In a major shift in Nigeria’s economic structure, real estate has surpassed oil and gas to become the third-largest sector in the country’s GDP, according to the latest data from Nigeria’s ongoing GDP and Consumer Price Index (CPI) rebasing process.
Key Changes in Nigeria’s Economic Landscape
The re-basing exercise, aimed at updating the country’s economic data to reflect current realities, reveals notable changes in sector contributions:
Crop Production Overtakes Agriculture: The crop production sector has overtaken agriculture as Nigeria’s second-largest industry. While the entire agriculture sector (including livestock, forestry, and fishing) contributed 28.65% to Nigeria’s GDP in Q3 2024, crop production continues to grow steadily.
Telecommunications Becomes Separate Sector: Previously categorized under information and communication, telecommunications is now recognized as its own sector, ranking fourth in GDP contribution with the broader information and communication sector contributing 16.35% to GDP in Q3 2024.
Trade Sector Growth: The trade sector has become Nigeria’s second-largest contributor to the economy, now accounting for 14.78% of GDP.
Real Estate’s Growing Role
Despite challenges like declining purchasing power, Nigeria’s real estate sector has been experiencing significant growth. In Q3 2024, real estate expanded by 46.52% in nominal terms, a substantial increase from the previous year. Real estate contributed 5.43% to the country’s GDP in Q3 2024, slightly down from 5.58% in Q3 2023, but still a notable figure considering the sector’s continued expansion.
Housing Demand and Market Outlook
Nigeria faces a considerable housing deficit, with experts estimating the country needs approximately 700,000 new homes annually to address the current gap of 28 million units. The real estate sector is projected to reach a value of $2.61 trillion by 2025, with residential real estate leading the charge. Additionally, the market is expected to grow at a 6.91% compound annual growth rate (CAGR), reaching $3.41 trillion by 2029, according to Statista.
Comparison to Global Markets
In contrast, the U.S. real estate market is forecasted to generate $136.6 trillion by 2025, illustrating the significant potential of Nigeria’s growing sector.
Re-basing Process and Implications
Nigeria’s GDP and CPI rebasing, a process undertaken by the National Bureau of Statistics (NBS), aims to ensure that economic indicators are accurate and reflect the country’s evolving economic structure. The most recent re-basing incorporates data from 2019 and includes emerging sectors like the digital economy and national health insurance schemes.
Expert Opinions on the Re-basing Impact
Moses Waniko, a technical assistant to the Statistician General, emphasized that re-basing provides a clearer picture of Nigeria’s economy, which is essential for effective planning and policy-making. Adeyemi Adeniran, the Statistician General of the Federation, added that rebasing helps create a more accurate understanding of the economy’s structure, aiding in more informed decisions.
Tayo Aduloju, CEO of the Nigerian Economic Summit Group (NESG), compared GDP re-basing to cleaning the lens through which the economy is viewed, warning that without this process, Nigeria’s true economic capacity might be misunderstood.
The updated GDP data is seen as a crucial tool for businesses and investors as they navigate Nigeria’s changing economic landscape. However, some sectors vital for economic growth are still underperforming, which may skew the overall economic picture, according to Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE).
Looking Ahead
As Nigeria moves forward, the re-basing of its GDP will shape the country’s economic future, informing policy decisions and helping businesses plan for growth in a dynamic environment.
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