Will Nigeria’s GDP, CPI rebasing be a game changer?

Nigeria is on the brink of a significant economic shift with the impending release of rebased Gross Domestic Product (GDP) and Consumer Price Index (CPI) numbers. The National Bureau of Statistics is in the final stages of this process, which is expected to reflect the current realities of the Nigerian economy and account for structural changes. Esili Eigbe, Director at Escap Management, shared insights on what to anticipate from this pivotal moment. One of the key highlights of the GDP rebasing is the expected increase in the size of the Nigerian economy by at least 15 to 20 percent. A significant factor in this growth could be the inclusion of illegal activities for the first time, offering a more comprehensive view of the economy. Additionally, sectors like the digital economy, pension fund administrators, modular refineries, and mining are set to be better captured in the new figures, aligning with the evolving landscape of Nigeria's economy. Eigbe emphasized the importance of correcting the GDP numbers to reflect the current state of the economy, which now boasts a substantial digital economy and thriving sectors that may have been underestimated in previous calculations. The rebasing aligns with global practices, with even the United States expected to rebase its GDP this year. In the realm of inflation metrics, the addition of indices such as services, energy, and farm produce will provide a more detailed assessment of price changes in key sectors. Notably, the reweighting of food and alcoholic beverages in the CPI basket from 52 percent to 40 percent raised eyebrows, especially considering the recent surge in food prices. As the composition of the inflation index evolves, stakeholders will gain a better understanding of economic trends. Among the expected post-rebasing contributors to GDP, crop production, trade, and real estate are poised to emerge as significant sectors. Real estate, in particular, is singled out for its resilience and value, likely to be more accurately portrayed in the revised figures. The rebasing could shed light on previously underestimated sectors and their true contribution to the economy. Regarding the implications for fiscal authorities, adjustments in the tax to GDP ratio and debt to GDP ratio are anticipated. Despite a potential decrease in the debt to GDP ratio post-rebasing, concerns about Nigeria's debt sustainability persist. Eigbe suggested alternative indicators like government revenue to debt ratios for a clearer picture of the country’s ability to service its debt. Urging tax reforms to boost government revenue, he highlighted the pressing need for Nigeria to enhance its tax collection efforts to align with global standards. As Nigeria gears up for the release of rebased GDP and CPI numbers, the economic landscape is poised for a transformation. The recalibration of key economic indicators is expected to provide a more accurate reflection of the country's economic prowess and potential, setting the stage for informed policy decisions and strategic planning in the coming years.