Nigeria, Africa's most
populous country and largest oil producer, is set to emerge as the continent's
biggest economy on after the results of an overdue rebasing of its gross
domestic product are announced.
Although United Nations
statisticians recommend that countries rebase 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 Finance Minister Ngozi Okonjo-Iwela and top government statisticians
are expected to place Nigeria ahead of continental powerhouse South Africa as
new and fast-developing sectors such as telecoms, music and local film
industry, Nollywood, are considered in the GDP rebasing.
Following the adjustment, Nigeria's
economy is expected to increase by as much as 60 percent, taking it from $264
billion past South Africa's $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 2013 and
the economy is projected to grow this year at a rate of 7.4 percent, according
to the International Monetary Fund.
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.
Analysts say while at this stage we can only speculate how big the
impact of the rebasing 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 rebasing 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.
But analysts cautioned
against viewing the new figures as a sign of development, noting that South
Africa is still way ahead in terms of GDP per capita, infrastructure and
governance.
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.
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 $2 a day.
"For the average person on the
street, it (rebasing) really does not have any meaning," Pat Utomi,
professor of political economy at the Lagos Business School, says..
"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 rebasing to
improve the living conditions of the people.
"The focus should be on how to
transform the huge human capital available in the country to output that will
help to reduce poverty and create jobs," he added.
Chapisha Maoni