NIGERIA ECONOMICS Essay

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Emma Chukuka Macro-Economics 201M Professor J. Pakula

Nigeria’s Fastest Growing Economy According to the Economist, on Saturday, April 5th 2014, South Africa’s was the largest economy in Africa. The IMF had said that South Africa had a GDP at $354 billion last year, well ahead of their closest rival country, Nigeria. But by Sunday afternoon that had changed. Nigeria’s statistician-general had announced that Nigeria had a GDP for 2013 had been revised from 42.4 trillion naira to 80.2 trillion naira ($509 billion). GDP which is an abbreviation of Gross Domestic Product measures the total value of all final goods and services in the economy during a given year. It is calculated by adding up the value of all products and also adding up all the spending on domestically produced final goods and services. The equation is Consumption (“C”) + Investment (“I”) + Government Purchases (“G”) + Net Exports (
NX”). GDP is denoted as “Y” An estimated income of the average Nigerian went from less than 1,500 a year to $2,688 in a trice. Thus making Nigeria the fastest growing economy in Africa as well as one of the fastest in the world. One of the things GDP doesn’t include is ensuring the average Nigerian that the salary they would be making in the future will increase. Other things not included are intermediate goods and services, inputs, used goods and financial assets like stocks and bonds. What it does it include are domestically produced final goods and service (this includes capital goods), new construction of structures (even though it takes construction workers and the government a billion years to complete it if they start it) and changes to inventories. The article also went on by adding that Nigeria has a reputation for corruption, so someone might think that the numbers doubling of its economy is a result of fiddling numbers. It talks about how we can determine the real growth rate of an economy by simply calculating the prices in a base year. The IMF recommends that base years should be updated every five years. The base years they are talking about is the Real GDP. This is defined as the total value of the final goods and services produced in the economy during a given year, calculated using the prices of a selected base year. According to the article, Nigeria left it far too long; as a result, its old GDP figures were inaccurate. The new figures use 2010 as the base year, they use this upgrade to come up with an estimate GDP. Statisticians need to add together estimates of output from a sample of businesses in every part of the economy, from farming to service industries. The article further explains that the weight which is given depends on its importance to the economy in that particular base year. That a number of Nigeria’s economy in 1990 gave a little or no weight to fast-growing parts of the economy such as the mobile telephone and movie industry. At that time the only a few hundred thousand people have mobile phones. Now over 120 million people have mobile-phone subscriptions. The past 1990 figures, the telephone sector of the economy was less than 1% of the GDP; it is now almost 9% of the GDP. Motion pictures had not shown up in the old figures in 1990 but they are very big in Nigeria now with an industry size at 1.4% of the GDP. Nigeria’ statisticians have improved on the gathering of statistics in other ways. Past GDP numbers were based on an estimate output. Economist use GDP per capita to measure instead of real GDP because population growth is an important variable, and so, real GDP per capita is a more accurate form of measurement of the GDP. The sample on which the data are based has increased from around 85,000 to 850,000. Businesses with fixed locations are the only ones included: the traders who sell their products in between the traffic are not captured. Now, even small businesses are now part of the GDP picture. Nigerians are not any richer than they were yesterday. According
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