Nigeria as Africa’s largest economy

It came like a thunderbolt – the news penultimate Sunday that the Nigerian economy has suddenly doubled, racking up billions of dollars, and breezing ahead of South African to become Africa’s largest economy.

The newsworthiness of the overnight transformation is the opposite of the docility of the Nigerian government in the past 24 years. Since 1990 the Nigerian authorities have not updated their approach to calculating gross domestic product (GDP), a process also known as “rebasing” which countries carry out every five years as recommended by the International Monetary Fund (IMF).

The revelation from the National Bureau of Statistics that Nigeria’s new rebased GDP (or, the market value of all finished goods and services produced in a country) had risen from 42.4 trillion naira to 80.2 trillion naira ($510 billion) as against South Africa’s $370 billion at the end of 2013, is not a hoax after all.

The National Bureau of Statistics explains that the new base year taken into account for arriving at the new rebased nominal GDP is 2010, and that it was based on national accounts 2008 from 1993 previously, as well as the international standard of industrial classification: 4.0 from the previous 3.1.

The “breakthrough news” of Nigeria’s new GDP status will surely have its real-world consequences. One, this will make entrepreneurs and investors more confidence about investing in Nigeria. Two, Nigeria might be tempted to clamour for membership of political groups such as G-20, the BRIC and even a permanent seat on the UN Security Council. Aid agencies may begin to see Nigeria from a different perspective, whereas the economic problems like poverty, inequality and poorly-functioning state remain unchanged.

GDP is different from a nation’s per capital income. The per capita income mirrors an individual’s standard of living. While the latest economic overhaul places Nigeria in the same size as Belgium and Polish economies, the per capital income of those countries are by far higher than Nigeria’s. An average Nigerian is believed to live on less than $1 per day. Even South Africa’s GDP numbers are three times higher than Nigeria’s on per capita basis.

Interestingly, the figure from the National Office of Statistics came out just a few days after the World Bank rated Nigerians among the “extremely poor” people of the world. Other countries also listed include DR Congo, Tanzania, Bangladesh, India, Indonesia, Pakistan, Ethiopia, China and Kenya.
World Bank President, Jim Yong Kin, who made the disclosure at the Council on Foreign Relations (CFR) in Washington, ahead of the World Bank/IMF Spring meetings, noted that two-thirds of the world’s extreme poor are concentrated in just five countries: India, China, Nigeria, Bangladesh and the Democratic Republic of Congo. He said if Indonesia, Pakistan, Tanzania, Ethiopia and Kenya are added, the total would grow to 80 per cent of the extreme poor.

Several reasons are responsible for the inability of Nigeria’s GDP and per capita income to grow on the same frequency. There is the high level of unemployment in Nigeria. This is more so due to the absence of any real modern manufacturing sector.

In all, Nigerians do not see anything in the GDP because they believe that the politicians in high positions have often cornered the wealth of nation in a brazen corruption and overpaid themselves millions of naira while the masses suffer in vain.

We advise Nigerian political leaders to think more about the welfare of the people that can only be seen in the per capital income, instead of setting out to celebrate the “victory of figure”, which is what GDP is all about.

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