The Nigerian Government has started restrategising to take advantage of the opportunities provided by better knowledge of the changing structure of the economy, the Minister of Finance and Coordinating Minister of Finance, Dr. Ngozi Okonjo-Iweala, has announced.

Speaking today in Abuja after the announcement of the country’s rebased Gross Domestic Product (GDP) figures, the minister said: “The policy direction will reflect even more the fact, like similar emerging market economies, that small and medium scale firms will increasingly play a more prominent role in the economy.

“As part of this focus, government will expand and deepen its current efforts to boost manufacturing, SMEs and entrepreneurship through relevant policies, skills training, grants and other incentives. This is likely to include scaling up of programmes like YOUWIN, the Graduate Internship Scheme and similar programmes. Another sector that will receive more attention is the Nigerian movie industry whose growth was also highlighted by the rebasing exercise. The industry accounts for N853.9 billion or 1.2% of GDP (not N9 trillion as wrongly reported by some media.)

“To encourage sustainable entrepreneurship in the industry which is popularly known as Nollywood, tax breaks in specific areas are being considered as well as the building a strong distribution network that will ensure that practitioners are not denied their just rewards due to the activities of pirates. Housing and construction, a sector which has the capacity to generate jobs and grow the economy, will also be a centre piece of future efforts.”

The results of the latest rebasing of Nigeria’s GDP, the first in almost a quarter of a century, confirm that the country’s economy has grown in total value and undergone significant changes, including substantial diversification in many sectors especially in the last decade.

According to the Statistician-General of the Federation and head of the National Bureau of Statistics, Dr. Yemi Kale, “The results reveal better diversification of the Nigerian economy than earlier reported… the structure of the Nigerian economy has changed significantly.”

The results also indicate that Nigeria is the largest economy in Africa and the 26th largest in the world.

A key finding is that the economy, like that of many other middle-income countries like Thailand, Malaysia and Egypt, is becoming more service-driven as the services sector has expanded significantly.

According to the National Bureau of Statistics (NBS), which carried out the exercise with assistance from respected Nigerian economists including Prof. Olu Ajakaiye, President of the Nigerian Economic Society, Prof. 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: N54,204, 795.12m ($360.6 billion)

2011: N63,258,579.01m ($408.8 billion)

2012: N71,186,534.89m ($449.9 billion)

The changes between the old and new rates represent growth of 59.5% in 2010, 69.13% in 2011, 75.58% in 2012 and 89.22% 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, 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 stated that “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.”

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.”

Other highlights of the rebasing exercise include:

THE ECONOMY HAS WITNESSED A STRUCTURAL SHIFT AND IS MORE DIVERSIFIED

One of key changes identified is the noticeable shift in the share of key sectors to the country’s overall GDP. An example is the decline in the share of the agricultural sector to the overall GDP and a rise in the share of Services. In the 1990 nominal series, agriculture contributed 30% to the GDP, while industry contributed 46.1% and services contributed 23.6%. According to the rebased 2010 series, the share of agriculture has declined to 24% while the share of services to the country’s GDP has risen to 50.2%.

The explanation for this is that even though agriculture is growing in terms of total value and jobs created, the rise in the contribution of service sectors such as telecommunications has led to a reduction of its contribution as a proportion of total GDP. The implication is that Nigeria is moving towards a more services-oriented economy. Under the new service industry structure, information and communication rank high, next to wholesale and retail trade.

One area of good news uncovered by the rebasing exercise is the 26.7% increase in the value-added on crop production, a 43.9% in value added of livestock, a 9.2% increase in the value added of fishery, and a 23.9% increase in the value of forestry.

STRUCTURE OF THE ECONOMY HAS CHANGED FROM 33 KEY ACTIVITY AREAS TO 46

The rebasing exercise was more comprehensive than previous ones as the number of economic activities reported in the GDP computation framework increased to 46 compared to 33 in the previous series. Other activities which were included in the computation framework included entertainment, research, patents and copyrights.

THE INFORMAL SECTOR, TELECOMMS AND MOTION PICTURES WITNESSED THE MOST CHANGES

Wholesale and retail trade was the economic activity which the most notable changes between the old and new GDP series. This is attributable to the effort made by the NBS during the rebasing exercise to capture more of the informal sector.

Telecommunications and information services; motion pictures and sound recording; cement production; food, beverage and tobacco; construction and real estate sectors also witnessed significant changes.

HOW REBASING THE ECONOMY WILL BENEFIT NIGERIA

1. 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.

2. 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.

3. 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.

4. The exercise will provide significant support for the growing pool of investors.

5. The rebasing of GDP is expected to boost Nigeria’s financial market ratings as investors show greater interest in the economy.

6. The rebased series provide broader classifications of economic activities, revealing opportunities for expanding the revenue tax base.

7. 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.

•Photo shows Okonjo-Iweala.