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

December 19, 2013 | Filed under: main story | Author: PATRICK ATUANYA

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
Businessday 12/19/2013

We keep going but development is not as fast as the growth. I hope our development catches up fast

What is the correct figure for south africa's gdp? a little research from google gives a figure above $405billion in 2011, the figure today must have surely passed $410billion.

Nigerians will start rubbishing this report. Mark it.

Its not about Economical Development But Economical Growth,yes we have overtaken SouthAfrica but an average nigerian still live below 1dollar per day....how can you equate that to the preached development when 90% of nigerians wallow in abject poverty abegi make una go sitdon

aaronson: Its not about Economical Development But Economical Growth,yes we have overtaken SouthAfrica but an average nigerian still live below 1dollar per day....how can you equate that to the preached development when 90% of nigerians wallow in abject poverty abegi make una go sitdon

so much for the ballooning populace.. But, a substantial figure is benefiting from the growth... over 90 million and counting..

aaronson: Its not about Economical Development But Economical Growth,yes we have overtaken SouthAfrica but an average nigerian still live below 1dollar per day....how can you equate that to the preached development when 90% of nigerians wallow in abject poverty abegi make una go sitdon

And you believe that a country with over 80 percent of it's population owning atleast a mobile phone has an average of it's population living below a dollar per day? Even a mo.ron won't think like this.

Fresh air no go kill me abeg. I used to say fresh air till 2019 but I was wrong.

FRESH AIR TILL 2023 at least. Later y'all.

aaronson: Its not about Economical Development But Economical Growth,yes we have overtaken SouthAfrica but an average nigerian still live below 1dollar per day....how can you equate that to the preached development when 90% of nigerians wallow in abject poverty abegi make una go sitdon

My friend shut up that your filthy dirty mouth. The fact that you and your family live on a dollar a day and in abject poverty, doesn't mean the rest of the population do.

People make this silly claim that 90% of nigerians live on 1 dollar a day, yet the number of L.G and samsung show rooms keep increasing in my neighbourhood. How are these one dollar population able to afford them?


I see you are redundant, however it would be foolhardy to drag in the rest of the population into your pathetic state of redundancy.

God bless Nollywood.
The impact that industry has on our economy is vastly understated.

solomon111: God bless Nollywood.
The impact that industry has on our economy is vastly understated.

thank you.even though its not the governments place to give grants,the various monies jonathan gave to Nollywood was a welcome idea.

we need a trillion dollar economy ..

scipher: we need a trillion dollar economy ..

my brother we can get there quickly once power is sorted out.imagine Almost half a trillion dollar economy with epileptic power.

And are we supposed to celebrate?
brazil with same population with nigeria has a gdp of over 2 trillion do
lars.
hw dat affects the price of garri and tomato is wat u should tell me.
mtcheeeeeeeew.
admin,kindly move this thread to travel section.
mtcheeeeeeeeeeeeeeeeeew

scipher: we need a trillion dollar economy ..

Any figure less than that is pathetic for a country as large as Nigeria.

scipher: we need a trillion dollar economy ..

I agree completely.

Arosa:

Any figure less than that is pathetic for a country as large as Nigeria.

we will get there veery soon

Arosa:

Any figure less than that is pathetic for a country as large as Nigeria.

Agreed. We cannot be joyful at 405 billion dollars. We got the capacity to hit a trillion dollars. My hope is, as our democracy continues to develop, so would our economy.

Another reason for my optimism is that we only began to grow in the period of 2003-2005. So with a sustained democratic push and a continuous diversification like we are currently seeing, we should be able to hit 800 billion dollars in the next decade.

For now, our target should be poland at 600 billion. I also do hope that we do not go the indian route, the brazilian model is the sure bet for us.


Apparently we are on the right path. Below is an excerpt from forbes.com

"Nigeria’s new status will improve its attractions to investors. Forbes magazine recently punted it as a rival to the Brics (Brazil, Russia, India, China and South Africa). It said Nigeria’s economy was more diversified than Russia’s and more closely resembled Brazil’s: “Rich in petroleum but blessed with other resources and a population that is only now starting to live up to their potential as consumers.” - Business Report

9jadelta: we will get there veery soon

I know, I'm just impatient that's all.

phantonce: And are we supposed to celebrate?
brazil with same population with nigeria has a gdp of over 2 trillion do
lars.
hw dat affects the price of garri and tomato is wat u should tell me.
mtcheeeeeeeew.
admin,kindly move this thread to travel section.
mtcheeeeeeeeeeeeeeeeeew

People like you should think before you post. Rome was not built in one day.I think the fact our economy is growing strongly inspite of the challenges we are facing, is a good thing. If we continue to grow at this rate, we might overtake Brazil one day. It took China almost 40years to become a super power.

NO I disagree with this assertion. Nigeria is way better than this.

Henry120:
Below is an excerpt from forbes.com

"Nigeria’s new status will improve its attractions to investors. “Rich but blessed with .... a population that is only now starting to live up to their potential as consumers.” - Business Report

Arosa:

I know, I'm just impatient that's all.

405 billie is too small

One guy fabricated the story, another guy in the publisher printed it and the others quoted it for Nairaland and media purposes.
this is what you see when there is no job for the youth.
In reality it does not tranlate to anything from an average nigerian persperctive because the last time i check dollar has not come down below 160, price of foodstuff is still high, looter and corruption has increase with impunity in the highest rate so far.
If you have not been to SA then continue to let them be fooling you,
pls ask those who have been there. What i am reading here is not what is actually on ground in SA,
Ask your self why is SA preventin Naija from entry these day??
God will help us to know the truth and 1 day it will set us free.

solomon111: God bless Nollywood.
The impact that industry has on our economy is vastly understated.

Nollywood, IT, Services (both Financial and non-Financial), Consumer Goods Industry, Housing/Construction, Hospitality, Naija Music, etc... Plus, the more traditional subsectors of course

phantom: thank you.even though its not the governments place to give grants,the various monies jonathan gave to Nollywood was a welcome idea.

See this shameless liar! What grant are you talking about? Nollywood is a symbol of the doggedness and resolve of the typical Nigerian with innovative spirit and is not tied to any confused and corrupt government.

Credit to those Heroes who saw a need and reached out to meet it and a lame duck president who had so much good will yet could not transform it to development for the people.

Any sane individual would tell you that Nigeria has long over taken South Africa as the number one economy in Africa.

You guys want South Africans to commit suicide o!

They have seriously agonized on this issue of Nigeria's economy being bigger than theirs. Unfortunately, it has happened to more respected countries in the world such as Germany and Japan watching powerlessly as India and China overtook their massive economies.

Take heart South Africans, it is just signs of the end times! May be you guys should use your high tech. weapons to help Yoruba people break away and form Odua Republic, because without Lagos alone, Nigeria's GDP will be sliced by a cool $100 billion dollars! Food for thought anyway!

Omo_Tier1:
See this shameless liar! What grant are you talking about? Nollywood is a symbol of the doggedness and resolve of the typical Nigerian with innovative spirit and is not tied to any confused and corrupt government.

Credit to those Heroes who saw a need and reached out to meet it and a lame duck president who had so much good will yet could not transform it to development for the people.

Any sane individual would tell you that Nigeria has long over taken South Africa as the number one economy in Africa.

Nigeria is now d LARGEST ECONOMY in Africa under President Goodluck Jonathan. The Economy increased from around $59bn in 1999 to more than $400bn in 2013 (ie it Expanded about 8 times in a mere 14yr period) unda his Party's leadership; And the growth and diversification of d Economy is still on, apace.

Now DIE!! ...

https://www.nairaland.com/1539312/experts-hail-nigerias-soaring-nonoil#19932682

Of course, we can see how once been the largest economy on the continent for SA was synonymous with good roads, hospitals, power, transport facilities and whatnot.

Meanwhile in Nigeria...

BlackBaron: Of course, we can see how once been the largest economy on the continent for SA was synonymous with good roads, hospitals, power, transport facilities and whatnot.

Meanwhile in Nigeria...

You know India is the 3rd largest economy in the world bigger than Germany and Japan! Which are countries that can boast of rural cities more glamorous than Indian capital, Mumbai! India's rural areas are poorer than any village in Nigeria or Burundi! But, they are working on it.

Likewise, don't expect Nigeria to displace South Africa in terms of infrastructure overnight. It is a gradual process that will span over many years. That is if we decide it is better to spend our money on infrastructure than buying weapons to fight ourselves in a 2nd civil war after 2015.I don't trust black people to making good choices for their countries. Only time will tell which option Nigerians will rather spend their money.

Chima_Agbalajob:

You know India is the 3rd largest economy in the world bigger than Germany and Japan! Which are countries that can boast of rural cities more glamorous than Indian capital, Mumbai! India's rural areas are poorer than any village in Nigeria or Burundi! But, they are working on it.

Likewise, don't expect Nigeria to displace South Africa in terms of infrastructure overnight. It is a gradual process that will span over many years. That is if we decide it is better to spend our money on infrastructure than buying weapons to fight ourselves in a 2nd civil war after 2015.I don't trust black people to making good choices for their countries. Only time will tell which option Nigerians will rather spend their money.

In other words, India is your benchmark as to why our economy is growing on paper whilst other indices show little to no improvements. [LOL]

Besides, India is not the world's 3rd largest economy. [Depending on whom you choose to quote]

Why didn't you pick China in your like for like comparison seeing it is the biggest economy in Asia?

Theben:
And you believe that a country with over 80 percent of it's population owning atleast a mobile phone has an average of it's population living below a dollar per day? Even a mo.ron won't think like this.

THE GUY NA CORRECT NA ZOMBIE