Nigeria's Economy Swells Overnight After GDP Update – But What's Really Behind It?
After more than a decade, Nigeria's National Bureau of Statistics (NBS) has finally updated the base year it uses for its GDP figures, moving it from 2010 to 2019. The result? The official size of Nigeria's economy has jumped by around 30%, from $187.76 billion to $244 billion. That change has pushed the country's GDP to 372.82 trillion in local currency (naira).
This recalibration is not a local event. It is significant for a continent where economic data is often outdated or incomplete. In Africa's economic rankings, the shift places Nigeria as the fourth-largest economy, behind South Africa, Egypt and Algeria.
So What Changed?
What prompted this major statistical shift? In simple terms, Nigeria updated its economic model to reflect changes in its economy over the past decade. The old base year did not account for entire sectors that now drive modern life, which has digital services, pensions and the informal labour force that employs the majority of Nigerians.
'It is the most comprehensive rebasing we have ever done. We are now measuring digital activity, pension fund administration and informal work, which over 90% of our population is part of,' said Adeyemi Adeniran, the head of the National Bureau of Statistics (NBS), during a press briefing in Abuja.
Economist Michael Famoroti from Lagos-based Stears described the timing as 'necessary'. The rebasing, according to him, offers a clearer image of how Nigeria's economy has evolved.
'The structure is shifting. Agriculture still leads the pack in terms of output, and oil now contributes barely 5%,' he said.
Benefits and Cautions
More than numbers, it is about perception. One of the biggest side effects of the rebasing is a healthier-looking debt-to-GDP ratio. Before the change, Nigeria's public debt stood at 52% of the GDP.
Now, it sits around 40%, right in line with the government's self-imposed threshold and below the 55% limit generally advised by the World Bank and International Monetary Fund (IMF).
On paper, this is good news. But experts warn it could give a false sense of security. 'The improved ratio may make the government feel more comfortable taking on more debt. But the underlying issues have not disappeared. The debt is still there,' Famoroti said.
Currency Struggles, Economic Realities
While the updated GDP figure is a statistical win, Nigeria's currency tells a different story. Since President Bola Tinubu adjusted the exchange rate last year to attract investment and reflect market reality, the naira has lost over 70% of its value against the U.S. dollar.
This devaluation cost Nigeria its title as Africa's largest economy in 2023. While helpful, the rebasing has not been enough to reclaim the top spot.
Senegal Eyes Similar Move Amid Debt Woes
Nigeria is not alone in revisiting its economic metrics. Last week, Senegal's finance ministry said it would also rebase its GDP for the first time since 2018. The announcement comes amid a financial scandal involving hidden debts that may exceed the country's current economic size.
Bank of America analysts highlighted that, just like Nigeria, a rebasing could help improve Senegal's debt-to-GDP ratio and investor confidence provided the underlying economic performance stays strong.
Since the announcement, Senegal's dollar bonds have shown signs of recovery. Still, the IMF has paused a planned bailout as it waits for the results of an investigation into billions of dollars in misreported debt.
How Recalculation Works, And Why It Matters
Think of GDP rebasing like updating a scale. If you measured your height with a stick from 10 years ago, you would miss some growth. Nigeria simply swapped out its 2010 measuring stick for a more recent 2019 version.
To explain this, let us use a local example. Imagine tomatoes cost 5 naira per kilo in 2010 and 20 naira in 2020. Using 2010 as the base year, prices appear to have jumped 4x. But if you base it on 2015, when tomatoes cost 8 naira, then the price increase is just 2.5x. The shift in perspective can dramatically change how economic growth looks on paper.
That is exactly what Nigeria did. By changing the base year, it removed several tough years from the calculation, years when the economy was under pressure. Now, the revised GDP reflects newer and faster-growing sectors and shows an economy that is broader and more modern.
Nigeria's GDP rebasing gives the country a larger economy, stronger debt profile and a more accurate view of its current structure. But while the new numbers offer some relief, they do not erase the deeper challenges, ranging from currency instability to rising debt, that still demand careful attention.
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