed significantly,” said Kale. “We are witnessing a historic rebasing of our GDP which was not done for more than two decades,” he added.

The NBS recalculated the value of GDP based on production patterns in 2010, increasing the number of industries it measures to 46 from 33 and giving greater weighting to sectors such as telecommunications and financial services.

This country’s new updated GDP statistics is being done for the first time since 1990 and compares with the World Bank’s 2012 GDP figures for South Africa of $384.3 billion.  “Nigeria is now officially the largest economy on the continent, which will make it increasingly harder for companies looking at Africa to overlook, especially considering the size of the domestic market and its potential,” Samir Gadio, an Emerging Markets strategist at Standard Bank in London, said in a response to questions.

In 2013, the Nigerian financial markets flourished as foreign portfolio managers in search of higher yielding assets flocked to developing economies.

Total Foreign Portfolio Investment in 2013 grew by 28.78 percent, to settle at $17.37 billion, according to data from research and investment firm Meristem Securities.

“I hope the announcement will influence international investors’ perceptions of Nigeria and Africa, helping them to reconsider the scale of the opportunity and potential returns,” said Andrew Alli, CEO of the Africa Finance Corporation (AFC), with a balance sheet size of $2 billion.

 “However, it is only through continued investment in basic infrastructure projects, such as road, rail and power generation, that all African countries will really be able to transform prevailing investor sentiment,” Alli said.

Nigeria’s economy grew by an average of 6.39 percent between 2010 and 2013 with the rebased numbers.

The services sector grew the fastest at 7.72 percent, followed by industry at 7.19 percent. But agriculture showed a slower growth at 2.61 percent.

Nigeria is now the 26th largest global economy (using 2012 figures), coming after countries like the United States, which is still the number one, at $16.245 trillion, and China at about $$8.227 trillion.

Japan comes third at $5.9597 trillion, followed by Germany, France, the United Kingdom, Brazil, Russian federation, Italy, India, Canada, Australia, Spain, Mexico, Korea Republic, Indonesia, Turkey, Netherlands, Saudi Arabia, Switzerland, Sweden, Norway, Poland, Belgium and Argentina .

“Nigeria’s new GDP data will be positive because with a larger GDP base, ratios such as fiscal deficit to GDP, debt to GDP, and GDP per capita will also improve, meaning Nigeria can be ranked closer to some developed and emerging market economies,” said Abiodun Keripe, research analyst at Lagos based, Elixir Investment Partners Limited.

“It can also lead to better Sovereign/credit rating, as with improved ratios, Nigeria can command better rating which will boost confidence,” Keripe said.

 Agriculture, in the new series, measured around N12.98 trillion in 2010, N14.42 trillion in 2011, N15.91 trillion in 2012 and N17.62 trillion in the 2013 forecast.

Industry stayed at N13.99 trillion in 2010, N17.31 trillion in 2011, N18.66 trillion in 2012 and N20.08 trillion for 2013. The results also showed that services within the four years went up significantly, recording some N27.22 trillion in 2010, N31.22 trillion in 2011, N36.24 trillion in 2012 and forecast of N41.92 trillion for 2013.

 Ngozi Okonjo-Iweala, Minister of finance and coordinating minister for the Economy, said the results of the rebasing exercise showed that Nigeria is more diversified than had been thought.

She noted key changes are the noticeable shift in the share of key sectors to the country’s overall GDP. She said an example is the decline in the share of the agricultural sector to the overall GDP and a rise in the share of services.

 She added that since Nigeria’s rebased GDP is expected to be a more accurate reflection of the structure and size of current economic activities in the country, presenting a clearer sectoral distribution and performance, it will help better policy making by government and good analysis of investment potential by investors.