Nigeria’s economy surpassed South Africa’s as the largest on the continent after the West African nation overhauled its gross domestic product data for the first time in two decades.
On paper, the size of the economy expanded by more than three-quarters to an estimated 80 trillion naira ($488 billion) for 2013, Yemi Kale, head of the National Bureau of Statistics, said at a news conference yesterday to release the data in the capital, Abuja. That compares with the World Bank’s 2012 GDP figures of $262.6 billion for Nigeria and $384.3 billion for South Africa.
The NBS recalculated the value of GDP based on production patterns in 2010, increasing the number of industries it measures to 46 from 33 and giving greater weighting to sectors such as telecommunications and financial services.
While the revised figure makes Nigeria the 26th-biggest economy in the world, the country lags in income per capita, ranking 121 with $2,688 for each citizen, according to Finance Minister Ngozi Okonjo-Iweala. “With better information we can see that our economy is more diversified than before,” she said, citing contributions by services and telecommunications.
Ratios such as tax to GDP and foreign-exchange buffers are lower than previously thought, Chris Becker and Catherine Bennett, analysts at ETM Analytics in Johannesburg, said in e-mailed comments today.
“We can probably expect policies that attempt to boost these ratios going forward, which should in turn create a positive feedback for GDP growth,” they said. “Announcing a highly expansionary budget won’t upset markets too much at this point.”
The new GDP figure exceeds forecasts from London-based Renaissance Capital, which predicted in December that the revision would boost the size of the economy by as much as 60 percent to between $384 billion and $424 billion.
According to calculations based on the new data, Nigeria’s economy grew at 12.7 percent between 2012 and 2013.
“We have to make sure this is sustainable growth and inclusive growth,” World Bank Group Chief Financial Officer Bertrand Badre said in an interview broadcast on Bloomberg TV today.
Nigeria, a country of about 170 million people, is a member of the Organization of Petroleum Exporting Countries and Africa’s biggest oil producer. The government is targeting 7.16 trillion naira in income from oil and gas this year.
“Rebasing does not change what was already there, it’s just about measuring better and more accurately,” Kale said. “It does not mean that within 24 hours something miraculous has happened.”
The most recent poverty survey by the NBS shows that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004.
While 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, the country won’t change its debt policy and borrow more, Okonjo-Iweala said.
Oil and gas, by far the biggest source of government revenue, contributed 14 percent of GDP under the new set of data, compared with 32 percent under the old.
“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 Nigerian investment company Heirs Holdings Ltd., in an e-mailed response to questions.
South Africa’s Finance Minister Pravin Gordhan welcomed the announcement.
“This is good news,” he told reporters in Pretoria today. “It sets up a climate where the most populous nation on the African continent is beginning to move forward. It also comes at a time when, for the last six or nine months, you had a negative narrative about emerging markets generally.”
South African companies are prominent in Nigeria’s retail and telecommunications industries. Johnannesburg-listed MTN Group Ltd (MTN) is one of the biggest mobile-phone operators in Nigeria.
President Goodluck Jonathan’s government is struggling to quell an Islamist insurgency in the partly arid north, where Amnesty International estimates more than 1,500 people have been killed this year. It is also grappling with rampant oil theft and allegations that the Nigerian National Petroleum Corp. has not accounted for billions of dollars of revenue, allegations the company denies.
Nigeria’s naira retreated 0.2 percent to 163.85 against the dollar as of 12.34 p.m. in the commercial capital, Lagos, extending the drop in 2014 to 2.2 percent.
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