Nigeria has undertaken two major GDP rebasing exercises in the past decade, first in 2014 and most recently in 2025.
These statistical recalibrations, while technical in nature, offer significant insights into the evolution of Nigeria's economy, its structural composition, and policy direction. Both exercises highlight the need for more accurate data, while also revealing persistent economic and developmental challenges that rebasing alone cannot resolve.
In 2014, Nigeria rebased its GDP by changing the base year from 1990 to 2010, a 20-year gap that significantly lagged the international recommendation of five-year updates. This overdue recalibration resulted in an 89% increase in GDP size, taking the economy's estimated value to $576 billion, catapulting Nigeria to the position of Africa's largest economy and the 25th largest globally at the time. The National Bureau of Statistics (NBS) incorporated emerging and fast-growing sectors such as telecommunications, Nollywood (the film industry), and modern retail trade. As a result, the services sector surged, while the shares of agriculture and oil declined, shifting the structural composition of the economy.
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The rebasing also improved Nigeria's economic indicators on paper. Specifically, the debt-to-GDP and deficit-to-GDP ratios dropped, suggesting stronger fiscal capacity. As a result, Nigeria was reclassified as a middle-income country by the World Bank, and the rebased figures helped attract increased foreign investor interest by revealing a larger and more diversified economic base. However, the 2014 rebasing did little to address underlying issues such as unemployment, poverty, and infrastructural decay. It merely provided a clearer statistical picture and not necessarily a transformation of the underlying economic reality. However, over the past decade, Nigeria has experienced slow and rather epileptic economic growth plus two consecutive recessions, impact of covid19 pandemic, geopolitical tensions like Russia/Ukraine and Israel/ Hamas Wars, supply chain disruptions etc. These have contributed significantly to shrinking of the economy over the past decade.
A decade later, in 2025, in another significant statistical and economic recalibration, Nigeria rebased its Gross Domestic Product (GDP) by shifting the base year from 2010 to 2019. Consequently, the country's GDP has risen by about 30% to $245 billion from the previous estimate of $187 billion. Due to devaluation of the local currency, the increase is more significant in naira terms. The new GDP has shown Nigeria's GDP as the fourth-largest economy in Africa and the 40th in the world. While this exercise is largely technical, its implications for policy, perception, and fiscal space are profound.
GDP rebasing is a standard global practice undertaken periodically to reflect structural changes in the economy. It involves updating the reference year used to calculate GDP, ensuring that newer sectors and price structures are accurately captured. For Nigeria, this exercise has revealed a more diverse economy but also underscored persistent structural weaknesses.
Despite the upward revision in nominal GDP, the real GDP growth rate post-rebasing was revised slightly downward to 3.38% from the previous 3.40%, suggesting a modest expansion in real economic activity. This subtle change reflects improved statistical clarity rather than a slowdown in economic momentum.
One of the most immediate effects of the rebasing is the improvement in fiscal ratios. The government's debt-to-GDP ratio has declined from 52.90% to 39.37%, and the budget deficit as a percentage of GDP has narrowed from 3.87% to 3.51%. These indicators offer a positive narrative of enhanced debt sustainability and fiscal prudence and could bolster investor confidence and improve Nigeria's sovereign credit rating outlook.
However, the rebasing has also led to a statistical dilution of revenue performance. Tax revenue to GDP fell from 7.82% to 5.82%, while non-tax revenue to GDP declined from 2.08% to 1.54%. These trends expose Nigeria's chronic revenue mobilization problems. Lower revenue-to-GDP ratios limit the fiscal space needed to invest in infrastructure, health, and education, sectors critical to improving human development.
Nigeria's rebased GDP must be contextualized within broader macroeconomic challenges. Inflation remains stubbornly high, with a headline rate of 22.22% in June 2025 and an average of 23.50% for the first half of the year. The exchange rate has depreciated significantly, averaging N1,550 to the US dollar, reflecting ongoing currency pressures and limited foreign exchange supply.
External reserves offer a mixed picture, rising from $32.91 billion in December 2023 to $40.92 billion in January 2025, before dipping to $38.77 billion in July. This volatility reflects persistent external sector vulnerabilities and an overdependence on oil exports, which account for over 80% of Nigeria's foreign exchange earnings.
Beyond numbers, rebasing cannot mask Nigeria's daunting human development challenges. With a Human Development Index (HDI) of 0.560, Nigeria is classified as a medium human development country, ranked 164 out of 193 globally. Life expectancy is just 54.5 years, and the mean years of schooling stands at 7.6, well below global averages.
Recent World Bank data shows that about 56% of Nigerians, over 129 million people, live in poverty based on income. Extreme poverty, measured by the $3.00/day international line, now affects more than half of the population, up significantly from 31% in 2018/19. In addition, the National Bureau of Statistics reports that around 63% of the population, or about 133 million people, experience multidimensional poverty, which goes beyond income to include factors like health, education, employment and living standards.
To understand Nigeria's development status, a comparison with peer economies like India and Indonesia is instructive. According to the UNDP's 2025 Human Development Report, India achieved an HDI of 0.685 in 2023, with a life expectancy of 72.0 years and expected years of schooling at about 13.0 years. Based on the 2019-21 Multidimensional Poverty Index, about 16.4% of Indians, or roughly 231 million people, are multidimensionally poor. In comparison, Nigeria's 2022 MPI of about 63% of its population, reflects deeper and more widespread deprivation.
Indonesia fares even better. It is classified as a high human development country, with an HDI of about 0.713 in 2023. Life expectancy stands at roughly 72.3 years, and its GNI per capita was about $14,250 in 2022 (PPP terms), compared to Nigeria's $5,650. These figures point to more inclusive growth policies in Indonesia, which have helped reduce poverty and improve overall quality of life when compared to Nigeria.
While GDP rebasing is essential for accurate statistics and international comparability, it does not address deep-rooted development challenges or automatically improve living standards. Rebasing provides a clearer view of the economy's size and structure and creates an opportunity to reset assumptions, but it is not a solution to structural weaknesses. Nigeria's economic fundamentals remain fragile, with declining fiscal and revenue ratios, high inflation, and weak per capita income, about $1,600 in nominal terms and $5,650 in PPP terms. These factors, combined with deteriorating human development indicators, underscore the urgent need for comprehensive reforms. The 2014 rebasing positioned Nigeria as Africa's largest economy, highlighting its potential. However, the 2025 rebasing has revealed the cost of failing to capitalize on that potential.
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Going forward, Nigeria must implement reforms that translate statistical growth into real development. A well-articulated strategy is essential: first, broaden the revenue base through tax reforms and economic formalization; second, ramp up investment in health, education, and infrastructure to tackle multidimensional poverty. Third, well synchronized fiscal and monetary policies to support access to low-cost finance for SMEs and help in reducing the negative variables encapsulated in the broader multidimensional poverty index. Reforms must be inclusive, targeting Nigeria's vast underserved population. While these recommendations are by no means exhaustive, ultimately, GDP rebasing is not a victory lap; it is a wake-up call. A signal to act, reform, and rebuild. The lessons from both 2014 and 2025 are clear: accurate data is necessary, but only purposeful action can drive meaningful development.
Dr. Rislanudeen Muhammad, Former Chief Economist with Bank of Industry is a member, Daily Trust Board of Economists
"Nigeria's rebased GDP must be contextualized within broader macroeconomic challenges. Inflation remains stubbornly high, with a headline rate of 22.22% in June 2025 and an average of 23.50% for the first half of the year. The exchange rate has depreciated significantly, averaging N1,550 to the US dollar, reflecting ongoing currency pressures and limited foreign exchange supply."
