By Adebayo Ahmed | The National Bureau of Statistics (NBS) released rebased Gross Domestic Product (GDP) data recently. GDP remains the most popular measure of economic activity. The data showed that economic output in 2024 was N373 trillion in current Naira terms and N218 trillion in 2019-Naira terms.
For context, this puts the economy about 34% higher in current Naira terms in 2024 compared to the previous estimate. Of course, this does not mean that the economy grew by 34%. It just means that we now know that the size of the economy was 34% larger than we thought it was in 2024. However, focusing on year-on-year growth perhaps misses the key lessons from GDP rebasing exercises.
Most countries "rebase" their GDP regularly. The rationale for GDP rebasing is that the structure of the economy changes over time. Some things that may contribute significantly to economic activity today may not have existed a decade ago. On the other hand, some activities that contributed significantly in the past may not exist today or may have been transformed over time. GDP rebasing is therefore an opportunity to re-evaluate the structure of the economy and understand how it has changed over time.
In the context of Nigeria, and many other African countries, structural transformation has been the key objective of economic policy. The goal has been to promote industrialisation and value addition. This would be characterised by an increasing share of the economy focused on manufacturing and other high-value economic activity and a decreasing share focused on primary economic activities such as agriculture and mining of natural resources. This has been argued to be the best path towards creating jobs for the multitude of people entering the labour market, increasing the quality of life and standard of living at scale, and reducing poverty. In short, the objective has been to get more people creating more complex, higher-value things.
Figure 1 – change in structure of the economy first time
GDP rebasing entered the Nigerian lexicon about a decade ago when the rebased GDP revealed a much larger economy than previously thought and planted Nigeria firmly as the largest economy in Africa. This large increase was partly because the exercise had not been conducted in a long time and much had changed in the intervening years. As shown in Figure 1 above – which shows the percentage point change in the contribution of different sectors to the economy – some sectors, like information and telecommunications, revealed themselves to be much larger than previously thought. This was largely due to mobile technology advances and reforms in the sector, which led to an explosion in connectivity. This was evidence of structural transformation in progress.
The Elusive Search for Structural Transformation
This time around, the changes are not as dramatic but are still significant, with a few things worth noting. Although the last exercise was conducted only just over a decade ago, since then there have been two major economic recessions – triggered by the crude oil price crash in 2014 and the COVID-19 pandemic – and very significant macroeconomic reforms.
Figure 2 – Change in sectors – 2013 to 2023
Figure 2 shows the average change in the share of GDP for different sectors for a three-year average period around 2013 – just after the last rebasing exercise – and for a similar three-year average period around 2023 with the new rebased data. As was the case last time, there has been significant structural change this time as well. The real estate sector has increased from about 7% of GDP in 2013 to over 13% in 2023. Agriculture and trade continue their rather unfortunate increase in their contribution to the economy. On the other side, mining and quarrying continues a rather fortunate – or unfortunate depending on how you think about it – collapse in its contribution to GDP, continuing a trend that was apparent at the last rebasing exercise in 2013. Within this overall structural change, some themes are increasingly clear.
Figure 3 Change in share of select sectors over time
A Tale of People Left Behind: The Hustle Absorber of Agriculture and Trade
We mentioned that the continued dominance of agriculture and trade in the economy is unfortunate because in essence it is the symbol of a failure of the type of structural transformation that is hoped for in Nigeria – the type that creates jobs that move people up the income and quality-of-life ladder. In 2001, agriculture and trade contributed a combined 36% of GDP. This increased to 40% of GDP in 2013 and now to about 46%. Indeed, both sectors – according to secondary data from the NBS – employ the largest number of Nigerians. So why did we describe this as "unfortunate"? It is because both sectors signify what is essentially the survival hustle economy. In agriculture, this is mostly rural subsistence farming that keeps farmers below the poverty line, and in trade, these are the urban hustlers who just try to sell whatever to keep mind and body together – also in poverty. Indeed, according to the rebased GDP reports – which for the first time in a long while were able to distinguish between formal and informal activities – 92% of crop production, 98% of livestock, 98% of forestry, 94% of fishing, and 39% of trade were informal activities. The expansion in these sectors can therefore be thought of as an expansion in the share of the economy that is focused on basic survival. Whereas agriculture and trade are not doomed to be keep-mind-and-body-together, low-income sectors, the path in those sectors to middle income and high quality of life is very bleak
The Resurrection of Fixed Assets?
If anything captured the economic struggles of the last decade, it would be foreign exchange. In this context, the depreciation of the Naira implied the loss of relative value of Naira-based assets – stocks, bonds, cash in the bank, etc. The decade has also been characterised by the increasingly insular policy of the last government, which sought to choke access to anything that implied demand for foreign exchange. It is conceivable that the natural response was for people to opt for any other Naira-based asset that could stand the test of time, of which the best option was probably real estate. Of course, the real estate measured as part of GDP does not mean construction or the value of property but the rental activities and associated real estate services linked with property. It is difficult to tell if the expansion in real estate is the economy trying to unlock "dead" real estate assets or if it is the services associated with new real estate. Still, this was an interesting surprise and hopefully will translate to a reduction of people dwelling in slums and more quality urbanisation – where possibly the bulk of real estate services are happening. Regardless, nearly 57% of real estate services are informal – which according to the NBS accounted for the increased share – and so there is much to understand there yet.
Dead and Buried: The End of Oil
If there is one thing that has characterised Nigeria's macroeconomic challenges, it is the death of oil. The rebased GDP data demonstrates just how much Nigeria has ceased to be an oil economy. In 2000, the crude oil and natural gas sector accounted for 29% of GDP. In 2013, this was down to 11%. In 2024, this has fallen even further to just over 3%. At this point, it should be clear to everyone that Nigeria is no longer a crude-oil-based economy. The unfortunate reality, though, is that as small as the crude oil and natural gas sector is relative to the rest of the economy, it still accounts for the lion's share of exports and therefore foreign exchange earnings. In 2024, crude oil accounted for 71% of all exports, with other oil products accounting for another 13% – only marginally lower than the above 90% it used to be a decade ago. Can a sector which is barely 3% of GDP finance foreign exchange transactions for the economy? The answer is definitely no. The last government tried to plug the foreign exchange inconsistency with debt and administrative restrictions. The current administration is trying to plug it with debt and investment. But the honest truth is that the rebased GDP data has made clear the fundamental structural macroeconomic problem – without diversification in exports and foreign exchange earnings, the exchange rate problems will continue.
Big Reforms, But Then What?
The big lesson from the GDP rebasing exercise in 2013 was that systemic reforms plus innovations in technology can create new activities that generate value. This was the story of the telecommunications sector, which increased from 0.12% of GDP in 2000 to almost 9% of GDP in 2013 – a transformation in just over a decade. Since then, things appear to have plateaued. The telecommunications sector is apparently still about 8% of GDP. The reforms have happened, the sector sprang into existence, but then what next? There has been no similar reform and transformation example this time around, but the telecommunications revolution should still serve as a signal of what is possible when innovation and good public policy meet.
Manufacturing – Stuck in a Protected Space
Perhaps the saddest part of the rebased GDP data is the continued stagnation in manufacturing – the sector which in principle could be the engine of Nigeria's economic transformation, creating the kinds of jobs and improvements in livelihoods that propel people in Nigeria to genuine middle-income status and improved quality of life. That transformation is yet to materialise, with manufacturing stuck in the doldrums. In 2000, the manufacturing sector accounted for almost 12% of GDP. In 2013, this was down to 9%, and in 2024, it is down even further to just over 8%. The failure of the manufacturing sector should not be surprising to anyone who has followed Nigeria's industrial and trade policy over the last decades: policy which can be summarised as protecting local producers from foreign competition at all costs—produce what you consume and ban or levy high tariffs on imports and similar policies. This is exemplified by the motor vehicle and assembly industry—a sector which has been protected with nearly 70% duties and levies on imported vehicles and all sorts of "incentives" thrown at firms who claim to assemble, not produce, motor vehicles in Nigeria. In 2000, the motor vehicle sector accounted for 0.09% of GDP (or about $62m). In 2013, this reduced to 0.07% of GDP (about $360m) and to 0.07% of GDP in 2024 (about $131m). In essence, in real terms, the motor vehicle sector is about the same as it was nearly 30 years ago in spite of the various “incentives” and costs to the regular public.
The insularity of Nigeria's industrial policy and failure to become internationally competitive enough to diversify exports is clear if you disaggregate the economy by tradable and non-tradable sectors. Non-tradable sectors are those which by their nature are immune to foreign competition as they cannot really be bought and sold across borders, such as road transport or water supply. Tradable sectors are those with outputs that can be traded internationally and are therefore in some way prone to international competition, even with trade restrictions
Figure 4- Tradable versus Non-Tradeable Sectors[1].
As is clear from Figure 4, the share of the economy that is non-tradable continues to increase from less than 30% of GDP in the 2000s to nearly 50% of GDP in 2023. In essence, the capacity of the economy to compete with other economies has worsened over the last decades.
Figure 5 – Tradable versus Non-Tradable Sectors – Manufacturing Sectors only
Even in the manufacturing sector, the sectors which are categorised as non-tradable – cement and non-metallic products[2] – have increased their share while those tradable manufacturing sectors that are forced to compete have continued to systematically shrink. If you combine this exposure to competition and the need to diversify exports, then the economic policy lesson from the rebased GDP data is the urgency of becoming competitive in some non-oil tradable, labour-intensive sectors that can begin the process of diversifying foreign exchange and creating jobs that lift people out of poverty. Without this, the government's vision of having a $1tn economy is unlikely. Already the economy needs to grow by over 25% a year in real terms to be a $1tn economy by 2030 – a feat which is likely impossible. Even the 9% and 5.5% it needs to be growing at to hit that target by 2040 and 2050 respectively seem rather unlikely at this point without significant structural transformation. Subsistence agriculture and urban trade hustle are unlikely to deliver the economy that we need to lift Nigerians out of poverty and into better quality of life.
A Few Other Troubling Signals
It is surprising that the contribution of Nollywood and the music industry to GDP has not changed significantly. This seems to be at odds with the trends in popular culture around the world where both have become a staple feature. But perhaps it sends a message about how difficult capturing international trade in services is. If unnamed artist X moves to London, creates music there, sells the music via international streaming platforms, and parks the income in banks in Switzerland, is that really economic activity related to Nigeria in any way? Or is it just international monetisation of Nigerian music and culture? The same can be said for tech company Y that incorporates in Mauritius and serves a worldwide clientele but operates only remotely from Nigeria with no transactions domiciled in the country except staff costs.
The rebased GDP data also showed that the COVID-19-induced recession was much deeper than we all thought. Some sectors, like transport, appeared to have collapsed and have still not recovered to their pre-pandemic levels.
Finally, if the future of Nigeria depends on investment in education, then the future may not be so bright. It appears the combination of both private and public activity in education is stagnating. It also suffered from the COVID-19 shock, with the sector half as large as it was in real terms in 2024 compared to 2019. The contribution of the sector has also collapsed from 2% of GDP in 2013 to less than 1% of GDP in 2024. Worrying. Structural transformation does not just happen but depends on investment in the people who will make up the future Nigerian economy. Investments, not only in their education but also in health, food security, and so on. Without that investment today, the path to structural transformation tomorrow looks blurrier. And of course, these investments don’t just happen. They require deliberate policy, deliberate focus, and deliberate action. The rebased GDP data has shown us where we are. The question now is whether Nigeria has the will to get where it needs to go.
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[1] Tradable sectors: All agriculture, all mining and quarrying, all manufacturing except cement and non-metallic products, water and air transport, information and communication, arts, financial and insurance, professional scientific and technical services.
Non tradable sectors: Electricity, water supply, construction, trade, accommodation, all transport except water and air transport, Real estate, administrative services, public administration, education, human health and social services, other services.
[2] Cement is counted as mostly non-tradable because of the heavy nature and costs or shipping which disincentivise trade. Non-metallic products are typically blocks and other heavy but low value manufactured products for which international trade makes little economic sense.
