Nigeria plans to change the base year for its gross domestic product (GDP) to 2008 from 1990, a move that could lead to a huge jump in the estimated size of Africa's second biggest economy, the national statistics chief said on Thursday.
The measure scheduled for January will aim to better capture the current real economy, taking into account the growth of sectors like telecoms, Yemi Kale, head of the National Bureau of Statistics (NBS) told Reuters in a phone interview.
When Ghana made a similar move to recalculate its GDP last November, its estimated output shot up by 60 percent, catapulting it into the ranks of the middle income countries.
When we do it next year ... We expect a huge jump in GDP because we have been using the 1990's and the structure of the Nigerian economy has changed since then, Kale said.
There have been a lot of changes in the Nigerian economy, for example, we now have a telecom sector which did not exist in the 90s, he added.
Most governments overhaul their GDP calculations every few years to reflect changes in output and consumption, such as the advent of mobile telephony and the Internet, but Nigeria has not done so since 1990.
If Nigeria's $247 billion economy is revised up by as much as Ghana's was, it would be almost as big as South Africa, the continent's top economy, with a GDP of $422 billion.
Arguably, the effect on Nigeria could be even more pronounced since Ghana's rebasing was only from 1993, not 1990.
Turmoil in Egypt this year enabled Nigeria to overtake the north African nation's now $232 billion economy, to take second place. A 60 percent increase would value it at $395 billion, only just behind South Africa.
The implication is that GDP per capita will subsequently increase making Nigeria a more attractive investment case and potentially boosting consumer stocks, said Samir Gadio, emerging market strategist at Standard Bank.
Nigeria's economy is currently growing at 7-8 percent, authorities say.
Alan Cameron, economist at CSL Stocbrokers said the move , which has involved International Monetary Fund assistance, would make its debt look better but diminish its tax revenue as a percentage of GDP, as Ghana's move did, as well as its trade surplus.
A revision to the base year ... would improve Nigeria's budget deficit and debt ratios, as well the relative size of the import burden, he said.
It exposes the weakness of a tax net that is already small and would reduce the relative size of the current account surplus, which has been shrinking anyway.