Nigeria’s economic landscape is undergoing a significant transformation, revealed by preliminary figures from the ongoing rebasing of its Gross Domestic Product (GDP) and Consumer Price Index (CPI). The rebasing, a process of updating the base year used for calculating economic indicators, has unearthed a dramatic shift in sectoral contributions, with real estate emerging as a dominant force. Surpassing oil and gas, real estate now claims the position of the third-largest sector, trailing only crop production and trade. This development underscores the evolving nature of the Nigerian economy, moving beyond traditional reliance on oil and highlighting the growing importance of diverse sectors. The rebasing, using 2019 as the new base year compared to the previous 2010, provides a more accurate reflection of the current economic structure and allows for better informed policy decisions.
The reshuffling of sectoral rankings highlights the dynamism of the Nigerian economy. Crop production, previously a component of the broader agriculture sector, now stands alone as the largest contributor to GDP. This emphasizes the continuing significance of agriculture in Nigeria, even as other sectors experience rapid growth. Trade maintains its strong position as the second-largest sector, indicative of Nigeria’s active role in regional and international commerce. The emergence of real estate as the third-largest sector signals a major shift, reflecting the increasing investment and activity in this area. The rise of telecommunications, now a standalone sector and the fourth largest, underlines the transformative impact of technology on the Nigerian economy. This restructuring of the economic landscape provides valuable insights for policymakers and investors alike, highlighting areas of growth and potential.
The impressive growth of the real estate sector reflects increasing demand despite prevailing economic challenges. Nominal growth in Q3 2024 reached a remarkable 46.52%, significantly higher than the previous year’s rate for the same period. While the quarter-on-quarter growth rate moderated to 16.15%, the sector’s contribution to real GDP remains substantial, albeit slightly lower than the corresponding period in 2023. This robust performance points to the resilience of the real estate market and its potential to drive economic growth. The demand for housing, particularly luxury apartments in major cities, remains strong, driven by urbanization and a growing middle class. This sustained demand, coupled with a significant housing deficit estimated at 28 million units, positions the real estate sector for continued expansion in the coming years.
The ongoing rebasing exercise, in line with United Nations recommendations, aims to provide a more accurate and contemporary snapshot of the Nigerian economy. By incorporating new economic activities such as the digital economy, modular refineries, pension fund administration, the national health insurance scheme, and mining, the rebasing captures the evolving nature of economic activity. This updated framework enables a better understanding of the relative contributions of different sectors and provides a more reliable basis for economic planning and policy formulation. The 2014 rebasing resulted in a significant upward revision of Nigeria’s GDP, solidifying its position as the largest economy in Africa. This current exercise is expected to yield similar insights, providing a more accurate reflection of Nigeria’s economic strength and potential.
The implications of the rebasing extend beyond simply updating economic figures. It provides a crucial foundation for effective economic and development planning, enabling policymakers to make informed decisions based on accurate data. By capturing the evolving structure of the economy, the rebasing allows for better identification of growth opportunities and potential challenges. Furthermore, it is expected to influence key economic indicators such as the tax-to-GDP ratio, debt-to-GDP ratio, and per capita income. A larger GDP figure could potentially lead to a lower debt-to-GDP ratio, enhancing Nigeria’s fiscal standing. Similarly, per capita income is expected to increase, reflecting improved living standards.
The rebasing of the GDP and CPI is a vital undertaking that modernizes Nigeria’s economic data framework and aligns it with current realities. This process provides a clearer picture of the nation’s economic performance, sectoral contributions, and potential for growth. By incorporating new and expanding economic activities, the rebasing offers valuable insights for policymakers, investors, and businesses. The updated information enables more accurate economic forecasting, facilitates evidence-based policymaking, and enhances transparency. The anticipated increase in the size of the economy, coupled with potential improvements in key economic indicators, further strengthens Nigeria’s position as a major economic player in Africa and reinforces its potential for sustainable economic development.
