GDP rebasing: Services to enjoy biggest gain

The services sector is projected to constitute about 55 to 60 per cent of the rebased Gross Domestic Product data when launched.

In the current GDP, the services sector constituted about 53 per cent, while the oil sector and agriculture comprise 5.57 and 28.65 per cent, respectively.

However, post-rebasing projections by Meristem Securities in its 2025 Full Year Outlook titled ‘Mining Gold in the Grit’, indicated that services will range between 55 and 60 per cent of the rebased GDP.

The oil sector will stay within 5 to 10 per cent while the contribution of agriculture is projected to decline to less than 25 per cent.

The full-year report read, “A rebasing exercise in 2025 could bring emerging sectors like fintech, tech startups, and digital services into sharper focus while improving the capture of underreported areas such as arts and entertainment. Additionally, it could offer a more accurate representation of recent economic activities and supply chain dynamics in agriculture and services, potentially spurring growth in these sectors. However, the contribution of sectors like oil and agriculture might decline in relative terms due to the likely higher weight of the services sector.

“Furthermore, while nominal GDP figures are expected to grow significantly, this may not translate into corresponding continued increases in real GDP due to prevailing economic challenges that could dampen actual improvements in the economy.”

The last rebasing in 2014 unveiled a much larger economy, with GDP rising by approximately 90 per cent to N80.22tn from N42.40tn. This increase was largely attributed to the inclusion of both new and previously under-represented sectors, such as information and communication, real estate, healthcare, social services, and professional services.

The new additions to the rebased GDP, as announced by the National Bureau of Statistics, were digital economy activities, pension funds, National Health Insurance Scheme, Nigerian Social Insurance Trust Fund, the activities of modular refineries, domestic households as employers of labour, quarrying and other mining activities, and illegal and hidden activities.

Experts at Afrinvest Securities warned that while the rebasing of GDP might enhance overall nominal GDP size, “policymakers must look beyond statistical effects to drive sustainable growth. Similarly, a potential decline in debt-to-GDP must not derail efforts to enhance fiscal discipline and sustainable debt growth.

“On the CPI side, the improvement in services sector coverage (services index) and inclusion of the Insurance & Financial Services sector (0.5 per cent weight) should improve the proximity of inflation reading to reality relative to the previous structure. Also, the increase in the number of items captured in the basket will provide legroom to capture activities relevant to consumers.”

In conclusion, the analysts said, “We anticipate significant statistical changes in data upon the release of the new GDP and CPI reports based on the aforementioned structural changes. While we expect some positive gains from the revisions, the underlying contexts and drivers for the economy would require sustained and quality economic reform based on coordinated fiscal and monetary efforts.”

For multi-asset investment and capital management firm CFG Advisory, the “ongoing exercise to rebase GDP and CPI might therefore not yield the desired results.”

Highlighting the reasons for this opinion, the firm in Nigeria’s 2025 Economic Forecast titled, ‘From Reform Fatigue Quagmire to Sustainable Growth’ stated, “Nigeria’s GDP at $195bn has declined over the last decade, losing over $300bn in value due to devaluation, low productivity, and stagflation. The country is no longer the largest economy in Africa, ranking fourth behind South Africa, Egypt, and Algeria. This owing to prolonged policy inconsistency since the economy came out of ...-COVID recession.”

The forecast signed by the Chief Executive Officer of CFG Advisory, Adetilewa Adebajo, said, “To get the economy back on track, the government must reduce its debt burden, restore its credit rating to investment grade, and tame inflation. This would reduce borrowing costs and provide stimulus for investment, sustainable growth, productivity, and employment. To accomplish this, FGN must restructure its capital structure and balance sheet. Selling down its JV oil assets will raise $30-50bn, which can be applied to reduce the debt burden, improve the foreign exchange regime, provide dollar supply for naira appreciation, restore credit rating, and boost net reserves.”