Rebased GDP to reveal Nigeria’s underlying economic realities

Nigeria’s National Bureau of Statistics is set to unveil the country’s rebased Gross Domestic Product for the first quarter of 2025, marking the first such revision in over a decade. SAMI TUNJI examines how the rebasing, which shifts the base year from 2010 to 2019, could significantly alter Nigeria’s economic metrics, including GDP size, per capita income, debt-to-GDP ratio, and tax revenue projections. While the new figures may present a more comprehensive view of Nigeria’s evolving economy, questions remain on whether the rebased GDP will translate into tangible economic benefits for ordinary Nigerians amid inflationary pressures and stagnant wages

Nigeria’s National Bureau of Statistics plans to unveil the country’s rebased Gross Domestic Product for the first quarter of 2025, an exercise expected to provide a more accurate reflection of the economy’s size and structure. The move comes more than a decade after the last GDP rebasing in 2014, which saw Nigeria overtake South Africa as the largest economy in Africa following an 89 per cent increase in economic output. This year’s rebasing will shift the base year from 2010 to 2019, incorporating fast-growing sectors such as information and communication technology, e-commerce, digital finance, the blue economy, and the creative industry, including better coverage of the informal sector.

While rebasing GDP is a technical adjustment to better reflect economic realities, it is also expected to impact per capita income, an important measure of economic well-being. Many Nigerians wonder whether the rebased GDP will indicate higher income levels or simply produce larger economic figures that do not translate into improved living standards. Given the country’s current economic struggles, including high inflation, exchange rate fluctuations, and slow wage growth, questions remain about whether the forthcoming rebasing will make a real difference in household earnings.

The meaning of GDP rebasing

GDP rebasing is a process of updating the reference year used to calculate economic activity to account for structural changes and price movements. It ensures that GDP figures accurately reflect modern economic activities, consumption patterns, and sectoral contributions. Over time, an economy evolves, and industries that may not have been significant in the past emerge as major contributors to output. Without rebasing, official GDP estimates can become outdated and fail to capture the true extent of economic progress.

In Nigeria, the last rebasing in 2014 significantly altered the perception of the country’s economy, showing that sectors such as telecommunications, entertainment, and financial services had grown far beyond previous estimates. With the upcoming rebasing, the economy’s structure will again be reassessed, incorporating new industries that have become vital drivers of growth in recent years. The expected increase in GDP size is likely to influence key economic indicators such as the debt-to-GDP ratio, tax revenue as a share of output, and fiscal planning.

GDP rebasing and Per Capita Income

Data obtained from the website of the International Monetary Fund indicated that Nigeria’s GDP per capita declined from $3,022 in 2014 to just $835.49 in 2024, signalling a sharp contraction in the average economic output per person. The country’s total Gross Domestic Product—the overall value of goods and services produced—also fell steeply, from $568.5bn recorded in 2014 to $194.96bn in 2024, marking a staggering 65.71 per cent decline over the period. Development economist Aliyu Ilias attributed Nigeria’s low GDP per capita to the prolonged depreciation of the naira. However, a better estimate of the GDP per capita will likely be provided with the rebasing of the GDP.

One of the direct effects of GDP rebasing is its impact on per capita income, which is calculated by dividing total economic output by the country’s population. If Nigeria’s GDP increases significantly after rebasing, per capita income will also rise on paper, even if individual earnings remain unchanged. This could lead to an improved classification of Nigeria’s income status by international bodies such as the World Bank, which sets thresholds for low-income and middle-income countries based on per capita GDP.

However, the reality for most Nigerians may not match the statistical improvements. The size of the economy may appear larger after rebasing, but if inflation, unemployment, and real wage stagnation persist, the majority of citizens may not experience an increase in their purchasing power. This is a key distinction between nominal GDP growth and real income growth. While rebasing can provide a clearer picture of economic output, it does not inherently improve the standard of living unless it is accompanied by policies that promote job creation, income growth, and economic inclusion.

Implications for key economic indicators

If GDP rebasing results in a significant increase in Nigeria’s economic size, several macroeconomic indicators will be affected. A larger GDP could improve the debt-to-GDP ratio, which is an important metric for assessing a country’s debt sustainability. With Nigeria’s public debt currently hitting N142.3 trn as of September 30, 2024, a higher GDP figure could make the debt burden appear more manageable in relative terms. However, this does not change the fact that the country’s debt servicing obligations remain high, consuming a significant portion of government revenue.

Another implication is on government revenue as a percentage of GDP. Nigeria has one of the lowest tax-to-GDP ratios in the world, currently around 10 per cent. If rebasing expands the size of the economy, this ratio could decline further unless tax collection efforts are improved. This would further stress the need for policymakers to introduce tax reforms aimed at increasing revenue mobilisation to match the newly rebased GDP figures.

During a sensitisation workshop on GDP and CPI rebasing organised by the Nigerian Economic Summit Group and the NBS in Lagos, the technical assistant to the Statistician-General, Moses Waniko, said, “Beyond that, there are other implications for the national economy, which we have tried to put in this slide. The first is that rebasing will provide or allow for an economic and development plan.

“The second is that the rebasing will really help to provide a good trajectory for the economy. So, beyond this, it’s important to also state that after the rebasing, there are certain things that we expect that might change, such as changes in the size of the structure of the economy.

“We expect that the size of the economy will be bigger. The tax-to-GDP ratio is something that people may want to see what the numbers would look like. The debt-to-GDP ratio of 18.5 per cent as of September 2019 could also reduce with the bigger size of the GDP, and then per capita income will increase after the rebasing.”

 

Challenges in measuring real income growth

Despite the anticipated statistical improvements, real income growth in Nigeria remains constrained by several factors. One major challenge is the widening income inequality, which means that while some segments of the economy may see higher earnings, many Nigerians still struggle with low wages and limited economic opportunities. The informal sector, which accounts for a large share of employment, often operates outside formal wage structures, making it difficult to translate GDP growth into widespread income gains.

Underemployment remains a major concern, particularly among the youth. While GDP growth may indicate a more vibrant economy, if job creation does not keep pace, many Nigerians will not benefit from the expansion.

High inflation also continues to erode purchasing power, making it difficult for wage earners to maintain their standard of living even if their salaries increase nominally.

The volatility of the exchange rate further complicates income growth. The naira’s depreciation against major foreign currencies affects the cost of living, especially for imported goods and essential commodities. Even if GDP rebasing leads to a statistical increase in per capita income, the real value of that income may be diminished if inflation and exchange rate pressures persist.

Beyond rebasing: What Nigeria must do

To ensure that GDP rebasing has a meaningful impact on real income, policymakers must focus on improving wage levels, expanding employment opportunities, and strengthening social protection systems. Implementing the minimum wage increase, promoting financial inclusion for informal sector workers, and supporting industries that create high-quality jobs are essential steps in translating GDP growth into higher real incomes.

According to Aliyu Ilias, reversing the decline in GDP per capita requires urgent policy action, stating, “To achieve economic growth, Nigeria must boost production, balance trade, improve security, and ensure food and energy security.

“Without addressing these fundamental issues, our GDP will continue to struggle, and GDP per capita will not improve.”

Investing in infrastructure, education, and healthcare will also play a critical role in ensuring that the benefits of economic expansion are widely distributed. A rebased GDP that captures the true size of Nigeria’s economy should be accompanied by policies that enhance productivity, encourage innovation, and reduce poverty. Without these measures, GDP rebasing may only serve as an adjustment to economic data rather than a meaningful change in the lives of ordinary Nigerians.

As the NBS prepares to release the rebased GDP figures, it is important for Nigerians to look beyond the headline numbers and focus on the underlying economic realities. While rebasing may indicate a larger economy and higher per capita income, the real test will be whether these changes translate into better wages, improved job prospects, and higher living standards. The government must ensure that economic policies are aligned with the needs of the population so that GDP growth is not just a statistical measure but a reflection of real prosperity.