Lagos - Nigeria’s gross domestic product (GDP) figures will shoot up by around 40% in the second quarter this year, when Africa’s second-biggest economy changes the base year for its calculation to 2009 from its current 1990, a source close to the matter told Reuters on Wednesday.
The recalculation will enable Nigeria to join the ranks of middle-income countries and put it much closer in size to South Africa, the continent’s most developed economy.
The source said the calculations had “taken into consideration fluctuations, availability and consistency in the data in choosing the new base year, which will be 2009”, and that it will be applied from the second quarter of 2012.
Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, such as cellphones and the internet.
Since Nigeria has not done so since 1990, analysts had expected a large jump. Nobody had put a number on it until today.
The source said the recalculation would add about 40% to Nigeria’s GDP. An increase of that magnitude would boost Nigeria’s roughly $250bn economy to around $350bn.
That brings it close to South Africa’s currently $385bn economy. And with a growth rate of around 7% a year, compared with 3% in South Africa, Nigeria may eventually overtake its rival to seize the top spot.
That would most likely boost interest in stocks of consumer goods companies that are looking to unlock the potential of Africa’s most populous country and its 160 million consumers.
It will also improve Nigeria’s debt to GDP ratio, currently at around 16%.
But Nigeria’s tax revenues, seen as woeful for a country of this size, will look even smaller. Nigeria does not publish tax revenue figures but they are suspected to be extremely low, with 95% of government revenues coming from oil output.
The national accounts had been reclassified to reflect International Monetary Fund ISIC 4 standards, the source said, making it easier to compare the country’s GDP with peers.