Revised figures show that Nigeria is Africa’s largest economy
YEMI KALE, Nigeria’s statistician-general, is not the type of person to be in any way associated with the sort of double-your-money scams his country is known for. Yet on April 6th he found himself explaining that his estimate for Nigeria’s GDP in 2013 had been revised from 42.4 trillion naira to 80.2 trillion naira ($510 billion), an 89% increase. Sceptics might assume that the remarkable new numbers have been fiddled. In fact, it is the old ones that were dodgy.
The revision means Nigeria leapfrogs South Africa to be Africa’s largest economy. It rises to 24th in the list of the world’s big economies, behind Poland and Norway and ahead of Belgium and Taiwan.
The upgrade is the outcome of a process known as “rebasing”. GDP is typically measured by reference to the shape of the economy in a “base” year. Statisticians sample businesses in different industries to see how fast they are growing. The weight they give to each sector depends on its importance to the economy in the base year. As time passes the figures become less and less accurate. Nigeria’s old GDP data relied on a hopelessly dated snapshot of its economy in 1990. The new figures (which have 2010 as the base year) give due weight to fast-growing industries such as mobile telecoms and film-making that have sprung up since then.
Indeed the telecoms industry accounts for more than a quarter of the upgrade in GDP. In 1990 the state telephone company had just a few hundred thousand fixed-line customers. There are now around 115m mobile-phone lines in use in Nigeria. Manufacturing also looms larger than it did. Factories that have opened since 1990 are being counted. As a result the sector’s share of the economy has grown from less than 2% of GDP to nearly 7%. Film-making had not shown up at all in the old figures; now the industry’s size is estimated at around 1.4% of GDP.
Nigeria’s number-crunchers have improved the gathering of statistics in other ways too. For instance, the old GDP figures were based solely on estimates of output. The new ones are reconciled with separate surveys of spending and income. Perhaps the greatest advance is the inclusion of the activity of small businesses. The sample of firms from which the GDP data are calculated has increased tenfold to around 850,000 establishments, including many small ones. The traders who weave between the Lagos traffic are not captured; only businesses with a fixed location qualify. But the informal shops that account for the bulk of retail and wholesale trade are now part of the GDP picture. Indeed after telecoms, trading makes up the biggest share of the revision.
A near-doubling of GDP is a hefty change. Other African countries have also bumped their numbers up a lot by shifting the base year, but not by quite as much. The International Monetary Fund advises that the base year should be updated at least every five years. Nigeria had left it much longer and as a result the revision is especially dramatic.
However, Nigerians are no richer than they were before the GDP figures were revised. The majority of its 170m-plus people live on less than $1.25 a day. Even so the new figures show that Nigeria is much more than just an oil enclave. The weight of the oil and gas industry, at 14% of GDP, is less than half what was previously thought. There are more factories. Service industries are booming. Nigeria now looks like an economy to take seriously.