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Monday, 7 April 2014
Economists shrug at Nigeria’s growth jump
The view abroad is that rebasing is an exercise in vainglory
Dr Yemi Kale, Statistician-General and CEO National Bureau of Statistics, during his presentation
South Africa remains the most important economy in the continent despite being overtaken by Nigeria as Africa’s biggest, South African economists said.
The result of a long awaited rebasing of Africa’s most populous nation showed that Nigeria’s GDP of $453 billion in 2012 was higher than South Africa’s $384 billion.
“South Africa will remain one of the important economies of the continent, though this rebasing will be a significant step in establishing Nigeria as a true African powerhouse,” said Investec portfolio manager, Roelof Horne.
To some Nigerian economists, the rebasing was a vainglorious exercise
Nigeria, with 170 million people, is about three times the size of South Africa by population, but it’s economy is still battling challenges such as poor infrastructure that hampers business activity.
The new statistics included the contribution of the fast-developing sectors such as telecoms, music and film industry, known as Nollywood.
Economist Dennis Dykes, at South Africa’s Nedbank said Nigeria’s new position as Africa’s largest economy should be “viewed positively”.
“It’s important that economies were measured accurately…it gives potential investors a good picture of activity,” he said.
“The news figures should help South African investors identify new opportunities in Nigeria, especially in areas that were previously not factored in.”
Dykes said South Africa’s $7,508 GDP per capita, higher than Nigeria’s $2,688 was still the most important measure of the economy.
“Being Africa’s number one is definitely a great confidence booster for Nigeria, but it won’t change much,” he added.
Dr. Yemi Kale, statistician-general, National Bureau of Statistics said the figures should not be seen as an end in themselves but should be used to help the government shape policy for the future.
The next rebasing was planned for 2015, with the results out in 2016, he added.
For ordinary Nigerians — most of whom still live on less than $2 a day — the rebasing is likely to have little effect, but it will improve the country’s balance sheet and its credit rating and promote it from being a low-income economy.
Nevertheless, 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.
Bismarck Rewane, the head of the Lagos-based Financial Derivatives Company said the exercise could only be meaningful “if it impacts positively on the living standards of the people”.
“Nigerians will still buy petrol at the same price, they will still have the same amount in their pockets, electricity is not going to improve on Monday morning,” he said.
“So, the exercise is a journey from reality to vanity,” he added.
South Africa will continue to remain the most competitive economy, despite Nigeria’s new status, he added.
South Africa has been hit by slow economic growth since the 2008 global recession, its growth lagging behind many of the world’s developing economies.
This year, the World Bank revised the country’s growth outlook to 2.7 percent, down from 3.2 percent, amid high unemployment.