LAGOS - Nigeria, Africa’s most populous country and largest oil producer, is set to emerge as the continent’s biggest economy on Sunday when the results of an overdue rebasing of its gross domestic product are announced.
Although United Nations statisticians recommend that countries rebase their GDP calculations every five years to reflect changes in the structure of production and consumption, Nigeria last carried out the exercise in 1990. So the new figures expected to be unveiled by Finance Minister Ngozi Okonjo-Iwela and top government statisticians are expected to place Nigeria ahead of continental powerhouse South Africa as new and fast-developing sectors such as telecoms, music and local film industry, Nollywood, are considered in the GDP rebasing. Following the adjustment, Nigeria’s economy is expected to increase by as much as 60pc, taking it from $264 billion past South Africa’s $384 billion.
Nigeria, with 170 million people is about three times the size of South Africa, but its economy is the second-largest on the continent, after South Africa. Africa’s leading crude producer has enjoyed high rates of growth, notwithstanding widespread corruption, poor governance, rampant oil theft and a raging Islamist insurgency in the north. The annual growth rate averaged 6.8 percent from 2005 to 2013 and the economy is projected to grow this year at a rate of 7.4 percent, according to the International Monetary Fund. That compares to a little over five percent between 2005 and 2008-9 in South Africa, which has struggled to go beyond 3.5 percent since. Analysts say while at this stage we can only speculate how big the impact of the rebasing will be, the actual size of the adjustment is probably of less significance than the psychological effect this will have on perceptions about Africa.
It would be interesting to see how international relations will be affected when South Africa is no longer the largest African economy. South Africa is, for example, the only African country represented in the G20. For Nigeria, the rebasing will probably not mean a significant change, but it will improve the country’s balance sheet and its credit rating. This should lead to lower borrowing costs for the government, which is ultimately beneficial for the country’s citizens. It will also shore up Nigeria’s image and make it interesting as an investment destination for foreigners, a status hitherto enjoyed by South Africa. But analysts cautioned against viewing the new figures as a sign of development, noting that South Africa is still way ahead in terms of GDP per capita, infrastructure and governance. Nigeria still faces an immense challenge in terms of infrastructure deficits. Slow ports, bad roads and a lack of electricity are some of the major factors hampering business activity. Despite its vast oil wealth, the last available World Bank figures from 2010 indicated that a staggering 84.5 percent of Nigeria’s 170 million people lived on less than $2 a day. “For the average person on the street, it (rebasing) really does not have any meaning,” Pat Utomi, professor of political economy at the Lagos Business School, told AFP.