Nigeria races past South Africa with GDP rejig; crowned Africa’s biggest economy
Apart from the necessary adjustment for inflation, updating the base year from 1990 to 2010 also meant that the country had to factor in previously unaccounted industries like telecom, information technology, music, online sales, airlines, and film production. (Image: Wikimedia)
Already seen as an economic giant in Africa, Nigeria’s ‘rebased’ GDP, which was initially calculated as $270 billion, is now worth $510 billion, representing a rise of 89% and pushing South Africa to a distant second place.
With a ‘mere’ $370.3 billion GDP at the end of 2013, Africa’s largest economy has now yielded place to the West African economy, which proudly wears the crown of the continent’s biggest economic hub.
Furthermore, Nigeria’s finance minister Ngozi Okonjo-Iweala told a news conference Sunday that the new data makes Nigeria the 26th largest economy in the world and raises its per capita income to $2,688, making it No. 121 in the world, up from No. 135.
The United Nations Statistical Commission recommends a statistical rebasing every five years, to account for changes in the patterns of economic activity and to update base prices to a more recent year, to account for inflation.
In Nigeria’s case, the government had not rebased since 1990, which represents five times the recommended rebasing duration! Apart from the necessary adjustment for inflation, updating the base year from 1990 to 2010 also meant that the country had to factor in previously unaccounted industries like telecom, information technology, music, online sales, airlines, and film production.
However, unemployment continues to plague the economy, which grapples with a huge population of 174.51 million, even as it enjoys unparalleled economic growth. Contrast this with South Africa, which, as the second largest economy in Africa, has to cater for a population of only 52.98 million.
“Nigeria’s economy needs to grow at about 10% to address massive poverty and youth unemployment. Government statistics say unemployment increased from 12.7% in 2007 to 23.9% in 2011,” said Okonjo-Iweala to the local press.
“The World Bank says unemployment among young Nigerians stands at 38%, but analysts say it is as high as 80% in many parts of the country,” she added.
Despite the unemployment woes and myriad others such as massive corruption and oil thefts to an Islamic uprising in the northeast that has killed more than 1,200 people so far this year, to a paralytic electricity supply and a declining share of oil revenues which have traditionally accounted for as much as 80% of its economy, Nigeria has been Africa’s biggest magnet for foreign direct investment.
Further, in the words of the finance minister, the “psychological impact” it will have on foreign investors will mean ever greater investments into Nigeria. Investors will pay greater attention to Nigeria now that its economy has overtaken South Africa and is equipped with new faith in itself, especially when value-laden sectors such as power are opening up in unprecedented ways.