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Nigeria’s economy largest in Africa as rebasing boosts GDP to $405bn

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In about three weeks from now, when the National Bureau of Statistics (NBS) releases the rebased Gross Domestic Product (GDP) it will show that Nigeria has overtaken South Africa as Africa’s largest economy, which will have great economic and geopolitical implications.

This is according to emerging markets focused investment banking firm Renaissance Capital, whose team of analysts were in Abuja, over the weekend.

“We are revising up our estimate of Nigeria’s GDP by 53 percent. The NBS has nearly completed its work, and our new estimate is that a 45 percent  to 60 percent uplift is likely, and we are taking 53 percent as the mid-point figure. We expect the data in January,” said Renaissance Capital analysts led by Charles Robertson, its global chief economist and head of macro strategy, in a research report released yesterday (Dec 18).

“This means Nigeria, at $405 bn in 2013 would be the largest economy in Africa, ahead of South Africa at around $370 bn.”

Other impacts of the rebasing include the possible reduction of growth rates to 5 – 6 percent from 6 – 7 percent, and an increase in GDP per capita to $2,400 from around $1,700, in essence moving Nigeria into middle income economy territory.

“Sectors that may show the biggest upward revision range from Nollywood to IT and telecoms, while we think agriculture will shrink from around 40 percent of GDP to 25 – 30 percent of GDP,” said Robertson.

The rebasing will show public debt shrinking  to 13 percent of GDP from 20 percent of GDP. Public external debt would be below 2 percent of GDP, while the current account surplus may still be 5 percent of GDP which will leave the sovereign in a good position to borrow if needed.

According to Rencap “In a Fed tapering world, these revisions make Nigeria look good, but credit rating upgrades (Ba3/BB-) are likely to be constrained by the most competitive presidential elections Nigeria will have seen since democracy returned in the 1990s.”

The NBS is seeking to change the calculations of Nigeria’s GDP, using a new base year of 2010 to give a better indication of the size and composition of its economy.

Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, such as telecoms, financial services and internet usage, but Nigeria has not done so since 1990 (about 23 years) suggesting that the previous GDP framework underestimated economic activity.

The numbers will have new implications for investors and the geopolitics of Nigeria’s place in Africa.

“We would be very surprised if recent and pending investment decisions are taken on the basis of the 1990 national accounts,” said FBN capital research analysts led by Gregory Kronsten, in a note released in August.

“The new GDP series will however be tracked by potential investors, such as suppliers of consumer goods and services,” Kronsten said.

Nigeria already hosts the second largest debt and stock markets in Africa, behind South Africa.

Its stock market is valued at $77 billion, while the secondary market bond trading volumes, ”certainly exceed those of Egypt and Morocco and represent around 20 percent of South Africa’s turnover,” according to Samir Gadio, an emerging markets strategist, at Standard Bank, in London.

Overall – Nigeria’s debt, budget and current account ratios will look among the best in Africa and in the emerging markets (EM), once the rebased figures are released, notes Robertson.

“We like Nigeria in the coming quarter – though we see domestic bond yields up a little, at around 13.5 percent on average. Nigeria is going to rise from 14 percent of MSCI frontier markets to around 20 percent in May 2014 which could attract equity investors wanting exposure to frontiers and/or Africa. We expect the NGN to remain at 160/$ until June 2014.  But we are still nervous for the second half of 2014,” Robertson said.

By: PATRICK ATUANYA

31 Responses to Nigeria’s economy largest in Africa as rebasing boosts GDP to $405bn

  1. an extra ordinary good news for me , my children and my country.

    ukpokwu u
    December 19, 2013 at 4:05 am
    Reply

  2. Whilst it’s good news that Nigeria has now assumed its rightful position of having the largest economy in Africa by virtue of our vast skilled human, material and mineral resources- there is still a lot of work that needs to be done.

    Let’s not forget that South Africa still has the most diversified and sophisticated economy in Africa, the largest stock exchange (JSE), the best infrastructure (health sector, power plants, roads, rail, seaports, airports and telecomunication network) as well as a well developed sophisticated financial and legal system. South Africa is also still the only African country that is a member of the G20 and BRICS.

    Nigeria still has a lot of catching up and work to do before we can truly say that we are the economic powerhouse of the African continent.

    GDP growth has got to reflect in job-creation and the spread of wealth to all Nigerians- afterall you can’t eat GDP.

    We have to improve our infrastructure (roads, rail, seaports, airports, telecoms,etc) and ensure that we create an enabling enviroment for private enterprise to thrive. Our leaders still travel abroad for medical treatment- that surely can’t be right.

    The legislature should pass the PIB bill into law, Govt should revive the manufacturing industry, revive Ajaokuta steel complex to establish and industrial base, fight corruption seriously and continue with the great reforms in the powere and agricultural sector.

    In any event kudos has to be given to the Jonathan administration and the economic team for the progress made so far. GOD Bless the Federal Republic of Nigeria.

    Yagazie
    December 19, 2013 at 9:35 am
    Reply

  3. What have they based this on? Is it comparable to South Africa in how they measure GDP?
    This is not the first time that economies in the region have revised their GDP figures, we should be careful of what exactly are the facts.

    sam
    December 19, 2013 at 2:09 pm
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    • GDP is calculated the same way in all countries, you try and estimate the total amount of goods and services produced in the country in a year.The main difference I can think of between the two GDP’s is their composition, Nigeria has a large portion of their GDP coming from the informal sector (which is hard to regulate and which doesn’t contribute a lot to government revenue), while SA has a lower proportion of it’s GDP attributable to the informal sector.

      FooMan
      December 25, 2013 at 12:08 am
      Reply

  4. Good news indeed for the sleeping giant called Nigeria, we should fight hard to push our great country forward in terms of being the economic powerhouse of the African continent, FULL STOP!!!!!!!!!.

    Okanite
    December 19, 2013 at 2:47 pm
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  5. Great indications and good leap for the Economy. This I am sure sure is a product of good and hardworking economic team of the Nigerian Government.

    My concern as raised in the article is the impact of the pre and post season of national elections in 2015. Evidently, it is the politicians who are destroying Nigeria and its economy. I’m sure this report means nothing for the opposition parties who are more interested in the grab of power than in any other things. If the economic forecast is bad, I’m sure the President will be one to be blamed, now that is looking promising, would he also get the commendation?

    Charles Egwuba
    December 20, 2013 at 6:03 am
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  6. This May sound good for Nigeria but looking at the real sector, Nigeria’s industrial output is still far behind that of South Africa and Egypt. Most of the large firms whose products or services Nigerians fancy most such as MTN, the largest telecom coy in the country, Shoprite, Multichoice DSTV, the largest pay TV in the country, Protea hotel group, Stanbic IBTC among others are all South African owned. In terms of social infrastructure, Nigeria doesn’t even come close to South Africa and so on and so forth. So, we need a lot of catching up to do.

    Chineze Ezeagwu
    December 20, 2013 at 4:35 pm
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  7. Great news for all Nigerians! Bravo to Dr. Goodluck Jonathan! Nigeria is in the upswing! I hope any future leader in the Country will put the nation first than his pocket and that of his cronies. It is easier to criticize a person than to praise him. Jonathan is doing well! Kudos to him!

    Victor Ukaegbu
    December 22, 2013 at 8:35 am
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  8. Good news coming out of our beloved country. It is however important to note that the size of our economy is not the same thing as economic development.

    These figures more than anything is a wake up call for us to take our place in the committee of nations. There is an urgent need for us to step up actions in the following areas:

    1. Revamping and revitalizing our judiciary
    2. Ensuring stable power power supply
    3. Developing our rail systems
    4. Improving on our medical facilities
    5. Diversify our national economy from oil

    Above all, our politicians must put aside party divides and curb corruption, the killer of our nation and national pride. Only then will the Nigeria of our dreams come to fruition.

    This nation has potentials for 15% year on year growth, we should not rejoice now.

    Chris
    December 23, 2013 at 9:04 am
    Reply

  9. Good news, if we all put our differences behind and work for the common good, the sky will be our starting point, we have got all it takes to be the greatest of all!!!

    LN
    December 24, 2013 at 2:40 pm
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  10. This is good news for Nigeria but the government has to work harder to convert this GDP into real wealth for itself and it’s people.Note that even though Nigeria will have the largest economy in Africa, it’s government will be the fifth richest in Africa with annual revenues hovering around $25BN, this is in contrast to South Africa which has a revenue of over $100BN a year whilst only supporting a population a third the size of Nigeria’s.

    FooMan
    December 24, 2013 at 11:44 pm
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  11. Nigeria economy surpasses SA because of Private business which play significant role to develop the country economic development It looks though that govt policies does play significance role,and it is too premature to jubilate for the fact that Nigeria economy still far less diversified compared to S A. For example Nigeria infrastructure still a big challenge to grow the economy, Secondly Nigeria lacks the neccesary modern Education and knowldge to keep the number one position for a long time.Nigeria govt and private investors must aggresively placed priority on the above in making Nigeria the economy apex of the continent and before achieving that, Nigeria should creates a condusive business environment so that the country can becomes a preffered FDI and one stop for foreign investment choice. Lack of man power skill among Nigerians in the area of science and technology yet another serious challenge to continue leading the continent There fore millions of Nigerians in diasporal should render assistance as in keeping the momentum on.The most important hurdles nigeria facing was the epilepsy electricity supply quickly need to be addressed. Thank the govt in the recent taken over the sector by the new private enterprise which bought over the power sectors from the Government few months ago.Corruption in Nigeria among govt official remain an uphill battle to the country and security challenge which the government had scored very high in handling but remain a big threat to the country .Nigeria has the population and huge market to lead the continent. Nigerians should continues unrealenting support for the present administrationand beyond 2015 because theres need for continuity. GEJ led govtmust confront corruption head-on.All in all Nigeria untapped potential remain very huge and attractive to many investors.

    Joe
    December 31, 2013 at 4:25 pm
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  12. Is it Jonathan that makes nigeria economics grow let look into it how self or he is just benefiting from what order state govn as done and look at it is the opposition governor that have done more then any order govn in is party I keep thinking where are this figures from are we sure is not a wrong statistic if we are let call order country to come and calculate it and we will see don’t get me wrong am not saying the news is not good for Nigeria is a good news we are getting how birth right back but is it real cause must people know nigeria about lying about everything don’t let forget is in is face all the abasement of money is did u see again the now investigation about 1.8b dollars that Jonathan as to help is state wish there say obasanjo have paid is state since 2006 and Jonathan want to collect it again lying that obj have not paid it u see why am not sure of that figure

    Saggy
    January 5, 2014 at 8:28 am
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    • Saggy, my brother, no be Jonathan grow our economy, na you do am! Na wa for some people!

      Nnamdi
      January 6, 2014 at 1:21 pm
      Reply

    • sajjy, God will punish u with that bias and hate comment of yours. you cant appreciate him for that but rather give the credit to state govt, but will blame him for BOKO HARAM. Foolish and idiotic u are.

      Dennis
      January 6, 2014 at 6:40 pm
      Reply

    • Don’t be stupid guys…. In what way is it jonathan that has improved the economy.. Do you people even know what GDP rebase is… GDP rebase is just a way of revising the economy so as to add sectors which were not there but had improve the economy to it…. Our base year is 1990, a year which we didn’t have telecommunications like we do now and our entertainment industry has not boomed like it has now… By rebasing our economy, they are trying to see how much these sectors had added to it.. So tell me, in what way has jonathan improved telecommunications or entertainment…. I believe there are 2 major functions of a president, to improve the standard of living of his people and also to provide security and our dear president has failed on both counts.. Infact he’s even half president because he’s not in charge of the economy… Okonjo Iweala is the minister of finance and COORDINATING MINISTER OF THE ECONOMY….. So jonathan didn’t do this for our economy ooo…. The icrease that is being revealed is something that had been there but we didn’t just know because it wasn’t part of our calculations…. And Mr Saggy, why bring Jonathan into this issue…. Its uncalled for

      Tolu
      January 18, 2014 at 4:38 pm
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      • Tnx for the enlightenment on what GDP rebase means.
        I don’t know what these commentators praising GEJ base their approval on .Maybe they are part of the 1% of the population who are benefiting anything from the reign of this man .

        Shola Jaiyeoba
        April 7, 2014 at 5:20 pm
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  13. The new economic growth of Nigeria under president Goodluck Jonathan and the coordinating minister of the economy Dr. Ngozi Okonjo Iweala is very impressive. China has taught the world the power of productive population in terms per capita income . Nigeria must upgrade in building a sophisticated population to produce a sophisticated economy. A local population no matter the number will produce a local economy. We have a sophisticated President and Minister of Finance whose pedigrees are far advanced than that of SA and other countries. The problem is that the population is local. We need to upgrade our skills, financially empower our budding enterpreneurs and improve technological compliance level and models in order to effect a paradigm shift from a consumer based a economy to a production based economy. Lee kwan Yue said ” there are no underdeveloped countries we only have under-managed countries”. Nigeria is not under developed, Nigeria had been grossly under-managed by inexperienced military regimes who were economic neophytes. As it stands now, under jonathan and iweala led economy, GDP levels standards at 7 percent. We need to improve on our real sector to produce more enterpreneurs. Commercial banks must increase lending to SMEs by remitting ten percent of their PBT according. World Bank guideline. We must ensure fiscal policies induce banks to move on from consumer bank and avoid unecessary cash pools while the real sector starves.

    hephzibah Suobo
    January 5, 2014 at 1:23 pm
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  14. While I appreciate the good news and great work being done by NBS, it will still amount to mere paper work when this does not translate to reduction in cost of living for an average Nigeria. What people want to see is cost of common goods and services reducing and let there be employment opportunities. Power, good road network etc.
    Overall it is a welcome news, that is why a stable democracy is encouraged for good economic growth.

    Emmanuel. Abi Couson
    January 6, 2014 at 12:33 pm
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  15. This is real good news.Can someone tell me when last Nigeria is reported worldwise with a positive news?It is very refreshing and kudos must be given to the present administration.For those who,rightfully,want this translated to poverty reduction and unemployment reduction let us know that a house cannot be built without foindation.A solid foundation is being laid for our economic growth with the inherent employment boost and poverty reduction.The general fear and concern of all well meaning Nigerians should be the gang-up of those who had previously mismanaged us and who are bent on grabbing power at all cost to return us back to where they left us.They are afraid of change and want us back to business as usual.We need continuity to consolidate these gains

    jed-Matthews Daniels Egwu
    January 6, 2014 at 8:44 pm
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  16. All these GDP issue will begin to make sense, when the middle class ratio doubles it’s 2013 figure and the over 17 SMEs begin to thrive and create additional jobs

    Eyo
    January 6, 2014 at 9:11 pm
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  17. All these GDP issue will begin to make sense, when the middle class ratio doubles it’s 2013 figure and the over 17 SMEs begin to thrive and create additional jobs. Then, we can talk GDP

    Eyo
    January 6, 2014 at 9:12 pm
    Reply

  18. This is d best news i’ve heard in more dan 20yrs. I just hope d statistics re correct. Al d same job weldone PGEJ n ur economic team.

    Ebi
    January 6, 2014 at 10:49 pm
    Reply

  19. Good news……….. God bless Federal republic of Nigeria my great wonderful land…. One love Nigerians…….

    Ray
    January 8, 2014 at 1:27 am
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  20. Whereas this is a good, my major concern is in area of increase in income distribution gap.this gap has continued widening. the government must come with sound policies in order to reduce this gap.

    Emem
    January 9, 2014 at 5:49 pm
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  21. how can i praise devised paper work. The real GDP will begin to count when every average nigerian is aving a three square meal at least, boast of earning a living without the food from the father or the mother. A diversification of the economy from oil to also agricultural and other sectors my fellow nigerians. It is very unwise to boast of a growth in the national economy when majority of nigerians still wallows in the pits of unemployment, insecurity, corruption growth and a host of others. Nigerians there is still alot to do before one can boast of a growth in the GDP n probably the growth in even the GNP.

    Akume paul.
    January 11, 2014 at 4:34 pm
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  22. I appreciate the good news and great work done by this administration,but they should come out with good and sound policies and the opposition party should SUPPORT not to INSULT this persent administration for selfish or political intrest bcos NIGERIA is a Nation of Young Vibrant,Natural Entrepreneurs both should work to overcome decades of CORRUPTION,CRIME and MISMANAGEMENT.

    IWERUMOR.S.N
    January 12, 2014 at 1:31 am
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  23. Nigeria is a clapping country…. We hear small news and we start jumping and shouting.. We don’t evewn bother to check the facts….. GDP and everybody is shouting Jonathan did this or that… For your info, and you can check o wikipedia…. Poverty level in Nigeria in 2012 was 45% and last year, okonjo iweala admitted it was now 69%….. That means things are getting worse…. Our human development index is 0.457 compared to a world average of 0.66 and sub-saharan of 0.459 and we are ranked 157 out of 180 countries…. These are the things that really matter not something like GDP rebase

    Tolu
    January 18, 2014 at 4:49 pm
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  24. This is good news, if the present team of administration should be allowed to continue their good work in the 4year by the opposition. I believe the presidenet Goodluck will fix our country if given a second chance.

    james Ibatt
    January 30, 2014 at 12:04 pm
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  25. Abeg my people, just go to your bank and tell them to rebase your account balance jare! If Nigeria rebases its GDP figures (after 24years of forgetting to do so, thus understating her true economic statistics) and VOILA, her GDP has doubled (53%), your bank balance had better IMMEDIATELY double too (with immediate effect and automatic ALACRITY)or increase somewhat by a reasonable multiple!

    If your account balance does not change, them don 419 you! Maga don pay!

    KnotTellling
    April 7, 2014 at 10:34 pm
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  26. GDP OF Nigeria in 2013 improves and that makes Nigeria the best economy in Africa ahead of South Africa. This improvement is just on paper but not to positively affect the social well economic being of the people.The standard of living of 90 percent of residents of Nigeria economy are in abject and supersonic poverty as result of unemployment, inflation, infrastructure deficit, lack of power supply etc.I want to tell you that Federal Government of Nigeria is fooling itself not the citizens and also dishonest.

    oshikoya olumide olabode
    April 7, 2014 at 11:38 pm
    Reply

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