Why Nigeria Becoming Africa's Biggest Economy Means Less Than You Think
Nigeria announced revised data yesterday that estimates the country's GDP at $510 billion, effectively making it Africa's largest economy. Last year, the International Monetary Fund measured Nigeria's GDP at $292 billion.
Just how did Nigeria make such a big jump? The answer is less an economic surge than a mathematical correction. Nominal GDP measures all produced goods and services at current prices. In Nigeria's case, the current price scale had not been updated since 1990. Any estimate since then has been based on 1990 price values.
And much has changed in Nigeria since 1990. The country's telecom, airline, and entertainment industries have all experienced massive growth. Whereas there was one telecoms operator for around 300,000 phone lines in 1990, there are now four major mobile service providers and approximately 120 million mobile phone subscribers. There are also now over a dozen airlines. In 1990, there was one.
Though the announcement pushes Nigeria's growing economy further into the global eye, the country still has improvements to make before it will be able to unseat South Africa as the continent's strongest economy. According to World Bank, 46 percent of Nigerians live below the poverty line. With a national electricity generation capacity around one-ninth the size of South Africa's, major portions of Nigeria still lack sustainable access to power.
So why is Nigeria choosing now to revise their national statistics? Critics claim the announcement amounts to nothing more than a PR stunt with the goal of boosting Nigeria's credit rating and attracting more foreign investment, while ignoring the country's persisting infrastructural needs. Optimists say this is a major step forward in the ongoing challenge of improving Nigeria's survey data and infrastructural transparency. The rebased estimate factors in new economic sectors that have previously gone unmeasured, while drawing attention to both the positive and negative results of Nigeria's growth.
In a press conference Sunday, Nigeria's Minister of Finance, Dr. Ngozi Okonjo-Iweala, acknowledged the need to address the income inequality gap.
"Inequality has been rising, so we need to build social safety nets meant to care of those at the bottom of the ladder."
Nigeria's Statistician-General, Dr. Yemi Kale, was also open about the need to use the revised GDP estimates as an opportunity to more closely examine the nation's poverty rate.
"GDP is a macroeconomic aggregate that depicts the totality of economic output within a nation's borders. While it depicts how rich a nation is, that is not necessarily the same as showing how rich the individuals in the nation are, due to the problem of unequal distribution of wealth."
More than anything, Sunday's announcement affirms Nigeria's growing importance in the global economy and brings both its strengths and flaws further into focus. Africa's biggest economy still has work to do.