According to Financial Times, Nigeria overtook South Africa on Sunday to become Africa’s largest economy and 26th largest in the world after the government released updated figures that nearly doubled estimates for gross domestic product.
As a result of the statistical revision, Nigerian GDP for 2013 was $509bn, 89 per cent larger than previously stated for last year. The change was made by bringing forward the base year for calculations to 2010 from 1990, when the structure of the economy was very different and services such as banking and telecoms had barely taken off.
Companies ranging from Nestlé and Standard Bank to Heineken and MTB have already poured millions of dollars into Nigeria but foreign businessmen and analysts said the revision could serve as a catalyst for further investment.
“The revision will have a psychological impact. It underlines to foreign investors that this country has a large consumer base. It validates the investment thesis,” Ngozi Okonjo-Iweala, the minister for economy and finance told the FT ahead of a press conference in the capital Abuja. “The idea [of the rebasing] is not to be the biggest; the main objective is to measure the economy properly.”
South Africa’s GDP stood at $372bn last year, although its population of 51m is a fraction of Nigeria’s 169m.
The figures follow an exhaustive data review intended to give a more accurate picture of the economic activity that has driven growth over the past two and a half decades. In a similar exercise, Ghana’s GDP rose more than 60 per cent in 2010.
The figures have been verified by the International Monetary Fund, the World Bank and the African Development Bank over the past three months.
“The actual size of the adjustment is probably of less significance than the psychological effect this will have on perceptions about Africa,” said Roelof Horne, portfolio manager at Investec Asset Management. “South Africa was historically the ‘go-to’ country for investment into Africa. However, the reality is that other regions are increasingly asserting their economic voice.”
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