Investors, analysts react as rebasing pushes Nigeria’s economy to $510 billion
...26th in the World ....Largest in Africa
Nigeria showed a path to becoming a G-20 economy as its GDP surpassed South Africa’s to become the largest on the continent, and 26th in the world after the country updated the statistics used in calculating economic output for the first time since 1990.
The new rebased data shows that the size of the Nigerian economy is now estimated at N80.3 trillion ($510 billion) for 2013, Yemi Kale, head of the National Bureau of Statistics (NBS), said at a press conference to announce the results in Abuja.
That compares with the World Bank’s 2012 GDP figures for South Africa of $384.3 billion.
“The economy’s structure has changed significantly,” said Kale. “We are witnessing a historic rebasing of our GDP which was not done for more than two decades,” Kale said.
The NBS recalculated the value of GDP based on production patterns in 2010, increasing the number of industries it measures to 46 from 33 and giving greater weighting to sectors such as telecommunications and financial services.
“Nigeria is now officially the largest economy on the continent, which will make it increasingly harder for companies looking at Africa to overlook, especially considering the size of the domestic market and its potential,” Samir Gadio, an Emerging Markets strategist at Standard Bank in London, said in a response to questions.
In 2013, the Nigerian financial markets flourished as foreign portfolio managers in search of higher yielding assets flocked to developing economies.
Total Foreign Portfolio Investment in 2013 grew by 28.78 percent to settle at $17.37 billion, according to data from research and investment firm Meristem Securities.
“I hope the announcement will influence international investors’ perceptions of Nigeria and Africa, helping them to reconsider the scale of the opportunity and potential returns,” said Andrew Alli, CEO of the Africa Finance Corporation (AFC), with a balance sheet size of $2 billion.
“However, it is only through continued investment in basic infrastructure projects, such as road, rail and power generation, that all African countries will really be able to transform prevailing investor sentiment,” Alli said.
Nigerian economy grew by an average of 6.39 percent between 2010 and 2013 with the rebased numbers.
Services sector grew the fastest at 7.72 percent, followed by industry at 7.19 percent. But agriculture showed a slower growth at 2.61 percent.
Nigeria is now the 26th largest global economy (using 2012 figures), coming after countries like United States, which is still the number one at $16.245 billion, China and China at about $$8.227 billion.
Japan comes third at $5.9597 billion, followed by Germany, France, United Kingdom, Brazil, Russia federation, Italy, India, Canada, Australia, Spain, Mexico, Korea Republic, Indonesia, Turkey, Netherlands, Saudi Arabia, Switzerland, Sweden, Norway, Poland, Belgium and Argentina, .
Services sector grew the fastest at 7.72 percent, followed by industry at 7.19 percent. But agriculture showed a slower growth at 2.61 percent.
Nigeria is now the 26th largest global economy (using 2012 figures), coming after countries like United States, which is still the number one at $16.245 billion, China and China at about $$8.227 billion.
Japan comes third at $5.9597 billion, followed by Germany, France, United Kingdom, Brazil, Russia federation, Italy, India, Canada, Australia, Spain, Mexico, Korea Republic, Indonesia, Turkey, Netherlands, Saudi Arabia, Switzerland, Sweden, Norway, Poland, Belgium and Argentina, .
“Nigeria's new GDP data will be positive because with a larger GDP base, ratios such as fiscal deficit to GDP, debt to GDP, and GDP per capita will also improve, meaning Nigeria can be ranked closer to some developed and emerging market economies,” said Abiodun Keripe, research analyst at Lagos based, Elixir Investment Partners Limited.
“It can also lead to better Sovereign/credit rating as with improved ratios, Nigeria can command better rating which will boost confidence,” Keripe said.
Agriculture, in the news series measured around N12.98 trillion in 2010, N14.42 trillion in 2011, N15.91 trillion in 2012 and N17.62 trillion in the 2013 forecast.
Industry stayed at N13.99 trillion in 2010, N17.31 trillion in 2011, N18.66 trillion in 2012 and N20.08 trillion for 2013.
The results also showed that services within the four years went up significantly, recording some N27.22 trillion in 2010, N31.22 trillion in 2011, N36.24 trillion in 2012 and forecast of N41.92 trillion for 2013.
Industry stayed at N13.99 trillion in 2010, N17.31 trillion in 2011, N18.66 trillion in 2012 and N20.08 trillion for 2013.
The results also showed that services within the four years went up significantly, recording some N27.22 trillion in 2010, N31.22 trillion in 2011, N36.24 trillion in 2012 and forecast of N41.92 trillion for 2013.
Ngozi Okonjo-Iweala, Minister of finance and coordinating minister for the Economy said the results of the rebasing exercise showed that Nigeria is more diversified than had been thought.
She noted key changes are the noticeable shift in the share of key sectors to the country’s overall GDP.
She said an example is the decline in the share of the agricultural sector to the overall GDP and a rise in the share of services.
She noted key changes are the noticeable shift in the share of key sectors to the country’s overall GDP.
She said an example is the decline in the share of the agricultural sector to the overall GDP and a rise in the share of services.
She added that since Nigeria’s rebased GDP is expected to be a more accurate reflection of the structure and size of current economic activities in the country, presenting a clearer sectoral distribution and performance, it will help better policy making by government and good analysis of investment potential by investors.
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