* Nigeria set to rebase GDP on Sunday
* Likely to overtake South Africa as continent's top economy
* Move seen as positive for investment in Nigeria
* Won't change poverty, infrastructure woes
By Chijioke Ohuocha
LAGOS, April 4 Nigeria will rebase its GDP on
Sunday, the statistics office said, in a move that will boost
its estimated size by anything from around 40 to 70 percent and
is almost certain to push it ahead of South Africa to become
Africa's biggest economy.
The National Bureau of Statistics (NBS) will change the base
year for calculating Nigeria's GDP to 2010 from 1990 to reflect
changes in the economy of Africa's most populous nation, and
more accurately assess the size of its current output.
Most governments overhaul GDP calculations every few years
to reflect changes in output and consumption, but Nigeria has
not done so since 1990, meaning sectors such as the Internet,
telephones and even the "Nollywood" film industry have had to be
newly factored in to give a truer picture, sources say.
When Ghana rebased in 2010, output jumped 60 percent. For
Nigeria being the continent's number one economy could prove an
irresistible magnet for investors.
Nigeria's GDP only needs to go up by a quarter from a
current IMF 2013 estimate of $292 billion to hit $365 billion,
which would enable it to overtake South Africa, currently
estimated by the fund at $353 billion.
"The impact of a rebasing would likely have a positive
impact on perceptions ... this would come at time when most
investors are fairly downbeat on South Africa," because of its
high combined fiscal and current account deficit, London-based
economist for CSL Stockbrokers, Alan Cameron, said.
Nigeria has been growing as a destination for foreign
investors owing to the size of its consumer market and
increasingly sophisticated capital markets. Analysts say higher
GDP means more consumption per capita, boosting its allure.
"The globe is still looking at the next strong growth story
outside China and India, and Africa is on their minds," said
Abri Du Plessis, chief investment officer at Gryphon Asset
Management, which has investments in Nigeria.
"We are seeing good growth in the ... Nigeria story."
It is already a growing market for consumer goods firms like
Nestle, Heineken, Cadbury and
Unilever, as well as construction material firms like
Lafarge and Dangote Cement, owned by
Africa's richest man Aliko Dangote.
Much increased interest would be in manufacturing and
service companies, which could further help Africa's top oil
producer move away from its over-reliance on the black stuff.
It certainly won't be the wonder cure for Nigeria's economic
ills. For one thing, being bigger means expansion will slow.
"The rebasing exercise will result in an increase in the
country's market size, but it is likely to lead to a slower rate
of real GDP growth," said Ecobank economist Gaimin Nonyane, from
its current rate of 7 percent for the past five years.
It will be mixed for Nigeria's fiscal stance as well,
improving the debt-to-GDP ratio, currently less than 20 percent,
but expose a weaker tax base, so debt investors won't be moved.
"Fixed income investors will probably not pay much attention
to the GDP dynamics," said Standard Bank's Samir Gadio.
Despite roaring growth in recent years and a bigger GDP,
Nigeria will continue to trail South Africa in terms of basic
infrastructure - power and roads - necessary to lift the bulk of
its population of 170 million out of absolute poverty.
And its legendary dysfunction - abysmal telephone and
Internet quality, clogged roads, ports and airports, obstructive
police and reliance on diesel generators for most of its power -
mean it won't be replacing South Africa as a hub very soon.
"South Africa is going to stay the entry point for funds
into Africa. I don't think (it will move to) Nigeria," Rigaardt
Maartens, a portfolio manager at PSG Online Securities, said.
(Additional reporting by Helen Nyambura in Johannesburg;
Editing by Tim Cocks and Giles Elgood)