With Nigeria’s GDP falling to an estimated $195bn – now trailing behind Algeria, South Africa and Egypt due to a 70% currency devaluation as the continent’s fourth-largest economy – the government is betting on its latest GDP rebasing exercise to enhance its economic metrics.
Rebasing a country’s GDP involves updating the base year used to calculate it. The GDP is used as a benchmark for measuring economic output and is typically revised periodically to accurately reflect evolving economic realities.
In 2014, the methodology for measuring the economy in Nigeria was updated for the first time in two decades, with 2010 as the base year.
The rebasing exercise catapulted Nigeria as the biggest economy in Africa, and the 26th-largest globally, bringing into focus sectors such as the digital economy, telecommunications, the film industry and retail – industries that were previously not captured or underreported.
Nigeria’s GDP expanded to $510bn from $270bn in 2013, while tax, the fiscal deficit and debt as a proportion of GDP declined.
Despite the revised rates, unemployment and poverty rates remained high. The rebased economy also looked more diversified, but in reality, the country remained hugely dependent on the oil and gas sector.
“Rebasing does not change what was already there, it’s just about measuring better and more accurately,” Yemi Kale, the then-CEO of the National Bureau of Statistics (NBS), said at the time. “It does not mean that within 24 hours something miraculous has happened.”
Why Nigeria is rebasing now
The GDP rebasing, whose results are expected to be released this month, was announced by the NBS in May 2024, with 2019 selected as the new base year.
“The standard practice is that every economy, based on the United Nations Office of Statistics prescription, should rebase every five years,” says Bongo Adi, a professor of economics at Lagos Business School (LBS). “When you don’t have accurate data, there is a limit to what you can do in terms of planning.”
Adi says the data overhaul would help policymakers develop policies targeted at the new sectors to boost their job creation potential and generate tax revenue.
But critics claim President Bola Tinubu‘s GDP rebasing exercise is a political manoeuvre to create the illusion of progress toward his $1trn economy election promise made in 2023.
“What they are trying to do is to sex up the figures and data,” says Paul Ibe, a spokesman for opposition leader and former vice president Atiku Abubakar.
“Tinubu needs to fix the economy if he wants to win in 2027. What matters to the average Nigerian is the cost of living and the standard of living, not GDP figures,” says political analyst Jide Ojo.
With election season barely a year away, an increased GDP figure may give the administration bragging rights, but questions remain on whether this will reflect the reality on the ground.
What the rebasing will show
The rebased GDP numbers will show an increase in the size and structure of the economy and a decrease in ratios such as tax to GDP and debt to GDP, which stood at 10.2% and 18.5% respectively in 2019, according to the NBS.
It said the new areas covered include digital economic activities, pension fund administrators, modular refineries as well as illegal and hidden activities such as sex work and the drug trade.
Between the last rebasing exercise and now, Nigeria has witnessed a Fintech boom which has led to the emergence of about six unicorns. Activities such as refining will also be added.
“It is mostly likely that Nigeria is going to be the largest economy in Africa after the rebasing, just like it happened in 2014,” says Adeola Adenikinju, president of the Nigerian Economic Society.
He adds that the rebasing will provide more information about the economic structure.
“We have to know the sectors that are driving our growth, that we need to target for development, and the sectors that are attracting or have potential to attract investment. Therefore, economic plans can be drawn to better target those sectors that are likely to reduce poverty, create jobs, and grow the economy.”
Accurate methods?
Under former president Muhammadu Buhari, Nigeria’s unemployment rate stood at 33%. However, Buhari directed the NBS to revise its methodology, redefining employment to include anyone working at least one hour per week.
This change slashed the unemployment rate from 33% to 4%. While the government celebrated this as a major success, critics quickly dismissed the figures as misleading and disconnected from reality.
Similar concerns are being raised around the most recent economic rebasing exercise. By including illegal activities in its calculations, critics argue the rebasing could once again produce skewed data that misrepresents Nigeria’s economic fundamentals.
These questions about data reliability come at a time when the NBS itself faces scrutiny. In December last year, the bureau reported alarming statistics: more than two million Nigerians were abducted and more than 600,000 killed in 12 months. Shortly after publishing the report, the NBS website was hacked, rendering it inaccessible.
Sources tell The Africa Report that Adeniran Adeyemi, the head of the NBS, was questioned by the secret police over the findings – a claim the NBS has denied.
“How do we convince foreign investors that our numbers are right?” asks Paul Alaje, an economist at SPM Professionals.
“If we release figures that are not genuine, they will be easily detected. All data must be subjected to rigorous verification,” he says, underscoring the broader implications of flawed statistics for Nigeria’s credibility on the global stage.
