Knowing the size of the economy is very important to planners and policy makers. Gross Domestic Product connotes the size of country’s economy and it is measured in term of monetary value of all the finished goods and services produced within a country’s border in a specific time period.
Rebasing of Nigeria GDP is about recalculating the GDP to capture some emerging sectors that were not previously included in the national account. In a nutshell, it means replacing the old base year used for compiling the constant price estimates to a new and more recent base year.
With the new calculation, Nigeria economy is said to emerge as the biggest economy in Africa overtaken South Africa and 26th in the world. By changing our base year from 1990 to 2008, the government released updated figures that raised the country’s gross domestic product by 89 percent to $509 billion from $285.56 billion. It is expected that as the GDP grows, the economy grows and so is the standard of living. With the calculation of per capital GDP which is GDP divided by the population of the country which assumes that the wealth of the country is evenly distributed but we all know the situation with wealth distribution in Nigeria.
It must be realised that bigger economy does not guarantee investment inflow where there is huge infrastructural deficit.
In a situation where there is no proper security, investors will not be encouraged to bring their investment. They would rather prefer to lend their money to Nigeria government with huge interest rate because they believe it is risk free.
To transform our larger economy into real economic growth, corruption must be reduced to the bearest minimum.
Huge government expenditure must be properly channeled to road construction, power, providing adequate security and other critical infrastructure that will fast track development.
Composition of the country economic structure must be looked into in order to correct the lopsidedness. For instance, the manufacturing sector is not really contributing significantly to the GDP compared to manufacturing sector in South Africa.
Inspite of the striving by government to boost the manufacturing sector, it stills underperforms compared to other countries. World Bank data shows contribution of manufacturing sector to GDP in Austria is 19 percent, while that of Thailand remains 34 percent. For South Africa, it is 12 percent, while it is 13 percent for Iran. In Nigeria, the manufacturing sector of the economy contributed 6.81 percent to the new GDP data equivalent to N5.47 trillion ($34.8 billion) out of total GDP of 2013 rebased estimate of N80.22 trillion ($510 billion).
Crude petroleum and natural gas which comes under mining and quarrying sector contributed 14.4 percent or N11.55 trillion ($73.56 billion) to the total GDP 2013 rebased. Considering the fact this sector contributes about 75 percent of our present earning is an indication that there are untapped potentials due to failure to develop the sector which has largely existed as rent seeking.
The telecommunication sector being eulogized today must be approached with caution. This sector contributed 8.69 percent to the country’s rebased GDP in 2013. However, the executive vice-Chairman (EVC), Nigerian Communication Commission (NCC), Mr. Eugene Juwah, has expressed optimism that the Information and Communication Technology (ICT) sector will contribute about 15 percent to the country’s GDP by 2015. This forecasted contribution represent about 95 percent jump from its 8.5 percent performance in 2013.
Inspite the immense contribution of this sector to the country’s GDP, it is still subjected to capital flight by the investors because it is dominated by foreign investors.
To curtail this, favourable investment climate must be created.
We must realize that GDP rebasing is a way to update the country’s GDP to capture the emerging sectors for accurate reflection of country’s economy size. This may not however guarantee investment inflow unless it is backed up by relevant economic indicators such as; good road, security, political stability, reasonable income distribution and high quality university programmes that will expose young people to science-based education and ensure that they graduate with cutting-edge knowledge that is relevant and meets the need of private employers.