Business
New data indicates that Nigeria to overtake South Africa sooner as Africa’s biggest economy
Among other improvements to Nigeria’s new GDP series, it will be re-based, from 1990 possibly to 2008. This will be the first overhaul of the country’s GDP data since 1990.
During the period 1990 – 2008, Nigeria has undergone major structural changes, which have radically affected the contributions of the various sectors of the economy to GDP. One of the factors behind the massive revision is the increased weighting of the exploding services sector.
A big jump in GDP means a bigger share for each of Nigeria’s 169 million people; the boost in per capita income continues to attract increasing interest in consumer names in Nigeria, “from investors who are likely to extrapolate the effect of a seeming increase in purchasing power on such consumer stocks as Nestlé, Nigerian Breweries, Guinness, Dangote Flour Mills etc”.
In 2010, the McKinsey Global Institute forecast that consumer spending in Africa would reach US$1.4 trillion in 2020, from about US$860 billion in 2008. Along with similar projections, this boosted interest in the consumer goods sectors of a number of countries.
Cowan noted last week that listed consumer stocks in Lagos and Nairobi were already trading on a price to earnings ratio of 30 and suggested they were in bubble territory.
Another benefit of the data revision is that Nigeria’s public debt to GDP ratio, which stood at 18.7 percent at the end of last year, would drop to 10.5 to 14.5 percent, depending on the extent of the GDP revision.
Nigeria’s new status will improve its attractions to investors. Forbes magazine recently punted it as a rival to the BRICS (Brazil, Russia, India, China and South Africa). It said Nigeria’s economy was more diversified than Russia’s and more closely resembled Brazil’s: “Rich in petroleum but blessed with other resources and a population that is only now starting to live up to their potential as consumers.” – (Business Report)
