Highlights of the GDP Rebasing Exercise
A. Introduction
The recently completed rebasing of Nigeria’s economy is long overdue, necessary, credible and beneficial to the country.
B. Understanding Gross Domestic Production (GDP)
The Gross Domestic Product isthe market value of all final goods and services produced within a country in a given period.
It is an internationally recognized indicator for measuring the size of an economy in a given period of time.
There are three ways of computing GDP: The Expenditure Approach, The Income Approach, the Value Added Approach
C. Rationale For Rebasing the GDP Estimates
Rebasing of the national account series (which includes the GDP) is the process of replacing an old base year with a new and more recent base year. The base year provides the reference point to which future values of the GDP are compared.
GDP Rebasing is a normal statistical procedure undertaken by the national statistical offices of countries to ensure that national accounts statistics present the most accurate reflection of the economy as possible.
The key benefits of the rebasing exerciseis that its results enables policy makers and analysts obtain a more accurate set of economic statistics that is a truer reflection of current realities, for evidence-based decision-making.
Rebasing also revealsa more accurate estimate of the size and structure of the economy by incorporating new economic activities which were not previously captured in the computational framework.
For instance, the GDP estimates have not adequately reflected the increasing contributions of sectors like retail trade and the entertainment industry which have grown significantly in terms of total value and employment generation since the last rebasing exercise in 1990.
Rebasing will give government better tools to tackle the challenges of growing the economy and fighting poverty.
Rebasing will enable government to have a better understanding of the structure of the economy, the sectoral growth drivers, and sectors where investment and resources should be channelled in order to grow the economy, create jobs, improve infrastructure and reduce poverty.
Several countries that have undertaken rebasing exercisein recent years and the magnitude of the changes is provided in table 1 below:
Table 1:
Country(alphabetical order)
Old Base Year
New Base Year
Number of years between base years
% Diff between Old and New Base Year GDP series
Botswana
1993/1994
2006
13
-10
Burundi
1996
2005
9
40.3
Cape Verde
1980
2007
27
13.7
DRC
2000
2005
5
66.4
Egypt
2001/2002
2006/2007
6
8.9
Ethiopia
1999/2000
2010/2011
12
-1
Ghana
1993
2006
13
62.8
Lesotho
1995
2004
9
-4.4
Morocco
1988
1998
10
11.7
Niger
1987
2006
19
2.5
Nigeria
1990
2010
20+
59.5 (2010)
Sierra Leone
2001
2006
5
25.6
Tanzania
2001
2007
6
10
Tunisia
1990
1997
7
9.8
Uganda
1997/1998
2002
5
10.5
South Africa
1993
1998
5
13.7
D. Methodology
The UN Statistical Commission (UNSC) recommends that countries rebase their national accounts (GDP) estimates every five years.
The preparatory work for the rebasing exercise commenced in the last quarter of 2011. Several activities were undertaken some of which include the on-going development of a Supply & Use Matrix, field surveys for certain economic activities which were not adequately captured previously, validation with sector experts as well as the international development partners.
This is the first time Nigeria’s GDP estimates will be rebased in almost a quarter century. The last exercise was done in 1990.
Three major methodological pillars were used to compile the rebased GDP estimates:
The System of National Accounts (SNA 2008 version), the International Standard Industrial Classification (ISIC Revision 4), The Central Product Classification (CPC version 2).
E. KEY RESULTS FROM THE GDP REBASING EXERCISE
Q9. What are the significant features of the rebased GDP series?
Answer:
Nominal GDP much higher than previously estimated: The rebased estimates indicate that the nominal GDP for Nigeria was much larger than previously estimated. In 2010, the rebased nominal GDP stood at N54,204,795.12m, N63,258,579.01m in 2011, N71,186,534.89m in 2012 and (forecast to be) N80,222,128.32m in 2013.
Gross Domestic Product At Current Basic Prices
(=N=Million)
ACTIVITY SECTOR
2010
2011
2012
2013
AGRICULTURE
12,988,809.19
14,421,928.95
15,918,631.70
17,625,142.90
1. Crop Production
11,650,645.93
12,884,849.19
14,191,235.47
14,902,324.87
2. Livestock
952,730.88
1,099,705.03
1,234,565.54
1,405,490.84
3. Forestry
135,720.90
153,045.31
170,159.66
190,533.96
4. Fishing
249,711.48
284,329.42
322,671.03
366,793.23
MINING AND QUARRYING
8,454,554.20
11,140,408.09
11,382,587.74
11,631,349.02
5. Crude Petroleum and Natural Gas
8,402,676.40
11,080,794.65
11,315,033.28
11,554,223.51
6. Coal Mining
3,218.23
3,927.62
4,678.59
5,641.51
7. Metal Ores
2,354.84
2,714.44
3,273.02
3,859.69
8. Quarrying and Other Minerals
46,304.72
52,971.37
59,602.85
67,624.31
MANUFACTURING
3,578,641.72
4,085,393.24
4,744,699.37
5,476,303.11
9. Oil Refining
255,160.05
294,748.21
332,090.85
378,889.70
10. Cement
221,087.82
254,653.27
300,680.54
350,678.37
11. Food, Beverage and Tobacco
2,298,522.91
2,667,543.92
3,158,989.33
3,703,565.04
12. Textile, Apparel and Footwear
352,543.82
359,428.71
371,114.42
380,771.02
13. Wood and Wood Products
123,384.10
139,411.15
158,520.82
179,680.96
14. Pulp, Paper and Paper Products
24,355.21
28,529.11
33,098.64
38,585.51
15. Chemical and Pharmaceutical Products
25,167.16
29,373.94
34,143.46
39,769.04
16. Non-Metallic Products
59,548.40
65,293.55
71,657.11
78,605.67
17. Plastic and Rubber products
33,859.54
41,255.15
51,896.35
64,256.93
18. Electrical and Electronics
2,506.55
2,816.48
3,192.90
3,603.65
19. Basic metal , Iron and Steel
44,474.19
53,216.42
64,183.87
77,106.01
20. Motor vehicles & assembly
21,890.75
25,220.23
29,156.99
33,649.94
21. Other Manufacturing
116,141.22
123,903.10
135,974.10
147,141.27
22. ELECTRICITY, GAS ,STEAM AND AIR CONDITIONING SUPPLY
315,302.59
486,162.80
654,380.92
844,802.53
23. WATER SUPPLY,SEWERAGE, WASTE MANAGEMENT AND REMEDIATION
72,966.95
83,770.57
99,900.67
116,914.39
24. CONSTRUCTION
1,570,973.47
1,819,802.66
2,142,753.54
2,502,582.39
25. TRADE
8,910,282.11
10,325,565.30
11,843,529.17
13,354,685.03
26. ACCOMMODATION AND FOOD SERVICES
245,760.58
282,439.47
327,404.73
377,898.66
TRANSPORTATION AND STORAGE
694,771.81
754,079.44
881,296.69
993,303.97
27. Road Transport
619,136.86
670,804.09
784,810.74
884,248.47
28. Rail Transport & Pipelines
107.77
116.90
135.01
151.20
29. Water Transport
4,225.75
4,705.73
5,418.30
6,136.25
30. Air Transport
32,673.90
36,668.85
42,732.74
48,878.49
31. Transport Services
22,646.26
24,775.87
29,000.43
32,836.45
32. Post and Courier Services
15,981.28
17,008.00
19,199.46
21,053.12
INFORMATION AND COMMUNICATION
5,960,944.87
6,754,904.07
7,692,089.42
8,780,137.74
33. Telecommunications and Information Services
4,931,991.14
5,530,155.05
6,213,794.01
6,974,681.34
34. Publishing,
14,661.08
16,720.63
19,072.87
21,754.10
34. Motion Pictures, Sound recording and Music production
479,194.45
639,245.40
853,937.18
1,139,942.91
36. Broadcasting
535,098.20
568,783.00
605,285.36
643,759.39
37.ARTS, ENTERTAINMENT AND RECREATION
30,934.93
39,358.21
50,075.79
63,711.40
FINANCIAL AND INSURANCE
1,242,813.40
1,580,492.35
2,050,043.19
2,645,195.98
38. Financial Institutions
946,032.29
1,242,138.08
1,656,341.84
2,191,719.44
39. Insurance
296,781.11
338,354.26
393,701.35
453,476.53
40. REAL ESTATE
4,127,988.21
4,633,587.99
5,544,996.12
6,429,913.45
41. PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES
1,711,698.01
1,950,982.89
2,236,209.76
2,555,976.99
42. ADMINISTRATIVE & SUPPORT SERVICES
13,140.14
14,911.69
16,922.18
19,203.68
43. PUBLIC ADMINISTRATION
1,998,470.88
2,258,293.77
2,566,981.58
2,909,290.60
44. EDUCATION
826,671.62
965,125.17
1,133,391.18
1,327,104.42
45. HUMAN HEALTH AND SOCIAL SERVICES
560,047.59
639,370.18
722,346.00
820,373.01
46. OTHER SERVICES
900,022.87
1,022,002.17
1,178,295.12
1,348,239.05
GDP at Basic prices
54,204,795.12
63,258,579.00
71,186,534.89
80,222,128.32
Net Indirect tax on Products
857,086.13
732,962.17
885,694.91
917,401.24
GDP at Current Market price
55,061,881.25
63,991,541.17
72,072,229.80
81,139,529.55
59.5% increase in 2010 Nominal GDP: In 2010, the rebased nominal GDP represents an increase of 59.5%over the nominal GDP using the old base year, 69.10% in 2011, 75.58% in 2012, and 89.22% in 2013(forecast).
Table 2
OLD SERIES (Nm)
2010
2011
2012
2013
Agriculture
10,310,655.64
11,593,434.13
13,413,842.46
14,709,104.92
Industry
15,659,521.00
16,569,291.58
16,456,457.10
15,374,554.67
Services
8,014,577.50
9,247,134.90
10,673,800.38
12,313,106.11
Total Nominal GDP
33,984,754.13
37,409,860.61
40,544,099.94
42,396,765.71
Table 3
NEW SERIES (Nm)
2010
2011
2012
2013
Agriculture
12,988,809.19
14,421,928.95
15,918,631.70
17,625,142.90
Industry
13,992,438.93
17,313,556.37
18,667,774.92
20,083,371.09
Services
27,223,547.01
31,221,112.69
36,243,580.95
41,925,033.96
Total Nominal GDP
54,204,795.12
63,258,579.00
71,186,534.89
80,222,128.32
Table 4
Percentage change between Old and New GDP Series
2010
2011
2012
2013
Agriculture
25.97
24.40
18.67
19.82
Industry
-10.65
6.31
15.60
34.46
Services
239.68
237.63
239.56
240.49
Total Nominal GDP
59.50
69.10
75.58
89.22
Real GDP growth post-rebasing estimated at 5.09% in 2011, 6.66% in 2012 is forecast as 7.41% in 2013.Over the period, the economy is expected to grow by an average of 6.39% percent. The Services sector is expected to grow the fastest during this period increasing by an average of 7.72 percent. This is followed by industry which is expected to grow by 7.19%. The agricultural sector is expected to grow by an average of 2.61 percent during the period.
Gross Domestic Product At 2010
Constant Basic Prices
(=N=Million)
ACTIVITY SECTOR
2010
2011
2012
2013
AGRICULTURE
12,988,809.19
13,437,367.04
13,808,846.72
14,032,549.19
1. Crop Production
11,650,645.93
11,914,060.84
12,107,582.48
12,112,011.50
2. Livestock
952,730.88
1,091,453.52
1,220,466.46
1,383,384.65
3. Forestry
135,720.90
152,016.09
168,349.55
187,685.33
4. Fishing
249,711.48
279,836.59
312,448.23
349,467.71
MINING AND QUARRYING
8,454,554.20
8,751,190.79
8,563,329.10
9,017,443.96
5. Crude Petroleum and Natural Gas
8,402,676.40
8,691,722.05
8,496,106.65
8,940,850.70
6. Coal Mining
3,218.23
3,918.09
4,655.59
5,602.58
7. Metal Ores
2,354.84
2,707.85
3,256.94
3,833.06
8. Quarrying and Other Minerals
46,304.72
52,842.80
59,309.92
67,157.63
MANUFACTURING
3,578,641.72
3,958,756.11
4,503,713.71
5,163,495.49
9. Oil Refining
255,160.05
286,627.11
316,217.59
358,333.18
10. Cement
221,087.82
247,636.89
286,308.63
331,652.44
11. Food, Beverage and Tobacco
2,298,522.91
2,577,660.22
2,989,090.85
3,480,692.27
12. Textile, Apparel and Footwear
352,543.82
349,524.81
353,375.23
360,111.72
13. Wood and Wood Products
123,384.10
135,568.35
150,942.01
169,930.36
14. Pulp, Paper and Paper Products
24,355.21
27,742.37
31,515.81
36,491.16
15. Chemical and Pharmaceutical Products
25,167.16
28,564.61
32,511.47
37,611.38
16. Non-Metallic Products
59,548.40
63,494.54
68,232.05
74,340.95
17. Plastic and Rubber products
33,859.54
41,045.80
51,418.54
63,485.43
18. Electrical and Electronics
2,506.55
2,738.87
3,040.27
3,408.13
19. Basic metal , Iron and Steel
44,474.19
53,138.42
63,823.60
76,456.56
20. Motor vehicles & assembly
21,890.75
24,525.34
27,763.34
31,824.28
21. Other Manufacturing
116,141.22
120,488.78
129,474.33
139,157.65
22. ELECTRICITY, GAS ,STEAM AND AIR CONDITIONING SUPPLY
315,302.59
441,280.95
499,644.22
563,740.49
23. WATER SUPPLY,SEWERAGE, WASTE MANAGEMENT AND REMEDIATION
72,966.95
81,727.39
96,063.15
111,151.13
24. CONSTRUCTION
1,570,973.47
1,769,662.23
2,040,334.31
2,366,805.67
25. TRADE
8,910,282.11
8,723,126.89
10,328,358.92
11,133,543.17
26. ACCOMMODATION AND FOOD SERVICES
245,760.58
267,529.58
288,222.12
315,090.71
TRANSPORTATION AND STORAGE
694,771.81
678,644.02
699,857.95
735,495.06
27. Road Transport
619,136.86
602,567.85
621,341.05
652,290.57
28. Rail Transport & Pipelines
107.77
105.01
106.89
111.53
29. Water Transport
4,225.75
4,227.04
4,289.71
4,526.57
30. Air Transport
32,673.90
32,938.78
33,831.86
36,056.58
31. Transport Services
22,646.26
22,255.60
22,959.88
24,222.73
32. Post and Courier Services
15,981.28
16,549.74
17,328.56
18,287.08
INFORMATION AND COMMUNICATION
5,960,944.87
6,547,367.40
6,884,113.59
7,527,847.62
33. Telecommunications and Information Services
4,931,991.14
5,381,152.85
5,608,285.50
6,058,320.82
34. Publishing,
14,661.08
15,619.22
15,938.12
17,047.29
34. Motion Pictures, Sound recording and Music production
479,194.45
597,137.38
713,587.17
893,299.71
36. Broadcasting
535,098.20
553,457.95
546,302.80
559,179.80
37.ARTS, ENTERTAINMENT AND RECREATION
30,934.93
39,179.59
46,229.87
55,313.00
FINANCIAL AND INSURANCE
1,242,813.40
1,476,383.03
1,713,105.54
2,072,869.42
38. Financial Institutions
946,032.29
1,160,316.65
1,384,111.51
1,717,509.12
39. Insurance
296,781.11
316,066.38
328,994.02
355,360.30
40. REAL ESTATE
4,127,988.21
4,328,366.86
4,633,640.71
5,038,708.33
41. PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES
1,711,698.01
1,822,468.83
1,868,674.45
2,002,954.26
42. ADMINISTRATIVE & SUPPORT SERVICES
13,140.14
13,929.43
14,140.91
15,048.69
43. PUBLIC ADMINISTRATION
1,998,470.88
2,109,536.69
2,145,081.82
2,279,823.34
44. EDUCATION
826,671.62
945,095.84
1,000,552.07
1,094,620.12
45. HUMAN HEALTH AND SOCIAL SERVICES
560,047.59
617,772.89
636,502.93
676,428.71
46. OTHER SERVICES
900,022.87
954,681.41
984,634.82
1,056,527.95
GDP at 2010 constant price
54,204,795.12
56,964,066.98
60,755,046.91
65,259,456.29
Net Indirect tax on Products
857,086.13
660,029.15
755,907.50
746,291.67
GDP at 2010 constant Market price
55,061,881.25
57,624,096.13
61,510,954.41
66,005,747.96
Growth at 2010 constant basic prices
5.09
6.66
7.41
Growth at 2010 Market Prices
4.65
6.75
7.31
Stronger diversification of the Nigerian economy: The results indicate that the structure of the Nigerian economy has changed significantly, leading to a decline in the share of agricultural sector and a rise in the share of Services in nominal GDP, indicating stronger diversification of the Nigerian economy than earlier reported.
Better coverage of Services sector:The economic activities with the most notable changes include human health & social services, information and communication as well as professional, scientific and technical services.
Inclusion of new economic activities:Activities which have been included in the computation framework include entertainment, research, patents and copyrights etc.
F. GDP Rebasing And Its Implications For Social Development
Rebasing will not change the facts of our economy overnight. It will not make poverty and unemployment disappear overnight but it will give us the tools, the policy ability, to tackle these problems in order to reduce poverty and improve the welfare of our people.
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.
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.
Growth in GDP is not synonymous with increase in job creation.
Increase in the overall economic output of a country does not necessarily mean increase in incomes of all individuals.
The confirmation that Nigeria’s economy is larger than other African economies is a positive development. But rebasing is an opportunity to boost Nigeria’s growth and development, not a destination. It should inspire us to work harder to make the economy work better for Nigerians.
The current Administration recognises this challenge and this is why a number of federal intervention programmes are targeted at addressing this issue.
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.
G. Implications Of GDP Rebasing For Key Macroeconomic Aggregates And The Nigerian Economy
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. Rebasing the GDP does not necessarily mean the country would not be eligible for concessional borrowing, as there are other criteria that qualify a country.A higher GDP means that the ratio of debt to GDP would be lower, thereby increasing the allowance to borrow. It is expected that the State GDP compilation process will utilise the most recent base year in the computational process.The rebased estimates also allow for better computation of state debt sustainability analysis.
H. Stakeholders Involvement in the Rebasing Exercise
National Bureau of Statistics (NBS) is responsible for computing and reporting the GDP estimates.The rebasing exercise involved several stakeholders including Federal and State Ministries, Departments and Agencies. For instance, oil and gas data was obtained from NNPC, data on government expenditure was obtained from the Offices of the Accountants General at the Federal and State levels, data on Banking and Insurance were obtained from the Central Bank of Nigeria and the National Insurance Commission etc. In addition, data was obtained from households and firms during the surveys.
Other stakeholders that played important roles during the process include the National Economic Management Team, the Economic Management and Implementation Team, National Planning Commission (NPC), and development partners including the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB).
The 36 States and the FCT (especially the State Statistical Agencies) were actively involved the compilation process. In particular, States supplied NBS with their Accountants General reports, and participated in the surveys conducted for the rebasing exercise.
I. Implications Of The Rebased Estimates On The Realisation Of The NV20: 2020 And The Transformation Agenda
The rebasing exercise is expected to fast-track the achievement of the sector targets of the Transformation Agenda and the Vision 2020, as well as the attainment of at least the 20th position in the world nominal GDP ranking by enabling policymakers to more accurately design policies to achieve this objective.
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.
J. Next Steps
NBS is expected to release the final estimates of the nominal GDP in by June 2014.
It is expected that 2015 base year data will be available by 2016 when another rebasing exercise will be undertaken.
The report of the exercise will be published on the website of the National Bureau of Statistics in April 2014. In addition, a Frequently Asked Question (FAQ) material has been developed by stakeholders to provide clarifications on the implications of the rebasing exercise.
NBS and other key stakeholders and partners in the GDP exercise are able to circulate the information widely through various channels including the print media, online media and institutional web sites.
K. Possible Reflection Points
This is the first time the Nigerian economy will be rebased in almost a quarter century. The last exercise was done in 1990.
This administration sees rebasing necessary for making better economic decisions.