July 27, (THEWILL) — Nigeria’s rebased GDP puts the economy’s size at N372 trillion as of 2024 — equivalent to US$244 billion at a recent exchange rate of N1,550/US$1. In USD terms, this constitutes a $266 billion slump in 10 years, when compared to the $510 billion the economy attained in 2014.
In 2014, Nigeria’s GDP was rebased, resulting in a significant increase in its dollar value. The rebasing, which changed the base year from 1990 to 2010 and incorporated new sectors, pushed Nigeria’s GDP from $270 billion to $510 billion, representing a growth of 88.8 percent.
The 2014 rebasing exercise involved incorporating new sectors like film and video, telecom and information technology, which had previously not been fully accounted for. This led to a more accurate representation of the Nigerian economy’s true size; the increase in GDP made Nigeria the largest economy in Africa, surpassing South Africa.
Similarly, the recently rebased GDP of the Nigerian economy came in at a time such critical insight and numbers are necessary for repositioning, planning and global economic engagements, according to the National Bureau of Statistics (NBS).
The new GDP status
Nigeria’s new GDP (2025) is now estimated at N372.8 trillion in 2024, based on the new base year of 2019 — marking a 41.7 percent increase from ₦314.02 trillion in 2023. Nigeria remains the 4th largest economy in Africa, trailing South Africa, Egypt, and Algeria, unlike 2024 when it was at the top.
For the average Nigerian, this shift means the economy is finally catching up with lived experience. Most people don’t work in oil rigs or factories. They sell, deliver, sew, code, plant or drive. These activities, once sidelined in policy conversations, are now the country’s economic core.
According to Sunday Dare, Special Adviser to the President (Media and Public Communication), “The rebasing makes one thing clear: Nigeria’s economy is not just about exports or revenue from crude oil. It is about people making things work in a difficult environment, often informally, often without support.”
The long-held image of an oil-fuelled, industry-led economy is fading. Agriculture and services have grown in prominence, while industry, especially manufacturing, has shrunk.
Based on the old calculation method using 2010 prices, Nigeria’s 2019 economy was estimated to comprise 22.1 percent agriculture, 27.7 percent industry and 50.2 percent services. The revised data tells a different story: agriculture now accounts for 25.8 percent, industry has dropped to 21.1 percent, and services have grown to 53.1 percent.
Receding FDI
A major factor that boosted the 2014 rebased figures was robust foreign direct investment, which has since shrunk to an abysmally low level.
This is because FDI has the inherent capacity of creating the desired multiplier effects that expand the economy and drive growth. For instance, the historic FDI in the telecommunication sector in the early 2000, propelled the economy to an unusual peak.
The significant impact was evident in massive job creation, innovation, backward integration and the birth of viable sub-sectors. Bountiful tax revenues continue to accrue from the sector to the three tiers of government.
The drop in numbers
However, FDI inflow to the economy has been in the negative for a long period, thereby posing a challenge to the gains that various reforms bring. According to the Central Bank of Nigeria’s (CBN) latest Balance of Payments report published in June, FDI inflows into Nigeria declined by 19 percent to $250 million in Q1 2025, compared to $310 million in the previous quarter.
While the figure marks a quarter-on-quarter contraction, it represents a recovery from the net divestment of $310 million recorded in Q1 2024, signaling a fragile return of investor confidence in the country’s long-term prospects.
Analysts say the FDI decline in Q1 2025 reflects a broader slump in capital inflows, with portfolio investments suffering an even sharper reversal. Overall, the financial account came under pressure, weakening Nigeria’s external position despite a current account surplus and positive trade performance.
The plunge in DFI had experienced a long downward trajectory. In Q1 2024, Nigeria saw a significant improvement in total capital importation, reaching US$3.38 billion, a 210.16 percent increase compared to Q4 2023. However, FDI remained relatively low, contributing only US$119.18 million, or 3.53 percent of the total capital imported, according to the National Bureau of Statistics (NBS).
While the overall capital inflow surged, the investment profile was heavily skewed towards Foreign Portfolio Investment (FPI) and ‘Other Investments’ which do not offer the desired sustainable economic development.
In the second quarter of 2024, Nigeria’s FDI dropped to $29.83 million, marking the lowest level recorded since 2013 according to NBS. This figure represents a significant decline of 65.33 percent compared to the $86.03 million recorded in the same period in the previous year and a 74.97s percent decrease from the $119.18 million in the first quarter of 2024.
‘Other Investments’ followed with $249.53 million, representing 19.92%, while FDI, a critical indicator of long-term investor confidence, accounted for just $103.82 million, or 8.29%, marking a relative underperformance.
In Q3 2024, Nigeria saw a significant drop in overall capital importation, falling by 52 percent to $1.25 billion. However, foreign direct investment (FDI) experienced a substantial increase of 248.1 percent during the same period. Despite this surge in FDI, it still accounted for less than 10% of the total capital inflow.
In Q4 2024, FDI in Nigeria experienced a slight decline, with inflows dropping to $0.25 billion from $0.31 billion in the previous quarter.
In the whole of 2023, FDI inflow into Nigeria fell by 26.7 percent to US$3.9 billion, from US$5.3 billion in 2022. This was essentially due to political risks and elevated uncompetitive operating environment. Ten years earlier in 2013, Nigeria recorded FDI inflow of US$5.56 billion.
Worrying outlook
These significant declines depict the challenges the Nigerian economy faces in attracting long-term investment in a very tough global economic environment and numerous domestic issues, which boosts tax revenue.
However, with FDI lacking in critical areas such as oil and gas, electricity, manufacturing, telecom and agriculture, the expected gains from the tax reform initiative would be a mirage. The surge in GDP growth in the Services will not provide the sustained growth for increased job opportunities, export and high reserves accretion.
According to data by the NBS, the telecom sector recorded an 87 percent decline in foreign investments for the third quarter of 2024, marking a significant downtrend from the previous two quarters of the year. The NBS data further showed that the sector attracted only $14.4 million in capital importation in Q3, a sharp decline from the $113.42 investments recorded in Q2 of this year.
Year-on-year, the Q3 2024 capital importation for the telecom sector also represents a 77% decline when compared with the $64.05 million achieved in the same period in the previous year. This came after years of consistent decline in investments even with a gaping infrastructure situation requiring billions of investments to bridge.
A closer study of the sector’s performance showed that FDI in telecom in Q2 2024 stood at $113.4 million. While this is lower than the inflow recorded in the preceding quarter, it represents a whopping 339% increase over the $25.81 capital inflow recorded in the same period last year.
The deepening slump in FDI in Nigeria signals a bad omen for the economy and should worry those in the position to halt the adverse trend. While the inauspicious development has severe implications on every sector, it could reverse the gains of the new tax regime.
In all, the poor investment climate and low-ranking ‘Ease of Doing Business’, accentuated by unfavourable economic policies and the continued rage of insecurity, are sure ways of scaring away both local and foreign investors. These will hamper sustained GDP that drives industrialization, job creation and export.
All things considered, the drop in FDI may not necessarily reduce the tax drive aimed at boosting revenue since there are genuine efforts through the new tax law to expand the tax base and also to block leakages and ensure prompt collection of tax revenue. It is however not encouraging since it will affect employment and production. In the long run we shall still have issues in the aggregates since tax is not the only issue in the economy.
The significant drop in FDI in the critical sectors that drive the rebased GDP signals more challenging days ahead as the economy battles with high exchange rate and inflation.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
