Nigeria emerges as Africa’s largest economy

Nigeria has overtaken South Africa as Africa's largest economy after a rebasing calculation almost doubled its gross domestic product, to more than $500 billion in 2013, data from Nigeria's statistics office showed Sunday.

Average Nigerians seemed unimpressed by the news, saying a doubled GDP figure didn't put money in their pockets. Though GDP per capita rose to $2,688 last year, from an estimated $1,437 in 2012, poverty and inequality have increased.

GDP for 2013 in Nigeria, Africa's top oil producer, was 80.22 trillion naira, or $509.9 billion, the Nigeria Bureau of Statistics said, up from the 42.3 trillion naira estimated before the rebasing. The new figure shrank Nigeria's debt-to-GDP ratio to 11 percent for 2013, against 19 percent in 2012, statistics chief Yemi Kale told reporters in the capital, Abuja.

Most governments overhaul GDP calculations every few years to reflect changes in output, but Nigeria had not done so since 1990, so sectors such as e-commerce, mobile phones and its prolific "Nollywood" film industry — now worth 1.4 percent of GDP, Kale said — had to be factored in to give a clearer picture.

Growing attention from foreign investors was forcing Nigeria to more accurately calculate its statistics, including GDP, Kale said, adding that the base year would now be recalibrated every five years, in line with global norms.

Nigeria, Africa's most populous country, with 170 million people, has been growing as an investment destination because of the size of its consumer market and growing capital markets.

The jump in the official GDP figure places Nigeria as the 26th biggest economy in the world, up from 33rd before the rebasing, Kale said. It comes at a time of rising investor interest in Africa's growth potential and expanding middle class.

Many Nigerians shrugged off the GDP news.

"I'm not really impressed. I don't feel it in my pocket," said Richard Babs-Jonah, 47, a small farmer, rubbing his thumb against his index and middle fingers to signify cash.

"It's not the masses who are rich. Those controlling the economy, those with government contracts get all the money," he added, expressing the common view that Nigeria's economy is rigged in favor of a handful of well-connected oligarchs.

On Feb. 20, Nigerian President Goodluck Jonathan fired the central bank governor blamed for leaking news that billions of petrodollars are missing from Nigeria's coffers, accusing him of "financial recklessness and misconduct."

Lamido Sanusi, a 52-year-old career banker, had spearheaded bank reforms and acknowledged making powerful enemies among vested interests in a country where corruption is endemic.

The new figures revealed that services have replaced farming as the Nigerian economy's biggest sector. It is worth 41.9 trillion naira, compared with 17.6 trillion naira for farming. Most services growth came from telecoms and real estate.

Nigeria's annual GDP growth for 2013 is expected to come in at 7.41 percent after the rebasing, compared with about 6.5 percent in 2012, Kale said.

Real GDP is calculated by the sum value of all produced goods and services at constant prices. The constant prices are from the base year. To more accurately define growth in GPD, updating the base year is critical. The United States has a system in which its GDP is constantly rebased — showing the most up-to-date figures, the BBC reported.

Analysts said the recalculated GDP will raise Nigeria's profile but change little on the ground.

"Is the money in your bank account more on Sunday than it was on Saturday? If you had no job yesterday, are you going to have a job today?" asked Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives.

"If the answer to those questions is no, then this is an exercise in vanity," he added, though he said the new figure was more accurate.

Nigeria's taking the title of Africa's biggest economy will fuel a longstanding rivalry with South Africa.

South Africa currently represents Africa at the G-20 and is often grouped with Brazil, Russia, India and China as the BRICS, the most powerful emerging economies.

Despite Nigeria's roaring growth in recent years and now a bigger GDP, the country still trails South Africa in basic infrastructure — power and roads — necessary to lift its people out of poverty.

"South Africa was historically the go-to country for investment in Africa. However, the reality is that other regions are increasingly asserting their economic voice," said Roelof Horne, a portfolio at Investec Asset Management in Cape Town.   

Al Jazeera and Reuters