Nigeria is to “rebase” its gross domestic product (GDP) on Sunday 6 April, which should push it above South Africa as the continent’s biggest economy. The United Nations defines rebasing as the “process of replacing present price structure [base year] to compile volume measures of GDP with a new or more recent base year”. Basically, it’s a need to update a country’s national statistics.
There are basically two ways to measure gross domestic product (GDP), the sum of a country’s goods and services.
Firstly, nominal GDP. This is the sum value of all produced goods and services at current prices. This measure does have its uses. But real GDP is more widely used and is slightly different. It’s the sum value of all produced goods and services at constant prices and is useful for showing how the economy changes in size and – with some further manipulation – how average living standards change over time. The constant prices are the ones from the base year – whichever that is.
Rebasing is necessary simply because economies change over time. Different goods are produced and new technology is introduced, so rebasing means that the statistics give the most up-to-date picture of an economy as possible. Most country do it at least every three years or so. But Nigeria’s old GDP base year is 1990.
Some analysts say that switching the base year to 2010 will boost the country’s GDP by as much as 65% – on paper.
Nigeria’s rebased GDP is thought to be around $432bn (£260bn) compared with South Africa’s GDP of $370.3bn at the end of 2013.
But some economists would point out that Nigeria’s economic output is underperforming because at 170 million people, its population is three times larger than South Africa’s. And on a per-capita basis, South Africa’s GDP numbers are three times larger than Nigeria’s. So, while Nigeria can claim the crown of Africa’s largest economy, there are certain caveats.
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