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Nigeria’s economy is about 30 per cent larger than previously thought after the west African nation updated the method by which GDP is calculated, the first rejigging of its statistical model in more than a decade.
Nigeria’s 2024 GDP now stands at N372.82tn ($244bn) at current prices, up from the $187.76bn estimated by the World Bank, after the country’s National Bureau of Statistics changed the base year from 2010 to 2019. This was done to account for previously excluded sectors such as a booming digital services industry, pension funds and the informal labour market, which employs most Nigerian residents.
Emerging market economies are encouraged by development experts to regularly rebase their economies to better capture the size of their national output and produce economic data reflective of their nascent economies.
Nigeria, Africa’s most populous nation, last rebased its GDP in 2014. At the time, the change allowed it to surpass South Africa to become continent’s largest economy, although it lost that crown in 2023.
Following the latest rebasing, Nigeria’s economy remains the fourth largest on the continent, behind South Africa, Egypt and Algeria.
“The rebasing exercise was timely,” said Michael Famoroti, an economist and head of research at Lagos-based data company Stears.
“It’s usually good to do these every 10 years or so especially in developing countries when the economy can change quite a bit. Add the emergence in the digital economy in that period and we needed an updated picture of the economy.”
Famoroti said the exercise had shown that a change in the composition of the Nigerian economy was well under way, with agriculture firmly cementing its place as the largest contributor to national output and crude oil “barely” contributing, at 5 per cent.
The rebasing makes certain metrics such as the country’s debt-to-GDP ratio seem healthier. Nigeria’s debt-to-GDP ratio was 52 per cent before the model change, but now stands at about 40 per cent. That is the same level as government’s self-imposed 40 per cent mark and below the 55 per cent level encouraged by the World Bank and the IMF.
“My worry is that the higher GDP figure will embolden the government to be laxer with its debt sustainability,” Famoroti added. “The debt-to-GDP ratio has already declined on the back of this. But that’s only masking the situation unfortunately.”
Adeyemi Adeniran, head of the NBS, described the rebasing as the “most comprehensive” ever carried out by the bureau at a press briefing in the capital Abuja. “Digital activities, pension fund administrators and the informal sector activities, where more than 90 per cent of Nigerians are employed, are now being measured,” he said.
Nigeria lost its status as Africa’s biggest economy in 2023 after President Bola Tinubu devalued its currency to reflect its true value and attract foreign investment. The naira has lost more than 70 per cent against the US dollar since the measure was taken.
Last week, Senegal’s finance ministry said it would soon rebase its GDP for the first time since 2018, in the midst of a scandal over hidden borrowing that threatens to push its debt burden well over the current size of its economy.
“Rebasing could improve debt/GDP along with continued strong economic performance,” Bank of America analysts said. “As such, the authorities may find this option appealing to resolve issues around the debt stock.”
Senegal’s dollar bonds have rallied since the announcement. The West African country’s GDP currently uses 2014 as a base year.
Last year, the IMF suspended a bailout for Senegal after billions of dollars in debt were misreported. The fund is waiting for the results of an investigation into the scandal.
