So, finally, we are a bigger economy than South Africa. Indeed, at US$509 billion (estimates for last year), we now are the continent’s biggest economy — in 2012, the World Bank had put South Africa’s GDP at US$384bn and Nigeria’s at US$263bn.
At about 2.00pm yesterday, at a press conference at the Transcorp Hilton Hotel in Abuja, the Statistician-General of the National Bureau of Statistics released new output numbers for the economy, which put gross domestic product numbers at N80.3tn (based on new measures of 2010 output), from N42.3tn previously.
But, bragging rights over South Africa (now the second biggest economy on the continent) aside, what does this really mean? Technically, we ought to have done this re-basing at least twice since we last did it (1990). Following the slew of reforms to the economy in 2003, which, besides bumping up the trend growth rate of the economy from the previously phlegmatic 3 – 4% per annum to the current 6 – 7% annually, also freed up new sectors (telecommunications and the wholesale and retail trade sectors, for one) to new investments (especially foreign), the old GDP measure clearly was undercounting production patterns in certain sectors of the economy.
According to the Statistician-General, “In 2010, the rebased nominal GDP represented an increase of 59.5% over the nominal GDP using the old base year, 69.10% in 2011, 75.58% in 2012, and 89.22% in 2013 (forecast)”. Consequently, whereas real GDP growth was estimated at 5% in 2010/11, post-rebasing, the new counts now stand at 5.09% in 2011, 6.66% in 2012 and is forecast at 7.41% in 2013.
The old GDP measure overestimated patterns in other sectors, apparently. According to the new numbers, agriculture, which accounted for 30.3% of the 1990 nominal series, is now only 23.96% of domestic output using 2010 as base year. In its place, services have grown, to a little over half of gross output numbers. Not much to cavil at here. There was always something the matter with (rain-fed, subsistence) agriculture accounting for that much of GDP under the old measure.
And with the significant advances made in the telecommunications, and wholesale and retail trade sectors, services’ 50% share of domestic output is not out of place. I am not too sure what to make of the fact that industry’s share (declining to 25.8% from 46.1% in the 1990 nominal series) is down. This again is not much of a surprise. It would have been a surprise if our run down infrastructure, obese bureaucracy, and light-fingered criminal justice system (including an antediluvian judicial system) supported more industry than this. Yet, I think there is a worry element in our transition from an agriculture-based society to a service-based one — completely skipping the industrial stage.
A 59.5% jump in the size of any economy is not something to be trifled with. True, despite the increase in GDP per head that a bigger numerator for this measure implies, we are no richer this morning than we were at 1.00pm yesterday. However, these new statistics make it easier to deal with the domestic economy, whether it is planners in government or investors (domestic or foreign). Obviously, the inroads into the supermalls was an informed one, as indeed would be any investment in the economy that seeks to leverage consumer spend.
Now, there is a paradox of some sorts here. How poor are we? If the National Bureau of Statistics is (2012) to be believed, four years ago, 61% of our compatriots subsisted on a little under US$1/day. 170m people spending a dollar a day is a lot of spend indeed. But since we are in the business of comparing with South Africa, it helps to remember that at US$2,994, our GDP per head is still lower than that of our southern neighbour’s — the World Bank estimated South Africa’s GDP per capita at U$11,255 in 2012.
Evidently, despite the new ginormous size of our economy, there is an equally humongous opportunity for improvement. We could glory in the many upsides of the new numbers: a lower debt-to-GDP ratio (down from 19% to 11%), lower budget deficit to GDP ratio, etc. Or we could undertake the reforms truly needed to put us at per with the standards down south: improve domestic competition across sectors of the economy; upgrade our criminal justice system; put a gastric band on the bureaucracy, etc.
Truth is, despite the nice news, we still have a long way to go.