It is no doubt that the rebasing of a country’s Gross Domestic Product (GDP) firms up its position, as it helps improve the country’s economic profile amongst foreign portfolio investors and foreign direct investors. This is evident in the recent rebasing of Nigeria’s GDP, which has firmed up Nigeria’s position as an emerging market economy. However, whilst GDP re-basing is recommended as a measure to achieve economic growth, it is important to state that such economic growth does not necessarily translate to economic development. Hence, the need to ensure sustainability of the economic growth so as not to defeat the rationale for rebasing the GDP.
GDP Rebasing – The Nigerian Perspective
In April 2014, Nigeria’s GDP was rebased after 24 years from a 1990 base year to 2010. This is contrary to the international standards for statistical accuracy, as recommended by the United Nations Statistical Commission (UNSC), which requires that GDP be rebased every 5 years.
It is pertinent to mention that Nigeria is not alone in this laid-back approach. African Development Bank recently reported that there are 18 other African countries, whose GDP base years are more than a decade old and that it is even much older in at least 10 countries. For instance, it is reported that the Democratic Republic of Congo and Equatorial Guinea have base years of more than 30 years.
The rebased GDP figure places the value of Nigerian economy at US$509.97billion (₦80.2trillion). This has made Nigeria to become the largest economy in Africa and 26 largest in the world, over-throwing South Africa with a GDP of US$350 billion in 2013. The increase in GDP stems from the increase in the list of activities from 32 to 42, occasioned by new sectors such as arts, entertainment and recreation especially music and the Nollywood film industry, food, beverage and tobacco, the electrical and electronic sector, motor vehicle and assembly, etc. It is imperative to state that certain sectors of the economy which had previously been under-estimated turned out with impressive contributions. For instance, contributions from telecommunication increased from 0.89% – 8.69%; services increased from 29.04% – 51.59%; manufacturing increased from 1.9% to 6.83%, etc.