Early numbers from the ongoing Gross Domestic Product (GDP) and Consumer Price Index (CPI) rebasing shows that real estate has displaced oil and gas as Nigeria’s third largest sector.
Real estate is behind crop production and trade which are now Nigeria’s biggest and second biggest sectors respectively.
Agriculture had been Nigeria’s biggest sector before now, contributing over 20 percent to the nation’s GDP. It had subsectors such as crop production, livestock, forestry, and fishing.
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This time, crop production has been taken out of agriculture and has emerged the nation’s second largest industry. Agriculture contributed 28.65 percent to overall GDP in the third quarter (Q3) of 2024.
Telecommunications, which was subsumed into information and communication, is a standalone sector and now the fourth largest sector. In the Q3 of 2024, information and communication contributed 16.35 percent to the GDP.
Trade, now Nigeria’s second largest, contributed 14.78 percent to the GDP in Q3 of 2024.
In the new rebased GDP, crude petroleum and natural gas, construction, food beverages and tobacco are fifth, sixth and seventh largest sectors in Nigeria. Public administration has been totally displaced from the top seven.
Real estate, a growing sector
In nominal terms, real estate services grew by 46.52 percent in the Q3 of 2024, higher by 43.70 percent points than the growth rate reported for the same period in 2023 and lower when compared to the preceding quarter.
On a quarter-on-quarter, the sector growth rate was 16.15 percent. It contributed 5.43 percent to real GDP in Q3 of 2024, lower than the 5.58 percent recorded in the corresponding quarter of 2023.
Despite the declining purchasing power, there is a growing demand for Nigeria’s real estate.
Though there are conflicting figures regarding Nigeria’s housing deficit, several real estate experts estimate the gap at 28 million units, stating that the nation needs 700,000 new homes annually.
The real estate market is anticipated to achieve a value of $2.61 trillion by 2025, Statista says, showing that the sector has huge potential.
“Among the various segments within the market, residential real estate holds the largest share, with a projected market volume of $2.25tn by 2025,” Statista says.
“Over the period of 2025-2029, the market is expected to exhibit a compound annual growth rate (CAGR) of 6.91 percent, resulting in a market volume of $3.41tn by 2029. When compared globally, the United States is projected to generate the highest value in the Real Estate market sector, amounting to $136.6tn in 2025.
“The real estate market in Nigeria is experiencing a surge in demand for luxury apartments in major cities.”
Why rebasing is critical
The NBS, last year, commenced rebasing the country’s GDP and CPI.
This initiative aims to reflect updated economic conditions and is recommended every five years by the United Nations Statistical Commission.
The last rebasing occurred in 2014, leading to a significant GDP increase of 89 percent and positioning Nigeria as Africa’s largest economy.
Moses Waniko, technical assistant to the statistician general, who presented the provisions of the rebasing exercise in a sensitisation workshop organised by the Nigerian Economic Summit Group (NESG) in collaboration with the NBS on Thursday, said that the base year for new provision was 2019 as against the former’s 2010.
According to him, the rebasing covers new areas of the economy including digital economy, activities of modular refineries, pension fund administration, national health insurance scheme, mining, among others.
Noting the implications of the rebasing exercise, Uwaniko said it would allow for economic and development planning, growth and increase in the size of the economy.
“This current exercise will enhance data accuracy and inform better policy-making in the light of recent economic shifts, particularly in technology and digital sectors.
“It is good to look at the rebasing from different angles, not just the aggregate numbers. It is good to look at what those numbers are supposed to tell us in terms of the distribution, the aggregate numbers, in terms of their weights, contributions and the rest. Beyond that, there are other implications for the national economy. The first is rebasing will provide or allow for an economic and development plan,” he said.
“The second is that the rebasing will really help to provide a good trajectory for the economy. Beyond this, it’s important to also state that after the rebasing, there are certain things that we expect might change such as changes in the size of the structure of the economy. We expect that the size of the economy will be bigger.
“The tax-to-GDP ratio is something that people may want to see. Debt to GDP ratio of 18.5 percent as of September 2019 could also reduce with the bigger size of the GDP, and then per-capita income will increase after the rebasing,” he further said.
In his keynote address, Adeyemi Adeniran, statistician general of the federation, explained that rebasing both the GDP and CPI is a vital exercise that ensures the economic indicators are current and accurate reflections of the economic realities.
He said as economies evolve, new industries emerge, and consumption patterns shift, justifying why the statistical measures must be updated to capture these changes.
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“Rebasing our GDP and CPI allows us to align with these transformations, providing a more precise and relevant picture of Nigeria’s economic landscape. This process is foundational to informed policymaking, strategic planning, and effective governance. Hence, it is one exercise that the NBS is conducting with significant importance and professionalism.
“As we proceed with the finalisation of the rebasing of our GDP and CPI, I want to highlight this key point. The rebasing exercise is designed to ensure that our economic indicators accurately reflect the current structure of our economy, incorporating new and emerging sectors, updating our consumption baskets, and refining our data collection methods. This is our responsibility as the official producer of data in Nigeria,” he said.
In his remarks, Tayo Aduloju, CEO of NESG, said, “Economic (GDP) rebasing, in essence, is a recalibration – an exercise with profound significance and akin to cleaning the lenses through which we view our economy – allowing us to see a clearer, more accurate picture of its structure, size, and potential.
“As economies evolve, new industries emerge, technology transforms markets, and the contributions of different sectors shift. Without updated economic measurements, we risk underestimating our true economic capacity.
“When we embarked on a similar rebasing in 2014, our GDP leapt by nearly 90 percent, elevating Nigeria’s economy to $510 billion and positioning it ahead of South Africa as the largest economy in Africa. This was not a fabrication; it was a reflection of reality.”
Results of Rebasing
Commenting on the results of the rebasing exercise, Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), noted that the outcomes of rebasing exercise would serve as a critical planning tool for businesses, especially private sector players.
He stressed the need to review the weighting component in formulation of the GDP growth. According to him, some sectors critical to the overall economic growth are underperforming, while others with less impact are recording growth but not impacting the economy.
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This, for him, does not reflect the true status of the economy, and must be addressed.
“We have some sectors that are not really recording growth while other critical sectors are not doing well. This distorts the picture of what the economy truly looks like.”
Analysts at CardinalStone Research said the rebasing is likely to shrink the size of the informal economy.
“The re-weighting of the CPI basket may result in a reduction in the impact of food and non-alcoholic beverage price changes on the overall headline inflation reading.”
