Nigeria, Africa’s most-populous country and largest oil producer, was set to emerge as the continent’s biggest economy yesterday when the results of an overdue recalculation of its GDP were to be announced.
Although UN statisticians recommend that countries recalculate their GDP calculations every five years to reflect changes in the structure of production and consumption, Nigeria last carried out the exercise in 1990.
So the new figures expected to be unveiled by Nigerian Minister of Finance Ngozi Okonjo-Iwela and top government statisticians were expected to place Nigeria ahead of continental powerhouse South Africa, as fast-developing and new sectors such as telecommunications, music and the local film industry — Nollywood — are considered in the GDP recalculation.
Following the adjustment, Nigeria’s economy is expected to increase by as much as 60 percent, taking it from US$264 billion past South Africa’s US$384 billion.
Nigeria, with 170 million people is about three times the size of South Africa, but its economy is the second-largest on the continent, after South Africa.
Africa’s leading crude producer has enjoyed high rates of growth, notwithstanding widespread corruption, poor governance, rampant oil theft and a raging Islamist insurgency in the north. The annual growth rate averaged 6.8 percent from 2005 to last year and the economy is projected to grow this year at a rate of 7.4 percent, according to the IMF.
That compares to a little over 5 percent between 2005 and 2008 to 2009 in South Africa, which has since struggled to go beyond 3.5 percent.
Analysts admit only speculation at how big the impact of the recalculation will be, the actual size of the adjustment is probably of less significance than the psychological effect this will have on perceptions about Africa.
It would be interesting to see how international relations will be affected when South Africa is no longer the largest African economy. South Africa is, for example, the only African country represented in the G20.
For Nigeria, the recalculation will probably not mean a significant change, but it will improve the country’s balance sheet and its credit rating.
This should lead to lower borrowing costs for the government, which is ultimately beneficial for the country’s citizens.
It will also shore up Nigeria’s image and make it interesting as an investment destination for foreigners, a status hitherto enjoyed by South Africa.
However, analysts cautioned against viewing the updated figures as a sign of development, noting that South Africa is still far ahead in terms of GDP per capita, governance and infrastructure.
Nigeria still faces an immense challenge in terms of infrastructure deficits. Slow ports, bad roads and a lack of consistent, universal mains electricity are some of the major factors hampering business activity.
Despite its vast oil wealth, the last available World Bank figures from 2010 indicated that a staggering 84.5 percent of Nigeria’s 170 million people lived on less than US$2 a day.
“For the average person on the street, [the recalculation] really does not have any meaning,” Lagos Business School professor of political economy Pat Utomi, said.
“To a very large extent, Nigeria remains a poor country with very serious infrastructural challenges,” he said.
Utomi advised policymakers to take advantage of the recalculation to improve Nigerian living conditions.