Africa’s most populous nation is now the largest economy in the continent as well. The GDP, value of all the goods and services produced in the country, soared to more than $500 billion after the rebased release of the economic indicators two months ago, on the 6th of April, 2014. The GDP doubled from 42.4 trillion naira to 80.2 trillion naira. Soon after the release, the foreign investors seemed attracted towards Nigeria when the fact is that nothing really has changed.
On the 5th of April, 2014 South Africa was much ahead of Nigeria in terms of growth rate, GDP and almost all the other economic factors. But, just after the Nigeria’s National Bureau of Statistics released the new GDP the other day; Nigeria, in terms of GDP, emerged to be the largest economy on the continent pushing South Africa to a distant second place. This change indicated that the estimated income of an average Nigerian increased from $1500 a year to $2688 a year. But the fact is that the Nigerians did not turn rich overnight as a majority of the 169 million population still lives on one dollar a day. Basically, going by suggestions of the World Bank, countries should update their base years after every five years but Nigeria had not updated its base year since 1990. Hence, this technical adjustment is what made this revision an ‘upward revision’.
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Nigeria’s GDP, $509.9b billion, is now about sixty percent bigger than South Africa’s $322.6 billion but the economic problems such as poverty, youth unemployment, inequality, poor governance and weak institutions still remain deep rooted in the country.
Where these dodgy numbers are giving a myopic view of Nigeria’s economy there is still a lot that the country deserves applause for. The mobile industry which once held no weight in the GDP has grown from a few hundred thousand in 1990 to 120 million subscriptions in 2010. The telecom sector which accounted for 1% of the GDP in 1990 now, accounts for 9% of the GDP. Nollywood, the film industry of the country, has become the second largest sector after agriculture. All these factors have made a big difference to the GDP. Moreover, the oil exports of the country have decreased from 33% to 14% proving that they are much more than just an oil exporter.
This makes us conclude that this change has come up with both good as well as bad news. Good being that the country now has a better system for measuring the economy. Bad being that even after releasing the latest facts, the economy does not reveal much about its citizens’ welfare in terms of their living standards.
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With the positive psychological impact that this doubled GDP has created in the minds of foreign investors and businessmen, the economy will surely witness a boom in the hotel and travel industry. But, they must keep in mind that with the power shortages, the cost of doing business in Nigeria will still be forty percent higher than in any other developing country!
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