Nigeria’s GDP Rebasing Postponed To 2014

Nigeria’s GDP Rebasing Postponed To 2014

The rebasing of Nigeria’s gross domestic product, which is expected to increase the size of the nation’s economy by around 40 percent, will likely to be delayed until 2014, according to a report in BusinessDay.

Most governments overhaul gross domestic product, or GDP calculations every five years to reflect changes in output and consumption, such as mobile phones and the Internet, the report said. Nigeria has not done so since 1990.

The rebasing is expected to add about 40 percent to Nigeria’s GDP, which would boost the economy of the nation from roughly $250 billion to around $350 billion.

That brings it closer to South Africa’s current $385 billion economy. With a growth rate of more than 6 percent a year compared with 3 percent in South Africa, Nigeria may eventually overtake its rival to take the top spot as Africa’s largest economy, the report said.

The recalculation will let Nigeria join the ranks of middle-income countries and put it closer in size to South Africa, the continent’s most developed economy. It will also make it an even bigger draw for foreign investors seeking a slice of Africa’s fast growth rates, the report said.

But several deadlines have been missed to implement the rebasing, with the latest being the fourth quarter of 2013.

“It is unlikely that even the target of the last quarter (this year) we will make it,” said Nigeria’s Director of the National Bureau of Statistics, Yemi Kale, at a Reuters Africa Investment Summit. “I underestimated how much work needs to be done … I think everyone understands that this is very, very crucial and has to be done properly.”

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Some economists warn that a sharp increase in the size of Nigeria’s economy will mean slower growth.

“You’d expect that the bigger the economy, the slower the growth … but I don’t think it is as easy as that,” Kale said. “Regardless of what our GDP is … we are still going to be small enough to produce even sharper growth rates.”

Industries like telecommunications, construction, hotels and entertainment should get a greater weighting after rebasing but agriculture, which makes up around 40 percent of GDP and 60 percent of jobs, is likely to decrease in influence.

“Growth in agriculture is … largely subsistence, largely labor intensive, so there is a limit to how much you can grow,” Kale said. “We know that capital-intensive technology probably generates more output than labor intensive technology.”

Oil and gas, which contribute around 80 percent of government revenues, are expected to maintain a weighting of around 15 percent.