The National Bureau of Statistics (NBS) has announced plans to rebase Nigeria’s GDP by the end of January 2025, using 2019 as the new base year. This move aims to give a more accurate and current picture of the Nigerian economy, as it will now compare economic data against prices and activities in 2019 instead of the current 2010. It is anticipated that this rebasing will reflect the nation’s evolving economic structure, which includes the emerging industries, shifts in production, and changing consumption trends.
This decision was made public during a sensitization workshop hosted by the Nigerian Economic Summit Group (NESG) in collaboration with NBS. The rebased GDP will capture key changes in the Nigerian Economy that were not completely represented in the previous base year. These encompass emerging industries like modular refineries, domestic households as employers of labor, and long-unreported informal or illegal economic activities, as well as emerging sectors like the digital economy, Pension fund administrators’ operations, and the National Health Insurance Scheme.
Reforming inflation measurements for greater accuracy.
Changes in Inflation measurement will also be reflected in the rebasing. NBS proposed moving the base year for inflation calculations to 2024 in order to account for the effects of the recent elimination of Fuel Subsidies and fluctuations in the foreign exchange rate. Another notable change is the inflation basket’s expansion, which will see it rise from 740 to 960 items. This extension would capture a wider range of goods and services that Nigerians use, enabling more accurate inflation tracking. Additionally, the NBS will increase the number of Consumer Price Index (CPI) divisions from 12 to 13 by replacing the antiquated 1999 classification system with the 2018 methodology.
In accordance with these modifications, NBS will digitize its inflation data collection procedures in order to improve accuracy and efficiency. To provide a more detailed understanding of inflationary forces, special inflation indices will be implemented at the state and federal levels. The intricacies of Nigeria’s changing economy would be further reflected by these indices, which will encompass a variety of industries such as services, energy, farm products, and goods. Emphasizing the essential of the rebasing process, Dr. Tayo Aduloju, the CEO of NESG, pointed out that it would provide a comprehensive economic map that helps policymakers make better decisions.
Prospect of rebasing and insights from the 2014 rebase.
As a result, governments will be able to pinpoint low-growth sectors that require focused interventions for balanced development and high-growth ones that can be scaled. According to Prince Adeyemi Adeniran, Statistician-General of the Federation and CEO of NBS, Nigeria’s GDP must be rebased to maintain economic indicators in line with structural shifts in the economy. He noted that rebasing the GDP and CPI will be in line with the continuous changes in the economy, allowing policymakers to make better-informed decisions that take into account the actual state of the Nigerian economy.
Adeniran added that by revising the base year, the NBS ensures that inflation and national accounts reflect the current situation and account for the contributions of developing industries and consumption trends. Nigeria typically rebased its GDP every five to ten years to account for these changes. The last rebasing took place in 2014, when the base year was updated from 1990 to 2010, and resulted in a notable increase in the size of the economy. As a result, the country’s GDP grew by an astounding 89% as a result of the exercise, surpassing South Africa to become the largest in Africa at the time.
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With the rebasing year being moved to 2019, it is anticipated that more accurate GDP numbers would be provided, redefining Nigeria’s Economic Development narrative. Similar to the 2014 rebasing, which produced an 89% increase, this could result in a major upward revision in the overall size of the economy. However, even if the overall GDP increases, the exercise will also reveal the areas where growth has been uneven, shedding light on sectors requiring targeted interventions. Investors and policymakers are looking forward to the rebasing to provide better insights for decision-making.