Nigeria has overtaken South Africa as Africa's largest economy after a rebasing calculation almost doubled its gross domestic product to more than $500 billion, data from the statistics office showed on Sunday.
GDP for 2013 in Africa's top oil producer was 80.22 trillion naira, or $509.9 billion, the Nigeria Bureau of Statistics said, up from the 42.3 trillion estimated before the rebasing. The new figure shrank Nigeria's debt-to-GDP ratio to 11 percent for 2013, against 19 percent in 2012, statistics chief Yemi Kale told reporters in the capital of Abuja.
Most governments overhaul GDP calculations every few years to reflect changes in output, but Nigeria had not done so since 1990, so sectors such as e-commerce, mobile phones and its prolific "Nollywood" film industry, now worth 1.4 percent of GDP, Kale said, had to be factored in to give a better picture.
Growing attention from foreign investors was forcing Nigeria to more accurately calculate its statistics, including GDP, Kale said, adding that the base year would now be recalibrated every five years, in line with global norms. Nigeria, Africa's most populous country with 170 million people, has been growing as an investment destination owing to the size of its consumer market and growing capital markets.
The jump in the official GDP figure ranks Nigeria as 26th biggest economy in the world, up from 33rd before the rebasing, Kale said. It comes at a time of rising investor interest in the African continent's growth potential and expanding middle class. Finance Minister Ngozi Okonjo-Iweala said last week that billions of dollars of foreign and domestic investment were envisaged for this year, including $1.5 billion in agriculture.
But political risks as Nigeria approaches what will be hotly contested elections next February remain a concern, as do multiple security headaches, especially an insurgency waged by Boko Haram, an Islamist sect, in the under-developed northeast.
Analysts said the recalculated GDP would raise Nigeria's profile, but change little on the ground.
"Is the money in your bank account more on Sunday than it was on Saturday? If you had no job yesterday, are you going to have a job today?" asked Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives.
"If the answer to those questions is 'no', then this is an exercise in vanity," he added, though he said the new figure was more accurate. Many Nigerians shrugged off the GDP news.
"I'm not really impressed. I don't feel it in my pocket," said Richard Babs-Jonah, 47, a small farmer, rubbing his thumb against his index and middle fingers to signify cash, before fumbling in his pocket for small change to buy traditional 'suya' - spicy grilled meat served at roadside barbecues.
"It's not the masses who are rich. Those controlling the economy, those with government contracts, get all the money," he added, expressing the common view that Nigeria's economy is rigged in favour of a handful of well-connected oligarchs.
Though GDP per capita rose to $2,688 last year from an estimated $1,437 in 2012, poverty and inequality widened.
"We need to work hard on infrastructure, governance, corruption and building a social safety net," Okonjo-Iweala said. " Inequality has been rising."
Services replaced farming as the biggest sector, worth 41.9 trillion naira, compared with 17.6 trillion naira for farming. Most services growth came from telecoms and real estate. Nigeria's annual GDP growth for 2013 is expected to come in at 7.41 percent after the rebasing, compared with about 6.5 percent in 2012, Kale said. Nigeria's taking the title of Africa's biggest economy will fuel a longstanding rivalry with South Africa.
South Africa currently represents Africa at the G20, as well as in the "BRICS" group of the most powerful emerging economies, which also includes Brazil, Russia, India and China. Nigeria may argue that it should join those clubs too.
It will also enliven competition for investor capital at a time when South Africa faces challenges such as striking workers and high current account and budget deficits. Despite its roaring growth of recent years and now a bigger GDP, Nigeria still trails South Africa in basic infrastructure, power and roads, necessary to lift its people out of poverty.
Its mobile telephone network is one of the least reliable in Africa, internet quality is poor, roads are potholed and its ports and airports clogged by bad infrastructure and obstructive officials. The power grid provides barely four hours a day.
President Goodluck Jonathan's suspension in February of respected central bank chief Lamido Sanusi after Sanusi had questioned massive oil revenue leakages at the state oil firm reinforced Nigeria's reputation as a byword for corruption. South Africa, by contrast, is seen as one of few African destinations where the rule of law safeguards investments.
By every measure, South Africa has a more sophisticated, developed and diversified economy, with advanced financial markets, while Nigeria relies heavily on oil. But investors say South Africa cannot afford to be complacent.
"South Africa was historically the 'go-to' country for investment in Africa. However, the reality is that other regions are increasingly asserting their economic voice," said Roelof Horne, a portfolio at Investec Asset Management in Cape Town.