Nigeria Becomes Africa's biggest economy

Abuja (AFP) - Nigeria on Sunday
became Africa's biggest
economy, leap-frogging South
Africa, after the government
announced a long-overdue
rebasing of the country's gross
domestic product.
The new calculations take into
account changes in production
and consumption since the last
time the exercise was carried
out in 1990, including an added
focus on communications and
the movie industry.

The data indicated that the
economy grew to $453 billion in
2012, instead of $264 billion as
measured by the World Bank for
that year.
South Africa's economy was at
$384 billion in 2012, according
to the World Bank.
Estimates for 2013 indicated
further expansion to $510
billion, Nigeria's chief
statistician, Yemi Kale, told a
news conference in the capital,
Abuja.

"Nigeria has moved to be the
largest economy by GDP size in
Africa and has moved to be the
26th largest economy in the
world," finance minister Ngozi
Okonjo-Iweala said.
"On a per capita basis, Nigeria is
number 121 in the world. So, we
have a total GDP size where we
have moved up to 26th," the
former World Bank managing
director added.
- New industries -
The widely expected results are
based on calculations taking into
account a range of new sectors
and industries that were
negligible or non-existent in
1990.

They include the mobile
telephones market -- Africa's
largest -- music and the hugely
popular local film industry,
Nollywood.
Nollywood, for example, was
now worth 853.9 billion naira
($5.1 billion, 3.7 billion euros) or
1.2 percent of GDP.
"The rebased GDP numbers
imply that the level of economic
activity is much higher than
previously reported," the finance
ministry said in a statement,
adding that the economy was
becoming more driven by the
service sector.

"It indicates a clearer picture of
Nigeria's economic landscape,
and the significant opportunity
for growth and wealth creation
in the Nigerian economy."
With 170 million people, Nigeria
is about three times the size of
South Africa and has enjoyed
high rates of growth,
notwithstanding widespread
corruption, poor governance,
rampant oil theft and a raging
Islamist insurgency in the north.

According to the International
Monetary Fund, Nigeria averaged
6.8 percent annual growth from
2005 to 2013 and was
projected to grow this year at a
rate of 7.4 percent.
That compares to a little over
five percent between 2005 and
2008-9 in South Africa, which
has struggled to go beyond 3.5
percent since.

Global investors have been
eyeing Nigeria as a potential
boom market, along the lines of
the BRIC countries (Brazil, Russia,
India and China) 10 years ago.
But economists have warned
not to take the new figures at
face value, given that South
Africa -- the continent's only G20
member -- has fewer people and
is streets ahead in areas such as
infrastructure and governance.

Okonjo-Iweala said GDP per
capita in Nigeria was now
$2,688 -- up from $1,555 in
2012 -- taking the country from
135th position in the world to
121st.

GDP per capita in South Africa in
comparison was $7,508.
Kale for his part said the figures
should not be seen as an end in
themselves but should be used
to help the government shape
policy for the future.
The next rebasing was planned
for 2015, with the results out in
2016, he added.
- A 'vanity' exercise -
For ordinary Nigerians -- most of
whom still live on less than $2 a
day -- the rebasing is likely to
have little effect, but it will
improve the country's balance
sheet and its credit rating and
promote it from being a low-
income economy.

Nevertheless, Nigeria still faces
an immense challenge in terms
of infrastructure deficits. Slow
ports, bad roads and a lack of
electricity are some of the major
factors hampering business
activity.
Bismarck Rewane, the head of
the Lagos-based Financial
Derivatives Company said the
exercise could only be
meaningful "if it impacts
positively on the living standards
of the people".

"Nigerians will still buy petrol at
the same price, they will still
have the same amount in their
pockets, electricity is not going
to improve on Monday
morning," he said.
"So, the exercise is a journey
from reality to vanity," he added.
South Africa will continue to
remain the most competitive
economy, despite Nigeria's new
status, he added.

Reference: Yahoo News