Nigeria is preparing for a major economic shift as experts anticipate significant changes in the country’s Gross Domestic Product (GDP) following an upcoming rebasing exercise. This follows the recent release of rebased Consumer Price Index (CPI) figures by the National Bureau of Statistics (NBS), which showed inflation dropping from 32.5% in December 2024 to 24.5% in January 2025. The last time Nigeria rebased its GDP was in 2014, updating the base year from 1990 to 2010, which resulted in a sharp increase in reported GDP.
With nearly a decade passed since then, the structure of Nigeria’s economy has evolved considerably. The upcoming GDP rebasing is expected to reflect these changes, capturing the growth of new industries and providing a clearer picture of the country’s economic reality. But what does this mean for Nigeria?
What is GDP Rebasing?
GDP rebasing involves updating the base year used to calculate a country’s economic output to better reflect current market conditions. Since economies change over time, rebasing helps in capturing new industries, technological advancements, and shifts in sectoral contributions.
When Nigeria last rebased its GDP in 2014, it led to a nearly 89% increase in the size of the economy, making it Africa’s largest economy at the time. A similar outcome is expected in this upcoming exercise, but what are the likely effects?
Expected Outcomes of Nigeria’s GDP Rebasing
1. A Larger GDP Size
One of the most immediate effects of rebasing will be a significant increase in Nigeria’s GDP size. This does not mean the country has suddenly become richer—it simply means previously underrepresented or new sectors will now be included in economic calculations.
Some of these fast-growing industries include:
- Fintech and digital banking
- E-commerce (online retail platforms)
- Entertainment (Nollywood, music, and streaming services)
- Telecommunications and digital startups
While Nigeria’s overall economic health may not drastically change, the new GDP figure will provide a more realistic representation of the country’s economic landscape.
2. Sectoral Shifts in Economic Contribution
As newer industries gain prominence, the share of traditional sectors like oil and agriculture in GDP calculations may decline. Some key shifts include:
- Technology and digital services will account for a larger percentage of GDP.
- Telecommunications and entertainment (including Nollywood and streaming services) will see increased representation.
- Agriculture and oil & gas may see a reduction in their proportional contribution, despite their continued importance.
- Informal sector activities, which were previously underestimated, may now be better captured.
This shift highlights Nigeria’s growing transition from an oil-dependent economy to a more diversified one.
3. Changes in Key Economic Indicators
Debt-to-GDP Ratio Improvement
A larger GDP size means Nigeria’s Debt-to-GDP ratio will likely decline, making it appear as though the country has more room to borrow. However, this does not change the burden of debt servicing, which remains a key concern.
Increase in Per Capita Income
With a higher GDP figure, Nigeria’s per capita income (GDP divided by population) will also increase. However, this will not necessarily mean better living standards unless inflation is controlled and real wages rise.
Boost in Foreign Investment
Sectors like fintech, e-commerce, and digital services may attract more foreign direct investment (FDI) as investors recognize their growing impact on Nigeria’s economy.
4. Potential Government Policy Adjustments
The government may use the new GDP data to adjust fiscal and monetary policies. Some expected changes include:
- Taxation Reforms: If high-growth sectors are found to be under-taxed, the government may introduce new policies to increase revenue collection.
- Monetary Policy Adjustments: The Central Bank of Nigeria (CBN) may revise interest rates and other economic policies based on the updated economic outlook.
- Reclassification of Nigeria’s Economic Status: Depending on the new GDP size, Nigeria’s classification in global economic rankings may change.
If GDP growth is substantial, Nigeria could move closer to upper-middle-income status, which might affect its eligibility for concessional loans and development aid.
Challenges to Consider
Despite the benefits of GDP rebasing, there are important challenges to keep in mind:
1. It Does Not Solve Core Economic Issues
While rebasing provides a clearer economic picture, it does not directly address problems such as inflation, unemployment, and poverty. These issues will require targeted economic reforms.
2. Risk of Public Misunderstanding
If not properly communicated, the rebasing exercise could lead to misconceptions among the public, with some expecting an immediate improvement in economic conditions. The government and economic experts must clearly explain that GDP rebasing only provides better data, not instant solutions.
Nigeria’s upcoming GDP rebasing will likely reveal a larger economy, highlight new sectors, and shift economic contributions across industries. However, while it improves data accuracy, it does not automatically translate to better living conditions for Nigerians.
The real impact will depend on how policymakers leverage the new economic data to drive meaningful reforms, attract investments, and address key economic challenges. As Nigeria moves forward, the focus should remain on sustainable growth, job creation, and inflation control to ensure the benefits of a rebased economy are felt by all.
For more updates on Nigeria’s economy, visit Coleman News.
