http://www.reuters.com/article/2012/04/25/us-nigeria-gdp-rebasing-idUSBRE83O11T20120425

The size of Nigeria's economy
will shoot up by some 40 percent in the
second quarter this year, placing Africa's
second-biggest economy on the list of
middle income countries and bringing it
closer to rival South Africa, a source close
to the matter said.
The makeover may give the country financial
bragging rights, but will change little for the
millions trapped in poverty.
From around July or August this year, Nigeria will
change the base year for its GDP calculation to
2009, from its current 1990, the source told
Reuters on Wednesday, applying the new base
from Q2 onwards.
Analysts said a recalculation along those lines
would bring Nigeria's economy up from a
current IMF estimate of $270 billion for 2012 to
about $375 billion - just behind South Africa's,
expected to be around $390 billion by the end
of 2012.
The source said the calculations had "taken into
consideration fluctuations, availability and
consistency in the data in choosing the new base
year, which will be 2009," and that it will be
applied from the second quarter of 2012.
Most governments overhaul gross domestic
product calculations every few years to reflect
changes in output and consumption, such as
mobile phones and the Internet. Since Nigeria
has not done so since 1990, analysts had
expected a large jump. Nobody had put a
number on it until now.
Nigeria's markets were largely unmoved on
Wednesday, with the stock exchange index
trading marginally up 0.34 percent. The move
was flagged late last year.
With growth 7 percent a year, compared with 3
percent in South Africa, Nigeria looks set to
overtake its rival to seize the top spot, an event
that would most likely boost interest in local
consumer goods companies seeking to unlock
the potential of Africa's most populous country
and its 160 million consumers.
"Perhaps the upside for Nigeria is that it will
become too important to ignore as a frontier
market and investment destination," said
Standard Bank's Samir Gadio, but he added that
the change was largely "a symbolic turnaround"
that will have little impact on Nigeria's actual
diplomatic clout.
"UNDERDEVELOPED"
Nigeria's GDP may be roaring ahead, but a
glance look at its huge and fast growing
population and poor record on governance
makes them look less impressive, analysts said.
Poverty in Africa's top oil producer is rising. A
decade of breakneck economic growth has failed
to lift 100 million people living on less than $1 a
day out of dire poverty.
The percentage of Nigerians living in absolute
poverty - those who can afford only the bare
essentials of food, shelter and clothing - has
risen to around 60 percent, thanks largely to
kleptocratic governance hampering basic
services.
"Nigeria remains significantly underdeveloped in
terms of basic infrastructure (electricity, roads,
etc) and faces high income inequality. Output
per capita in Nigeria will continue to trail that of
South Africa over the next decades," said Gadio.
The rebasing will also improve Nigeria's debt to
GDP ratio, currently at around 16 percent. But
Alan Cameron, an economist at Nigerian stock
broker CSL questioned whether that would make
a difference to its debt position - especially with
its poor record on saving money despite high
world oil prices.
"While certain debt ratios will be flattered by the
revision, to us the question of debt sustainability
has always been about the government's
servicing capacity rather than the ratio of debt
to GDP," he said.
Nigeria's tax revenues, seen as woeful for a
country of this size, will look even smaller.
Nigeria does not publish tax revenue figures but
they are suspected to be extremely low, with 95
percent of government revenues coming from
oil output.
Even as a consumer market, South Africa with its
rising middle class and good infrastructure is
likely to dwarf Nigeria for some time to come.
"Look at any metric estimating the size of the
consumer market in South Africa...and look for
the comparable figure in Nigeria...and the
difference is far greater than 10 percent," said
Razia Khan, head of Africa research at Standard
Chartered.