In about three weeks from now, when the National Bureau of Statistics (NBS) releases the rebased Gross Domestic Product (GDP) it will show that Nigeria has overtaken South Africa as Africa’s largest economy, which will have great economic and geopolitical implications.

This is according to emerging markets focused investment banking firm Renaissance Capital, whose team of analysts were in Abuja, over the weekend. “We are revising up our estimate of Nigeria’s GDP by 53 percent.The NBS has nearly completed its work, and our new estimate is that a 45 percent to 60 percent uplift is likely, and we are taking 53 percent as the mid-point figure. We expect the data in January,” said Renaissance Capital analysts led by Charles Robertson, its global chief economist and head of macro strategy, in a research report released yesterday (Dec 18).

“This means Nigeria, at $405 bn in 2013 would be the largest economy in Africa, ahead of South Africa at around $370 bn.”

Other impacts of the rebasing include the possible reduction of growth rates to 5 – 6 percent from 6 – 7 percent, and an increase in GDP per capita to $2,400 from around $1,700, in essence moving Nigeria into middle income economy territory.

“Sectors that may show the biggest upward revision range from Nollywood to IT and telecoms, while we think agriculture will shrink from around 40 percent of GDP to 25 – 30 percent of GDP,” said Robertson. The rebasing will show public debt shrinking to 13 percent of GDP from 20 percent of GDP. Public external debt would be below 2 percent of GDP, while the current account surplus may still be 5 percent of GDP which will leave the sovereign in a good position to borrow if needed.

According to Rencap “In a Fed tapering world, these revisions make Nigeria look good, but credit rating upgrades (Ba3/ BB-) are likely to be constrained by the most competitive presidential elections Nigeria will have seen since democracy returned in the 1990s.”

The NBS is seeking to change the calculations of Nigeria’s GDP, using a new base year of 2010 to give a better indication of the size and composition of its economy. Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, such as telecoms, financial services and internet usage, but Nigeria has not done so since 1990 (about 23 years) suggesting that the previous GDP framework underestimated economic activity.

The numbers will have new implications for investors and the geopolitics of Nigeria’s place in Africa. “We would be very surprised if recent and pending investment decisions are taken on the basis of the 1990 national accounts,” said FBN capital research analysts led by Gregory Kronsten, in a note released in August. “The new GDP series will however be tracked by potential investors, such as suppliers of consumer goods and services,” Kronsten said.

Nigeria already hosts the second largest debt and stock markets in Africa, behind South Africa. Its stock market is valued at $77 billion, while the secondary market bond trading volumes, ”certainly exceed those of Egypt and Morocco and represent around 20 percent of South Africa’s turnover,” according to Samir Gadio, an emerging markets strategist, at Standard Bank, in London.

Overall – Nigeria’s debt, budget and current account ratios will look among the best in Africa and in the emerging markets (EM), once the rebased figures are released, notes Robertson. “We like Nigeria in the coming quarter – though we see domestic bond yields up a little, at around 13.5 percent on average.

Nigeria is going to rise from 14 percent of MSCI frontier markets to around 20 percent in May 2014 which could attract equity investors wanting exposure to frontiers and/or Africa. We expect the NGN to remain at 160/$ until June 2014. But we are still nervous for the second half of 2014,” Robertson said.


About beegeagle

BEEG EAGLE -perspectives of an opinionated Nigerian male with a keen interest in Geopolitics, Defence and Strategic Studies
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  1. Yagazie says:

    A nice xmas and New Year present. It was bound to happen sooner rather than later. Now that we have the continent’s biggest economy, we should also have a millitary capability to match our economic might.

  2. beegeagle says:

    That goes without saying, bro.

  3. jimmy says:

    The question is not if or when we will overtake S’africa as the Number one economy. IMHO we already have. The question when will strong political LEADERSHIP that will build a strong MILITARY arrive?

  4. ifiok umoeka says:

    Merry christmas brothers.

  5. Sideways&smilling says:

    Great!! Pretty sure if we had: 24/7 electricity + security, good transport/ports, good schools (no ASUU wahala etc) we’d be competing with Indonesia or even Mexico by now. Few years and we’ll be gunning for Brazil 🙂 #DayDreaming

    • igbi says:

      The funny thing is that ethnically, most brazilians are actually Nigerians, with some being mixed between Nigerians and Portuguese.

  6. ifiok umoeka says:

    Though I haven’t clicked the links for ‘compelling read’ I’d say that I hope these figures will translate to something meaningful in areas like security, social amenities and good governance generally. Eg, what % of that will be government revenue? How much will be reinvested in Nigeria? How much will be ‘Nigerian’? These questions and a lot more when ans +vely will determine the greatness of nigeria from this point on. God bless Nigeria

    • peccavi says:

      Questions which unfortunately we may not find the answers to, after all while we look for a national carrier, strike aircraft, close support aircraft etc another plane is added to the Presidential Fleet. Serious misplaced priorities

  7. triggah says:

    wow dats awesome

  8. chucks says:

    With all these debasing and rebasing, what does it portend for our armed forces? Na dat one concern me. @ d end of it all,with active connivance of western powers,only the corrupt politicians will reap whatever benefit(if any though) that might accrue from the exercise. Mark my word!

    • igbi says:

      Brother, you are wrong to predict such a bad future. You need to learn how to be optimistic. How can you actually come and bring a bad spin to such a good news ?
      You are not God so you can not predict the future. So don’t say things like this. Instead try and give your own solutions, your own advises. This mentality we Nigerians have of always putting ourselves down and predicting the worse future for ourselves and even looking at good news as if it were bad news is not helping Nigeria at all. If you get a good news then I beg you: smile, be happy. If not then when are you ever happy ? Is it when you get a bad news ? So no, I will not mark your words, they are wrong words. Go EFCC ! Go Nigeria !

  9. chucks says:

    Oga igbi, no blame me and no vex for me abeg. Our politicians keep failing us when it matters most. They feast our collective patrimony as its theirs. It hurts. In advanced climes, with such exercise every facet of the economy will benefit and the positive effect will be seen even by the blind. Here all they know is ‘wots in for me’. Anyway I don hear you I will be optimistic in 2014. Meanwhile I dey enjoy my mmanya dey go

    • Akin Oges says:

      Oga chucks, you have the right attitude brother; a wise man admits his error, and move on to greater things. I clink my Courvoisier glass to you and the other Generals on this platform: good health, good tidings and a greater Nigeria in 2014 and beyond. Cheers!! Be Blessed.

  10. cutievik says:

    Oga chucks,If one should sleep thinking of Nigeria’s problems and how our polithievesians are reaping us off hair by hair I guess one would just wake up in the middle of the night sweating,gently climb off d bed,kindly gettin a stool and a rope,humbly placing the stool directly underneath the fan and climbing on it,sadly tying the robe on d fan and then his neck,then Happily kicking off the stool!!!lolz
    Oga chucks,no worry e go betta.

  11. ifiok umoeka says:

    Chei, polithievecians, una don come again! I don laugh my belle de pain me.

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