Nigeria has moved up 11 steps to become the 26th largest economy globally, ahead of South Africa, following the reclassification of the based year of the gross domestic product (GDP) from 1990 to 2010.
The country's nominal GDP increased by 75.58 per cent from $258.55 billion before the rebasing to $453.96 billion, ahead of countries like Austria with $394.7 billion, Venezuela with $381.26 billion as well as Columbia, Thailand, Denmark, Malaysia and Singapore which have $369.6 billion, $$365.96 billion, $$314.88 billion, $274.7 billion and $269.86 billion respectively as at 2012.
However, with a forecast of $509.9 billion for 2013, the country is expected to move to the 22nd position, all things been equal, ahead of Norway, Poland, Belgium and Argentina currently having GDP figures of $499.66 billion, $489.79 billion, $483.26 billion and $475.5 billion respectively.
On the continent, Nigeria now ranks No. 1, ahead of South Africa which currently has a GDP of $384.3 billion in 2012.
The result of the rebasing of Nigeria's GDP, the first in almost a quarter of a century, confirms that the country's economy has grown in total value and undergone significant changes, including substantial diversification in many sectors especially in the last 10 years.
Statistician-general of the federation Dr Yemi Kale, who announced the new GDP figures yesterday in Abuja, noted that the results reveal better diversification of the Nigerian economy than earlier reported.
One of the major changes identified is the noticeable shift in the share of key sectors in the country's overall GDP.
An example is the decline in the share of agriculture sector to 24 per cent while the share of the services sector rose to 50.2 per cent.
In the 1990 nominal series, agriculture contributed 30 per cent to the GDP while the industry sector contributed 46.1 per cent, and services, 23.6 per cent.
According to Kale, even though agriculture is growing in terms of total value and jobs created, the rise in the contribution of the services sector such as telecommunications has led to the reduction of its contribution as a proportion of total GDP. The implication of this, he said, is that Nigeria is moving towards a more service-oriented economy. Under the new service industry structure, information and communication rank high, next to wholesale and retail trade.
NBS said it carried out the exercise with assistance from respected Nigerian economists including Professor Olu Ajakaiye, president of the Nigerian Economic Society; Professor Akpan Ekpo, Dr Ayo Teriba and others; the International Monetary Fund, the World Bank, the African Development Bank and other partners.
The rebased estimates indicate the forecast for the nominal GDP for Nigeria in 2013 is N80,222,128.32 ($509.9 billion)
Comparatively, nominal GDP for the previous three years were: 2010, N54. 2 trillion ($360.6 billion); 2011, N63.258 trillion ($408.8 billion); and 2012, N71.186 trillion ($449.9 billion).
The changes between the old and new rates represent growth of 59.5 per cent in 2010, 69.13 per cent in 2011, 75.58 per cent in 2012 and 89.22 per cent in 2013 (forecast).
The rebased GDP numbers imply that the level of economic activity is much higher than previously reported. It indicates a clearer picture of Nigeria's economic landscape, and the significant opportunity for growth and wealth creation in the Nigerian economy.
Speaking on the development, coordinating minister for the economy and minister of finance Dr Ngozi Okonjo-Iweala said: "We did not set out to become the biggest economy in Africa. We set out to measure how much the economy has changed. And that is the outcome. Becoming the largest economy on the continent is a positive development, but it is not destination. The knowledge derived will help us make better policies to grow the economy and create jobs for young Nigerians."
She added: "Nigerians have worked hard to make our economy the largest in Africa and they should be proud of the feat. But it is also a challenge and an opportunity. The results of the rebasing exercise will not make the challenges of poverty and unemployment disappear overnight, but the better understanding of the structure and changes of the economy will give us better tools to grow the economy and tackle poverty and unemployment."
She also explained that the rebasing has also improved the country's debt to GDP ratio, moving it lower from 20 per cent to 11 per cent.
On the adverse side, however, Okonjo-Iweala noted that the rebasing exercise has decreased the country's tax revenue to GDP ratio.
Ambassador Bashir Yuguda, supervising minister of the Ministry of National Planning, underscored the credibility of the rebasing exercise which he stressed was rigorously and professionally executed by a team of local and international experts. "It is a thorough job and we are pleased with the results. The results will empower government to do more for the Nigerian people."
Okonjo-Iweala, while highlighting the benefits of the exercise, said the GDP rebasing will give government tools to better tackle the challenges of growing the economy and fighting poverty. It is only when we are able to collate, understand and interpret data correctly as well as identify key areas in our economy that require change that our policy prescriptions and direction are more likely to respond to the real needs of the Nigerian economy.
"Rebasing the GDP provides more accurate data on the economy to enable policy makers make informed decisions and policy choices to tackle social problems like poverty and unemployment.
"Nigeria's rebased GDP is expected to be a more accurate reflection of the structure and size of current economic activities in the country, presenting a clearer sectoral distribution and performance. As a result, better investment choices are expected to be made, resulting in higher profitability and even higher investments. This will help create jobs and also reduce poverty in Nigeria in the medium to long term.
"The exercise will provide significant support for the growing pool of investors; The rebasing of GDP is expected to boost Nigeria's financial market ratings as investors show greater interest in the economy. The rebased series provide broader classifications of economic activities, revealing opportunities for expanding the revenue tax base. The rebased estimates also allow for better computation of state debt sustainability analysis. With the rebased estimates providing more accurate economic statistics, economic planners are better able to formulate appropriate economic policies and sector strategies to achieve desired development objectives," she said.