Nigeria: Africa’s New Number One

(This article was originally published in June 2014)

By Thomas Chevillotte

On April 6, the National Bureau of Statistics (NBS) announced new GDP figures for 2013. Although much anticipated, revised figure makes Nigeria the 24th-biggest economy[1] in the world moving from the frontier to the official emerging market status.

Thanks to a new base year – 2010 instead of 1990 – Nigeria’s economy is now the largest African economy with a GDP worth 510 billion dollars in 2013, up from 286 billion under the former methodology — surpassing South Africa’s 351 billion dollar economy. “The rebasing provides the government with a more accurate view of all the levers they can pull to drive growth and how far we have actually already moved beyond oil,” said Tony Elumelu, chairman of Heirs Holdings, a large Nigerian Conglomerate[2]. Vision 2030 aim to place the country as a middle income earner[3] and the gateway to Africa.  Nigeria is Africa’s most populous nation, Lagos the commercial capital is the country’s biggest city. Economic growth is driving more people to the cities with increased urbanization throughout the country.

The reasons behind the GDP increase include the improvement of statistics gathering. Whereas the old GDP figures were based solely on estimates of output, the new ones are reconciled with separate surveys of spending and income. Some of the greatest advances include an increase in the measured number of industries (from 33 to 46) and the activity of small businesses. New GDP data are now calculated based on around 850,000 establishments[4], including many small ones, and gave greater weighting to sectors such as financial services, manufacturing, film-making and telecommunications. New official figures show that services are bigger than agriculture and industry combined. However industrial value added has even decreased from the old series to the new series, not only in proportional terms but also in absolute terms[5]. This is worrying for a couple of reasons. For most countries (apart from India), the service sector has been a poor engine of growth. Secondly, the quality of numbers on production, value and intermediate consumption on small and medium scale services is very poor. Africa’s biggest oil producer, Nigeria is a member of the Organization of Petroleum Exporting Countries. Oil and gas, by far the biggest source of government revenue, contributed 14 percent of GDP under the new set of data, less than half what was previously thought. Finally the revised economic data saw Nigeria’s 2012 debt-to-GDP ratio decline to 11 percent from the 19 percent projected with the old figures.

Despite economic status upgrade, little has changed on the ground. With a population of about 170 million people, the country may be a giant but is still poor ranking 153rd out of 187 countries in the UN’s Human Development Index[6], also lagging in income per capita, and ranking 121st with $2,688 for each citizen. NBS’s most recent poverty survey shows that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004. Some of Nigeria’s other challenges include keeping on attracting investment, training new talent and diaspora remittances. With presidential elections in 2015, a period when political tensions increase violence, the security situation is an area of concern as recently observed with Boko Haram’s activities in the Northern regions. Improving good governance and corruption are some of the issues this oil rich country is facing, although it remains a favorite for many investors.

Now that Nigeria is in the spotlight, the real investment winners will emerge in the long-term, as savvy investors seek to capitalize on the ‘new’ direct investment opportunities in the country. However the government will likely face pressure to justify rising unemployment, its lack of success effecting infrastructure and policy reforms befitting the economy’s evident dynamism.

[1] The Economist, “Step change” (April 12th 2014)

[2] Bloomberg, “Nigerian economy overtakes South Africa’s on rebased GDP” (April 6th 2014)

[3] SSCG, “Rebasing Nigeria Economy: Opportunities and Challenges”

[4] The Economist, “Step change” (April 12th 2014)

[5] African arguments, “What does Nigeria’s new GDP number actually mean?” (April, 8th 2014)

[6] The Economist, “Africa’s new number one” (April 12th 2014)

Courtesy of Emerging Frontiers 

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