Nigeria at $432bn Still Africa’s Biggest Economy Despite South Africa’s Rebased GDP of $370bn

Nigeria has maintained her position as Africa’s biggest economy after South Africa released the report of its rebased Gross Domestic Product (GDP) that pushed the latter’s economy up by 11 per cent, an analysis of a new report by Statistics South Africa (SSA), has revealed.

After a comprehensive overhaul of its national accounts up to the end of the 2020 fiscal year, South Africa disclosed in the SSA that the value of her economy increased to $370 billion as a result of the rebasing exercise.

The rebasing of South Africa’s GDP coincided with the release of Nigeria’s latest GDP report, which showed a 5.01 per cent growth in the second quarter of 2021.

During the period under review, the National Bureau of Statistics (NBS) and the World Bank put Nigeria’s GDP at $432.29 billion, indicating that her economy was $62.29 billion bigger than South Africa’s after the latter rebased its GDP.

In a summary report obtained from its official website at the weekend, South Africa’s statistics agency said the latest GDP rebasing and benchmarking exercise had resulted in an upward revision in the size of the economy, as well as changes to the composition of the supply and demand sides of economic activity.

Specifically, SSA’s rebasing report showed that the rebased GDP “is 11 per cent larger in 2020 than previously estimated. Between 2011 and 2020, the percentage difference between the previous and revised levels averaged 9.6 per cent.”

“The percentage difference ranged between 8.6 per cent in 2014 to 11 per cent in 2020. The time series was revised from 1993. Differences between previous and revised levels are a typical outcome of rebasing and benchmarking exercises,” SSA revealed in its latest report released midweek.

Comparatively, the report said the average increase between previous and revised GDP estimates across OECD countries was 3.8 per cent in 2010, ranging from 0.2 per cent for Luxembourg to 7.8 per cent for South Korea.

It added: “Latin America recorded an average increase of 8.8 per cent and closer to home; Botswana revised the size of its economy down by 10 percent. How does South Africa’s revised GDP affect its standing in Africa?

“In terms of purchasing power parity (PPP), the World Bank currently ranks South Africa as the third biggest economy on the continent after Egypt and Nigeria.

“Egypt’s GDP (PPP$ in current prices) was PPP$1,290 billion, according to the World Bank’s estimate, higher than that of Nigeria (PPP$1,069 billion) and South Africa (PPP$717 billion),” the report said.

Despite the 11 per cent increase recorded after rebasing, Africa’s most advanced economy still lags behind Nigeria, which is at N154.25 trillion or $432.29 billion in 2020 as shown in the data of the NBS and World Bank.

The rebasing of South Africa’s GDP coincided with the release of Nigeria’s latest GDP report, which showed a 5.01 per cent growth in the second quarter of 2021.

The latest growth, according to the NBS in its new report, makes three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.

In the report, the NBS said: “The Q2, 2021 growth rate was higher than the -6.10 percent growth rate recorded in Q2 2020 and the 0.51 per cent recorded in Q1, 2021 year on year, indicating the return of business and economic activity near levels seen before the nationwide implementation of COVID-19 related restrictions.

“The steady recovery observed since the end of 2020, with the gradual return of commercial activity as well as local and international travel, accounted for the significant increase in growth performance relative to the second quarter of 2020 when nationwide restrictions took effect.

“Year to date, real GDP grew 2.70 per cent in 2021 compared to -2.18 per cent for the first half of 2020. Nevertheless, quarter on quarter, real GDP grew at -0.79 percent in Q2, 2021 compared to Q1, 2021, reflecting slightly slower economic activity than the preceding quarter due largely to seasonality.

“The nominal GDP growth rate in Q2, 2021 was higher than -2.80 per cent growth recorded in the second quarter of 2020 when economic activities slowed sharply at the outset of the pandemic. The Q2, 2021 nominal growth rate was also higher than the 12.25 per cent growth recorded in Q1 2021. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.”

Reacting to the development yesterday, the immediate past Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf told THISDAY that the size of an economy “matters a lot.”

Yusuf, an economist, and a leading private sector advocate, pointed out that the size of an economy “indicates the inherent opportunities for investment, revenue, profit, job creation and the welfare of the people.”

However, the economist observed that the size of the economy “is not an end in itself. Rather, it should be a means to an end. The quality of lives must be positively impacted.”

He, therefore, pointed out that economic inclusion “is critical in ensuring an impactful economy. Nigeria and South Africa are the two biggest economies in Africa. Yet, the two economies are grappling with profound challenges around inequality, poverty, social discontent, and insecurity.

“All of these are manifestations of the absence of inclusion and social dislocations. Only recently, the two countries witnessed looting and destruction on an unprecedented scale.

“Although the triggers were different, the events were reflections of the underlying social problems that existed in these two countries. The standard of living in many countries in Africa is far higher than what we have in the two leading economies of the continent.”

Yusuf, therefore, challenged the governments of Nigeria and South Africa to design economic and social policies to fix these gaps, which according to him, would require a greater focus on investment in social infrastructures such as education, healthcare, and the environment.

He explained that high investment in social infrastructure “impacts significantly on people’s welfare. Investment in economic infrastructure – roads, railways, or power – is critical as well. This would impact productivity, cost of production, inflation, and the general level of competitiveness of firms.

“The macroeconomic management is also crucial to ensure that the economic fundamentals support investment and productivity. This should support low inflation, stable currency, and low-interest rates. The growth of small businesses is vital to the promotion of economic inclusion because of their number and spread across the country.

“An investment-friendly policy, regulatory and institutional environment is imperative. Hostile regulatory and institutional environments undermine investors’ confidence and impact negatively on the economy,” Yusuf explained.

Gboyega Akinsanmi

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