Prior to the much-needed and long overdue “rebasing,” (the last occurred in 1990) industries such as IT, telecom, music, online sales, music, airlines, as well as its growing film industry (Nollywood), will finally be counted amongst the country’s other industries and resources. To illustrate the difference that 25 years makes, Nigeria now produces more Guinness Stout that any country in the world. Presently the country has 100 million mobile phone users – in 1990 when the economy was last “rebased,” the West African nation had 300,000 landlines.
Inclusion and “rebasing”
The “rebasing” not only rockets Nigeria’s economy into the African lead, it dwarfs the continent’s second largest economy, South Africa. South Africa will likely have company now on the table of G-20 nations; South Africa’s GDP of $353 billion made it the sole African nation to count itself a member of the group. Every Nigerian, on paper, has just received a $1200 per capita increase in their salaries, shame most markets don’t except GDP as a form of payment.
“Our rebasing story is like the story of a woman that decided to give her husband four pieces of meat by dividing the tiny one into four,” tweeted a follower of BBC’s Africa Network member Tolu Ogunlesi. “So Nigeria has now supplanted South Africa as Africa’s largest economy. But I’ve not had light (electricity) for seven days, so it means nothing to me,” said another Twitter user.
Financial analyst Bismarck Rewane speaking of the “rebasing” called it “a vanity. The Nigerian population is not better off tomorrow because of that announcement. It doesn’t put more money in the bank, more food in their stomach. It changes nothing.”
The easy suggestions that this is simply reworking of numbers will continue, but the other side of the equation is the fact that the number is certain to jump out at foreign investors. While Nigeria’s oil and gas business accounts for nearly 80% of this figure, tourism, telecommunications, service industries, and agriculture are booming businesses. Nigerian oil production is decreasing each year while the economy continues to grow.
Nigeria, despite civil unrest, widespread corruption, and other difficulties is the largest recipient of direct foreign investment in Africa due to its 7% annual growth rate. This number, however, will surely come down with the recalculation of the economy. It will also lower the country’s already low debt to GDP ratio of just 21%. According to many economists, this should significantly lower interest rates the government is offered if the country wishes to make further investments in its future.