Experts raise productivity concerns despite N372.8tn rebased GDP

Economists have raised concerns that productivity remains a significant challenge in the Nigerian economy, despite the recent rebasing of the Gross Domestic Product (GDP), which has now pushed the economy’s value to ₦372.8 trillion.

They argue that while the rebasing exercise reflects an updated methodology for measuring economic activity, the underlying economic challenges remain unresolved and continue to affect the daily lives of ordinary Nigerians.

Last Monday, the long-anticipated rebased GDP figures were released by the Nigerian Bureau of Statistics (NBS), placing the country’s new GDP at ₦372.8tn (approximately $243.7bn). The rebasing exercise adopted 2019 as the new base year and included new sectors such as e-commerce, mining and quarrying, pension funds, marine economy, culture, and tourism.

This new figure represents a significant jump of ₦103.51tn (over $67bn) from the previously reported ₦269.29tn under the 2010 base year. It implies that Nigeria’s economy at the end of 2024 was 38% larger than earlier estimated. In dollar terms, Nigeria’s economy rose from $187.8bn to $243.7bn, maintaining its position as the fourth-largest economy in Africa in 2024.

During a webinar hosted by Analysts Data Service and Resources Limited (ADSR), the Head of Operations, Peace Olubere, pointed out that projections from the International Monetary Fund (IMF) before the rebasing did not strongly suggest that Nigeria would reclaim its top spot as Africa’s largest economy by 2030. ADSR instead projects that Nigeria may only climb slightly, potentially overtaking Algeria for the third position — assuming other countries do not rebase their economies within the same period.

The rebasing also highlighted that despite growth in naira terms, exchange rate harmonisation and the depreciation of the naira are primary contributors to the subdued dollar figures.

According to the data, the services sector retained its position as the largest contributor to GDP with a 53.09% share in 2024, up slightly from 52.60% in 2019. Agriculture followed with 25.83%, while industries contributed 21.08%. Notably fast-growing sectors included financial and insurance services (15.03%), transport and storage (14.08%), and arts, entertainment, and recreation (9.63%).

Speaking at the same event, Dr. Joseph Ogebe, Head of Research at the Nigerian Economic Summit Group, flagged Nigeria’s persistently low productivity despite the apparent economic expansion.

“It is a welcome development because it aids comparability of numbers across countries. It’s also trying to capture more recent activities in the country, but the underlying concerns are still there,” Ogebe noted. “Productivity remains a concern. Even with the revised numbers, we can see that agriculture and services have increased while industry dropped slightly. However, if you do a small check, you’ll see that the sectors with the largest contributions, like agriculture, have the lowest productivity.”

He added, “When you benchmark Nigeria with other countries, we’re doing less than two in productivity. Countries like South Africa and Brazil are doing twice what we’re doing. So it’s not just about big numbers. Productivity is very important across sectors. Also, sectors like agriculture and services that have expanded still contribute very little to export earnings, so we are not competitive. Manufacturing and agricultural products are not competitive enough to generate the foreign exchange (FX) inflows the country needs.”

Ogebe stressed that for Nigeria to achieve a $1 trillion economy by the end of the decade, productivity must be a top priority. “The FX rate is a big drag. To achieve that trillion-dollar economy, we need systematic and strategic efforts to boost productivity and export competitiveness to improve FX inflows and stabilise the exchange rate,” he said.

Similarly, President of the Nigerian Economic Society, Professor Adeola Adenikinju, agreed that low productivity is a core issue. He traced it to what he called Nigeria’s leap from an agricultural economy directly into a service-based economy without developing a solid industrial base — a scenario he described as “abnormal growth.”

“This growth path, which we also saw in the 2014 rebasing, shows a rise in agriculture and services while industry declines. This doesn’t align with structural transformation principles, which typically show increasing industrial contributions first,” he explained.

“When you look at the sectors that have contracted — manufacturing and construction — these are critical. No large economy can develop without a strong manufacturing base. Manufacturing is essential for employment and income generation to reduce poverty. Agriculture and services, though important, are low-productivity and low-income sectors dominated by the informal economy.”

Adenikinju added, “This results in high poverty, inequality, and gender imbalances because these sectors don’t generate inclusive growth. The growth pattern isn’t following a developmental sequence, and that must be corrected.”

On the oil and gas sector, Adenikinju stated that its current 4% contribution to GDP should not be seen as a success. “It has much greater potential. With better horizontal integration, the sector could drive broader economic development,” he argued.

Chief Economist at Deloitte West Africa, Damilola Akinbami, focused on the challenges of Nigeria’s large informal economy, which she referred to as a “hustle economy” that contributes little to government revenue.

“For a country of this size, having an informal economy that makes up 43% of GDP is enormous. Imagine cutting that down to 20% or 10% — the impact on tax revenue would be substantial,” she said. “While there have been several government and private sector efforts to formalise the economy, structural challenges remain.”

Akinbami noted that many in the informal sector avoid formalisation due to bureaucratic and tax-related hurdles. She advocated for the use of technology and simplified systems to encourage more businesses to formalise.

Meanwhile, analysts at Afrinvest assessed the fiscal implications of the rebased GDP, highlighting its effect on the nation’s debt-to-GDP ratio. They noted that the improved GDP figures have led to a decline in the debt-to-GDP ratio, which now stands at 40.0% for 2024 — down from 53.8% using the old base year.

By annualising Q1 2025 GDP (₦376.4tn), the ratio drops slightly to 39.7%, remaining under the Debt Management Office’s 40% prudential benchmark.

“This development provides the Federal Government with fresh headroom for additional borrowing to bridge fiscal shortfalls without breaching the ceiling,” the analysts noted. However, they cautioned that tax revenue to GDP has also dropped from 13.5% to 10%, a decline they believe will drive the aggressive enforcement of the newly signed Tax Reform Act of 2025, set to take effect in 2026.

Afrinvest maintained its 3.3% GDP growth forecast for 2025, supported by a resilient services sector and a moderate recovery in agriculture due to the harvest season. However, they warned of persistent risks such as insecurity in farming regions, high inflation eroding consumer spending, and tight credit conditions that may limit economic performance.