In a dramatic boost for African economic confidence, Nigeria has announced a huge rise in its estimated GDP, making it the biggest economy on the continent and the 26th biggest in the world.
The surge in its newly calculated GDP, nearly double the previous estimate, helps to reveal Africa’s hidden wealth. The new data include fast-growing sectors, from telecommunications to manufacturing and even the Nollywood film industry, which were never properly counted in the past.
Under the revised data announced on Sunday, Nigeria overtakes South Africa to become the biggest African economy. It now estimates that its GDP is nearly $510-billion (U.S.), a jump of 89 per cent from the previous estimate.
The increase is far beyond the forecasts from economic analysts, who expected that Nigeria’s economy would rise by 40 to 70 per cent under the new data. It makes Nigeria’s economy the 26th biggest in the world, a sharp jump from 36th biggest in the earlier data.
In just one example of the new data, Nigeria’s famous Nollywood film industry – one of the most prolific in the world – is now believed to be a $6-billion sector, worth about 1.2 per cent of the economy. In the older estimates, it had been given a value of virtually zero.
Nigeria’s Finance Minister, Ngozi Okonjo-Iweala, said the government is happy with the new data, which it hopes will make Nigeria “much more attractive” to foreign investors. It shows that the oil-rich Nigerian economy is more diversified than previously believed, she said.
Independent analysts believe the improved data could help donors and lenders to target their spending more efficiently. The World Bank and International Monetary Fund are also praising the new estimates.
Several other African countries have improved their economic data recently, producing sharp rises in their GDP. In Ghana, for example, the revised data led to a 60-per-cent GDP increase in 2010.
But the new data, while potentially valuable, does not put money into the pockets of Nigerians.
It is merely an improved calculation of the economic data, which was long overdue because it hadn’t been properly reviewed since 1990.
The Finance Minister warned Nigerians that the economy remains unequal. Despite vast oil revenue, most Nigerians are still poor. The country has a huge population – about 170 million, the biggest on the continent and about three times bigger than South Africa. Measured by per capita income, even with the new data, Nigeria still ranks only 121st in the world, with an average income of about $3,000 per person.
“We should not get carried away by this exercise,” Ms. Okonjo-Iweala told a press conference after the new data were announced. “We’ve been growing in an unequal manner. We need better quality growth.”
While the announcement of the higher GDP was greeted by applause from Nigerians at the press conference on Sunday, there was skepticism from many Nigerians on social media, who noted that the country is still plagued by poverty and electricity shortages.
Despite its rising GDP and diversifying economy, Nigeria is hampered by severe corruption. Billions of dollars in oil revenue have disappeared, many foreign investors find the country difficult to work in, and its roads and telephone systems are relatively poor. South Africa’s economy, with a GDP of about $370-billion, falls to second place in Africa under the new data. But its per capita income is still almost three times higher than that of Nigeria.
Some analysts in South Africa said on Sunday that they hope the new Nigerian data will rattle the South African government and provoke it into responding with stronger economic policies to avoid losing its leadership position in the continent.
But the reaction from one South African official was more complacent, suggesting that it doesn’t see Nigeria as a serious competitor. “The lights are on in SA, the banking sector and infrastructure is world class,” said Clayson Monyela, a top South African diplomat, in a series of tweets on Sunday. “SA’s economy is more diversified and not limited to one commodity.”