Nigeria Economy Set to Leapfrog South Africa on Data Revamp

Nigeria may leapfrog South Africa as the continent’s biggest economy when the government statistics agency publishes revamped data this weekend.
The National Bureau of Statistics is set to release gross domestic product figures based on 2010 production patterns in Africa’s most populous country, the first time Nigeria has overhauled the data in two decades. 
A report will be released at a press conference in the capital, Abuja, at about 2 p.m. local time on April 6, according to Bloomberg.
The revision may boost the size of the economy by as much as 60 percent to between $384 billion and $424 billion, according to London-based Renaissance Capital Ltd., lifting Nigeria ahead of South Africa in the World Bank’s global rankings.
“This will make it increasingly hard for companies looking at Africa to overlook Nigeria, especially considering the size of the domestic market and its potential,” Samir Gadio, a strategist at Standard Bank (STAN) Group Ltd. in London, said in an e-mailed response to questions.
The World Bank calculated Nigeria’s GDP at $263 billion in 2012 and South Africa’s at $384 billion. The West African nation’s population of 170 million is more than three times bigger than South Africa’s.
Nigeria is following Ghana and Zambia in recalculating the size of its economy. When Ghana, a West African oil and gold producer, rebased its data in 2010 in a similar exercise, the value of GDP increased by 75 percent to about $31 billion. The economy of Zambia, Africa’s second-largest copper producer, increased by 25 percent to about $24 billion following data revisions in February.
Regardless of the new GDP number, investment in oil-producing Nigeria is constrained by power and infrastructure bottlenecks, corruption and weak governance. Nigeria’s power supply is less than a 10th of South Africa’s, while the West African nation was ranked at 144 out of 177 countries on Transparency International’s Corruption Perception Index last year.
“Addressing these shortcomings will probably have much more impact on investment than the perception that Nigeria is now a bigger economy,” Gadio said.
The revisions will increase the number of industries measured by the statistics agency to 46 from 33 and give greater weighting to sectors, such as telecommunications, financial services, insurance, real estate and film-making.
The new numbers will probably lower Nigeria’s debt-to-GDP ratio, while reducing the proportion of government revenue to GDP.
“Crucially, what is not always clear is how governments then respond to these new ratios,” David Cowan, an Africa economist at Citigroup Inc. in London, said in an e-mailed response to questions. “Do they think they can borrow a lot more, or do they think the best policy response is to boost tax revenue? The latter is clearly the better policy response.”
The naira has dropped 2.1 percent against the dollar this year and was trading at 163.89 on the interbank market as of 11 a.m. in Lagos, the commercial capital.
Per capita GDP in Nigeria is estimated at $2,666, according to data from the World Bank, compared with $11,255 in South Africa.
The NBS’s most recent poverty survey, published in 2012, shows that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004. In the desert northeast, where Amnesty International estimates at least 1,500 people have been killed this year as security forces battle a Islamist insurgency, poverty rates may be even higher.
Nigeria emerging as the biggest economy in Africa “changes nothing in terms of the challenges facing the economy — the need to build infrastructure,” Cowan said. “Nigeria will remain a poor country in terms of per capita income, even compared to South Africa.”

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