Understanding Nigeria’s Upcoming GDP Rebasing and Its Economic Implications

Nigeria’s National Bureau of Statistics is set to unveil a rebased Gross Domestic Product in early 2025, shifting the base year from 2010 to 2019. This rebasing aims to better reflect the evolving economy, capturing fast-growing sectors. However, questions remain regarding the real impact on ordinary Nigerians’ welfare amidst ongoing economic challenges like inflation and stagnant wages.

The National Bureau of Statistics of Nigeria plans to release the rebased Gross Domestic Product (GDP) figures for the first quarter of 2025. This will be the first revision in over a decade, with the base year shifting from 2010 to 2019. This rebasing aims to provide a clearer representation of the economy, integrating rapidly expanding sectors such as digital finance and the creative industry, along with enhancing the recognition of the informal sector.

Rebasing GDP involves updating the reference year to accurately depict the economy’s current structure and performance, accounting for changes in consumption and sector contributions. Since the last rebasing in 2014, which led to Nigeria surpassing South Africa as the largest economy in Africa, sectors such as telecommunications and entertainment have dramatically increased in significance. The upcoming rebasing will reassess the economic landscape by including emerging sectors crucial for growth.

The implications for per capita income are significant. Data from the International Monetary Fund indicates that Nigeria’s GDP per capita has dramatically declined from $3,022 in 2014 to $835.49 in 2024, underscoring economic challenges. If rebasing leads to an increase in GDP, the per capita income figures will also rise, but this does not necessarily correlate with improved living conditions for citizens burdened by inflation and stagnant wages.

Rebasing may also influence vital economic indicators such as the debt-to-GDP ratio and tax revenue as a percentage of GDP. A larger GDP could lessen the perception of Nigeria’s debt burden, which currently exceeds N142.3 trillion, by providing a better economic context. However, without improvement in tax collection strategies, the tax-to-GDP ratio may continue to decline.

The ongoing challenges of income inequality, high inflation, and unemployment complicate the potential benefits of GDP rebasing. The informal sector and underemployment hinder wage growth, and fluctuations in the naira hinder purchasing power. Thus, while statistical growth can occur, the real-life implications for citizens’ economic well-being need careful scrutiny.

To translate GDP growth into tangible benefits for the populace, policymakers must focus on increasing wages, boosting employment opportunities, and enhancing social protection systems. Aliyu Ilias advocates for urgent economic reforms, emphasizing the need for production enhancements, balanced trade, and improved security and economic stability.

Furthermore, investments in infrastructure, education, and healthcare are critical to ensuring that economic expansions are reflected in the quality of life. As the National Bureau of Statistics prepares to present the new figures, it is essential for Nigerians to discern beyond the statistics to understand how these changes will influence their daily lives and whether they signify real prosperity or mere numerical adjustments.

The forthcoming rebasing of Nigeria’s GDP is poised to offer a more accurate reflection of the economy and could have considerable implications for various economic indicators. However, the anticipated gains in per capita income and GDP size may not reflect the realities faced by ordinary Nigerians unless accompanied by substantive policy actions that address inflation, wage stagnation, and job creation. The government’s commitment to translating GDP growth into tangible improvements in living standards will be crucial for realizing the true benefits of this economic adjustment.

Original Source: punchng.com