The real size of many African economies is likely to be larger than their current estimates, suggesting that the role of the continent in the global economy “might have been underestimated”, a top UN official for the region has said.
Carlos Lopes, the executive secretary of the UN’s Economic Commission for Africa (ECA), said the recent rebasing of Nigeria’s gross domestic product (GDP), which saw the country emerge as the largest economy in Africa, “has important implications for the rest of the continent… and raises the question whether there are other African economies with a systematically underestimated GDP”.
Lopes added: “As shown by Nigeria’s case, it is crucial for African countries to regularly rebase and re-benchmark their GDP figures, considering current lists in the basket of products and activities that better capture the size, structure, and trends of economy. It is also important that countries use the same classification and methodologies for better cross-country comparisons and regional integration.”
Lopes said that using a recent base year and applying the 2008 System of National Accounts (2008 SNA) – the international statistical standard for national accounts adopted by the UN Statistical Commission – “implies that the price structure is more representative of the economy”. Also, a wider basket of products and activities are considered when national accounts are calculated.
A more diverse economy and a strengthening consumer base, as seen in Nigeria, is “expected to attract more foreign direct investment (FDI)”, ECA said.
The Nigerian National Bureau of Statistics (NBS) said earlier this month that the latest GDP estimate of 80.2 trillion naira or $510 billion is 89% higher than the previous figure for the year 2013, based on the Central Bank of Nigeria’s average exchange rate for 2013.
According to ratings agency Fitch, which said Nigeria’s rebasing “could boost investor sentiment”, per capita GDP in 2013 rose by 89% to $2,900 – but remained below both the ‘BB’ and ‘B’ category peer group medians of $4,528 and $3,841, respectively.
ECA’s African Centre for Statistics reported from a survey conducted in January 2014 that seven African countries still base on 1990 or earlier years, 10 countries have base years between 1991 and 2000, and a further 19 have base years between 2001 and 2005.
According to centre head Dozie Ezigbalike: “On the system of national accounts, only nine African countries are reported to have partially or wholly adopted the 2008 SNA, while the other countries are still using previous versions.”.
Last January, the ECA, African Union Commission and the African Development Bank launched a project to support the implementation of the 2008 SNA across the continent. It is expected that all African countries “will soon adopt” the 2008 SNA classification and methodologies for compiling their national accounts to ensure better comparability, ECA said.