Modupe Olalere
Nigeria has recently revised its Gross Domestic Product (GDP) base year from 2010 to 2019, thereby recasting the size and structure of its economy to account for current realities. According to National Bureau of Statistics (NBS), Nigeria’s GDP rose from N314 trillion to N373 trillion (for $243 billion). A broader, more diversified economy is recommended for Nigeria. This statistical bump occurs during high inflation, public debt payments, and low economic growth. With Tinubu’s administration’s fiscal policy and the Central Bank of Nigeria (CBN)’s monetary policies, both are being tested as Nigeria navigates this increasingly complex economic landscape.
The process of rebasing GDP involves changing the base year used to evaluate output, incorporating new sectors, shifts, and data methodologies. Nigeria’s economic capture for those sectors that were either nonexistent or under-captured in the reference (benchmark) year can be observed through the prescription of rebasing from 2010 to 2019. This includes the burgeoning digital economy, previously omitted modular refineries, the real estate industry, and informal market movements; these sectors render a more realistic picture of the country’s productive capacity.
The rebasing significantly changed Nigeria’s economic structure. Services now contribute around 53% of GDP, up from just over 50%, while industry contributes approximately 27.7%, up from approximately 21%. Nigeria’s traditional reliance on the oil industry has given way to a service-based economic model, with real estate surpassing oil as the single most significant contributor.
Even with these changes, Nigeria’s economic growth is still lacklustre. In the first quarter of 2025, the economy had a year-on-year increase of about 3.13% (NBS). Considering Nigeria’s massive, youthful, and expanding population of over 220 million, this growth feels relatively modest and insufficient to make a real difference in living standards or tackle the widespread poverty.
Gbolade Idakolo, the CEO of SD & D Capital Management, indicated that the rise in GDP “does not guarantee an improvement in the standard of living for Nigerians or truly address the struggles that citizens are currently facing,” highlighting the ongoing challenges of high unemployment, inflation, and falling incomes.
One of the deeper issues that comes to light with the rebasing is that the sectors driving growth—primarily services and the informal economy—are significant but often struggle with challenges such as low productivity, lack of capital, and limited access to formal credit. The informal sector, which now constitutes about 42.5% of the economy, operates outside complete regulatory and tax oversight. In addition to limiting government revenue, this also makes it more challenging to implement the required structural reforms.
Rebasing also impacts per capita income data. Per capita incomes rise nominally because of the larger GDP base; however, rising imported inflation and the number of individuals at the margins of the jobless economy depress the real purchasing power of all Nigerians. The distance between the headline numbers and the economic realities for those living in Nigeria is a source of contention for those wondering whether rebasing is a valuable tool to measure progress in development.
While the rebasing enhances Nigeria’s economic size and, therefore, its position in the world economic ranking, the potential for new foreign investment will become more likely. How far this large and otherwise unofficially rooted economy can translate measured growth into real socioeconomic growth is still an open question.
The effect on Nigeria’s debt profile is among the most discussed outcomes of the 2019-based GDP rebasing. Following re-basing, the official debt-to-GDP ratio shrank from more than 52% to an estimated 39.4%, and was reported as “comfortably” less than Nigeria’s self-imposed debt limit of 40%. With Nigeria’s debt ratio lower than before, the government may have more capacity to borrow for development and infrastructure.
Nevertheless, the less favourable problem regarding Nigeria’s growing total debt stock and debt servicing burden hides behind this statistical improvement. By March 2025, Nigeria’s public debt reached N149.39 trillion, a 23% increase over the prior year. The declining value of the naira against the US dollar will increase the local currency cost of foreign debt, making it difficult to pay off. While, in part, the larger GDP denominator due to rebasing helps the debt-to-GDP ratio, analysts are aware that, once again, the total amount of debt and associated interest payments pose fiscal risks.
Nigeria’s inflation rate remains high, currently in double digits. While inflation is high and many food prices are rising, the inflation rates are driven by supply chain disruptions, insecurity, and climate shocks that hinder agricultural production. Food prices make up the bulk of the consumer price index basket. Cost-push inflation is also driven by higher energy and fuel prices choking household budgets across the income spectrum. This environment, which is causing inflation, restricts the government’s spending, as it advances inflation.
The Tinubu administration’s fiscal policy is aimed at various revenue mobilisation reforms, including tax regime changes to better align with the rebased GDP. Even with these reforms to mobilise revenue, the tax-to-GDP ratio remains low, and it’s among the lowest in the world due to the size of the informal economy and poor enforcement. The government’s ability to increase tax collection “without inflicting further hardship on an already cash-strapped population” has been questioned by Gbolade Idakolo. The administration must increase revenue without causing social unrest by removing subsidies or imposing higher taxes.
The CBN, which leads monetary policy, is also at a challenging crossroads. The central bank balances the need to bolster a fragile economic recovery and curb inflation. Strict monetary policy can reduce inflation, but it also risks limiting access to credit and the potential for economic expansion. On the other hand, while accommodative monetary policy may promote growth, it may also contribute to inflation and exchange rate instability. Although the CBN has recently tried stabilising the naira through cautious interest rate changes and foreign exchange interventions, currency volatility still exists.
Nigeria’s economic managers are under considerable strain due to these policies’ interaction with external factors like rising US interest rates and geopolitical inflation pressures. Foreign exchange shortages may worsen due to international capital outflows, increasing the cost of servicing external debt.
Dr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, says rebasing improves policymaking accuracy. “With updated GDP and sectoral data, we can better design tax reforms and expenditure frameworks that reflect current realities,” he said. He admits the difficulties of integrating tax reform, budgetary discipline, and public investment amid external shocks and home socioeconomic issues.
Moreover, shifting the unorganised sector complicates monetary and fiscal policy conduct. Consistent taxation and cash flow transmission are complicated for most Nigerians who are informal workers and endure not being paid consistently. This limits the government’s capacity to fund infrastructure and other social programs that would have reduced poverty or increased demand.
Thus, Nigeria’s economic crossroads is marked by conflicting indicators: a rebased GDP that implies a larger and more heterogeneous economy but is based on minimal, volatile real growth; improved debt ratios statistically but increasing debt levels and rising interest payments; prospective increases in fiscal and monetary policy, but constrained by risks of inflation and currency depreciation.
The Tinubu administration and the Central Bank of Nigeria must tread carefully to navigate this delicate landscape. Insufficient inflation management could slow economic activity, and too much fiscal impatience could lead to further debt and make the public debt more unsustainable. However, trepidation could hinder the potential growth momentum, meaning most Nigerians will remain on low incomes and experience further inflation.
Nigeria must build its institutional capacity, tackle corruption, expand the formal tax base, and nurture productive industries that create quality jobs to succeed. Without making the necessary structural reforms to support a proper GDP rebasing, the country risks a scenario where the economy looks good on paper, but many citizens continue to face hardships.
Nigeria’s economic narrative changes with rebasing. Better data-to-development outcomes translation is still ongoing. The rebasing’s success or failure would depend on Nigeria’s fiscal and monetary authorities’ ability to manage inflation and debt and promote sustainable growth.