For the second time in its economic history, Nigeria embarked on a comprehensive GDP and CPI rebasing exercise. For context, the last rebasing exercise in Nigeria was conducted in 2014, updating the base year for GDP calculations to 2010, from 1990. The exercise resulted in a significant jump in the nation’s GDP, driving the outcome of a more accurate representation of the economy by incorporating previously underrepresented sectors such as telecommunications and entertainment.
According to the United Nations System of National Accounts (UN SNA)-2008, the base year for calculating a nation’ Gross Domestic Product needs to be revised periodically (usually every five years) to capture structural changes in the economy, new industries emerging, and shifts in consumption patterns. While it is undeniable that Nigeria was long overdue for a rebasing of its economic indicators; this step comes with significant implications for businesses, policymakers, and everyday Nigerians.
This article examines the implications of Nigeria’s CPI and GDP rebasing efforts for businesses, focusing on its impact on the pricing of goods and services, taxation, and key sectors such as agriculture, energy, and manufacturing. It also provides insights into how businesses can effectively navigate this transition.
- Understanding CPI Rebasing & GDP Rebasing
Consumer Price Index
A consumer price index (CPI) serves as a vital tool for understanding the economic health of any nation. Essentially, it provides a statistical estimate of goods and services procured for consumption by households in the Country. The calculation of the Consumer Price Index (CPI) involves identifying a representative selection of essential goods and services, commonly referred to as a “market basket.” The prices of these items are systematically monitored over time, and a weighted average is computed, taking into account the relative frequency of consumption for each item.
A revision of the Consumer Price Index (CPI) was concluded in February 2025 to accurately reflect evolving consumption patterns within the Nigerian economy.
| YEAR CONDUCTED | 2014 | 2024 |
| ITEMS IN THE CPI BASKET | 734 | 940 |
| DIVISION | 12 | 13 |
Key takeaways from the 2024 CPI rebasing.
This revision involved significant adjustments to the market basket, a key component used by statisticians to quantify inflation. Specifically, the number of items included in the basket was increased from 740 to 940, whilst the weighting of the basket goods and services were adjusted to reflect their current significance. Notably, sectors like fintech and healthcare, which were previously underrepresented, now hold a more substantial position within the basket. The rebasing has also introduced a new division “Insurance and Financial Services”, expanding the total number of divisions from 12 to 13, reflecting the importance of financial products in people’s lives. It has also resulted in the feature of supplementary indexes for services, energy and farm produce.
Gross Domestic Product
The Gross domestic product (GDP) refers to a monetary measure of the total market value of all the final goods and services produced in a specific period by a country, used to measure the economic performance of a country or region. To rebase a country’s GDP is to update the base year used to calculate economic output to a more recent year. This will enable the GDP computation take into account structural changes that have occurred in the economy between the previously adopted base year and the most recently adopted base year to provide a more realistic representation of national economic performance.
Why Nigeria is Rebasing Its Gross Domestic Product (GDP)
Nigeria’s 2014 GDP rebasing exercise dramatically reshaped its economic standing, propelling it to become Africa’s largest economy – surpassing South Africa, with an 89% surge to USD$509 billion. This transformation was not unexpected, as the previous base year had become increasingly obsolete, failing to capture the significant diversification of the Nigerian economy over 24 years.
Now, ten years later, Nigeria’s macroeconomic landscape has witnessed momentous shifts across various sectors. Stakeholders and policymakers agree that the rebasing of Nigeria’s CPI Index and GDP, is not only overdue, but has become critical, given the growing divergence between the base year’s economic data and the rapidly evolving realities of the Nigerian economy. To address this, the ongoing rebasing effort seeks to incorporate burgeoning sectors such as technology, digital services, NSITF (Nigeria Social Insurance Trust Fund), NHIS(National Health Insurance Scheme), Modular refineries and the informal economy, with a view to enhancing the reliability of Nigeria’s economic statistics. It is important to note that Nigeria’s current GDP rebasing exercise is still in progress. Therefore, stakeholders should be aware that any preliminary data or analysis may be subject to revision upon completion of the process.
| YEAR CONDUCTED | 2014 | 2025 |
| BASE YEAR | 2010 | 2019 |
| GDP($000,000,000) | 509 | TBD |
| KEY SECTORS INRODUCED | Telecommunications, IT, Nollywood | Technology, Digital services, NSITF (Nigeria Social Insurance Trust Fund), NHIS (National Health Insurance Scheme) Modular refineries and the informal economy |
| POSITION IN AFRICA | 1st | TBD |
| POSITION IN THE WORLD | 26th | TBD |
Recognizing the need for precision in both GDP and inflation tracking, the National Bureau of Statistics (NBS) has selected 2019 as the base year for the ongoing GDP rebasing. The selection of 2019 as the base year is due to its relative economic stability compared to the turbulent years that followed, which were significantly disrupted by the COVID-19 pandemic leading to global supply chain shocks, and fluctuating oil prices from which the world is only now recovering.
Whilst some schools of thought may view a GDP rebasing as a statistical facelift, in reality, it could be a blessing or a curse as it will illuminate both the growth and inherent challenges in the economic landscape. The rebasing exercise does not only adjust GDP figures, but also directly impacts key economic metrics expressed as proportions of GDP, such as fiscal deficits and debt-to-GDP ratios. Typically, a higher GDP, resulting from rebasing, lowers these ratios, presenting a more favourable fiscal outlook.
Beyond fiscal management, a rebased GDP also provides valuable support for development planning by highlighting growth trends across various sectors. These insights will prove invaluable for data-driven economic planning as it enables the Government allocate resources efficiently, target high-growth industries, and address economic gaps.
How Investors and Consumers should Interpret the rebased GDP & CPI
The rebased CPI and GDP figures present a nuanced landscape for investors. On the surface, the reported decline in inflation and an expanded GDP—driven by the inclusion of sectors like fin-tech, digital services, and formalized informal industries—may signal economic diversification and resilience. This could attract foreign investment, particularly in sectors newly reflected in the GDP, which now appear more prominent contributors to Nigeria’s economic output. A larger nominal GDP might also improve Nigeria’s debt-to-GDP ratios, potentially enhancing its creditworthiness.
However, the risks lie in the details. The GDP increase is partly a statistical recalibration which may not necessarily be backed by real growth in productivity or output. For instance, while the 2019 base year captures Nigeria’s post economic recovery, it may overemphasize Nigeria’s progress in addressing underlying structural challenges, such as infrastructure gaps or over-reliance on oil exports. Similarly, the post rebasing inflation rate shaped by updated consumption weights (e.g., reduced emphasis on volatile food prices), could mask ongoing cost pressures in utilities, transportation, or imported goods. Investors comparing pre- and post-rebased data without adjusting for methodological shifts may misallocate capital. In responding to the rebasing outcome therefore, investors would need to employ a holistic approach; looking closely at other indicators like employment rates, currency stability, and consumer buying power to get a true sense of the economy’s health. This comprehensive approach helps avoid overestimating the positive impact of the statistical updates.
For consumers, the rebased CPI could flay a dangerous misconception that inflation has meaningfully slowed, and that prices of goods and services are stabilizing. The reported decline of food inflation to 24.48% might lead households to believe their purchasing power has improved, prompting increased spending or reduced savings. This decline, however, is largely a consequence of a re-weighted CPI basket which now assigns lower weight to staple foods like cassava or yam and higher weight to services like healthcare or streaming platforms. Prices for essential goods such as fuel, electricity, or imported rice may still be rising sharply, but their impact on the headline inflation rate is now de-emphasised.
Implication of GDP and CPI Rebasing on Pricing Strategies & Models
It is important for businesses and Investors to adjust their pricing models and strategies to align with the updated CPI basket which now emphasizes modern sectors like technology and services while reducing the weight of traditional industries such as agriculture. For example, businesses in the agricultural sector or particularly reliant on inputs (e.g., food processors) may find their rising costs underrepresented in the new CPI, as staples like cassava or maize now carry less statistical influence. On the other hand, tech firms offering digital services—now more prominently weighted—could leverage their heightened visibility in inflation metrics to justify price adjustments. This shift requires businesses to analyse their pricing strategy and structures through the lens of the revised CPI, potentially renegotiating supplier contracts or diversify supply chains to mitigate discrepancies between reported inflation and actual expenses to reflect the reported changes in consumer taste and behaviour.
Implication of GDP and CPI Rebasing on Tax Reforms
Nigeria’s 2014 GDP rebasing was a watershed moment, propelling the nation to the top of Africa’s economic rankings overnight. Yet, it revealed a glaring disconnect: while the economy looked larger on paper, its tax-to-GDP ratio remained one of the lowest in Africa.
Fast-forward to 2024, and policymakers are at a crossroads with the anticipated passage of the Tax Reforms Bill 2025. Take agriculture, the backbone of Nigeria’s economy which according to Statista, contributed 22.72% to GDP in 2023—a figure still anchored to the outdated 2010 base year. Yet, its tax contributions remain negligible, a paradox that underscores a systemic flaw. A rebased economy offers a clearer map of taxable activity, empowering policymakers to cast a wider net. Sectors like tech and financial services, now amplified by rebasing, offer a prime opportunity for the implementation of smarter taxation strategies.
- Sector-Specific Challenges
- Agriculture, Energy, Manufacturing & Oil and Gas
For Nigeria’s farmers, manufacturers, and energy producers, rebasing feels like shifting sands beneath their feet. For example, manufacturers importing machinery may face a cruel irony: rising global costs clash with a CPI that underweights these expenses, leaving them stuck between raising prices, losing customers or assuming massive losses.
Agribusinesses who are already battling climate shocks and poor infrastructure, now risk being left in the cold. If the rebased CPI downplays food price volatility, government aid could dry up, and attention could shift to more prominent sectors of the economy.
- Banking & Finance
The banking and financial sectors must re-assess lending rates, interest rates, and credit accessibility based on the rebased economic data. This could lead to adjustments in lending rates mortgage, personal and corporate loans
- Retail and Consumer Goods
Adjustments in CPI weightings reflects reshaped consumer behaviour analytics, requiring businesses in retail to revisit demand forecasting models and consumer pricing strategies.
- Conclusion.
Nigeria’s comprehensive GDP and CPI rebasing exercise represents a pivotal moment in the nation’s economic history. While the statistical adjustments offer a more nuanced and contemporary view of the economy, they also necessitate a strategic recalibration for businesses, investors, and consumers alike. The shift in economic indicators, driven by the inclusion of emerging sectors and updated consumption patterns, demands a proactive approach to contract renegotiation, regulatory compliance, and financial planning as the impact extends beyond mere statistical adjustments, directly influencing pricing strategies and tax reforms.
For investors, the rebased figures present both opportunities and risks, requiring a holistic assessment that transcends surface-level data. Consumers, too, must remain vigilant, understanding that reported inflation figures may not fully reflect the lived reality of rising essential costs. The need for expert legal guidance becomes paramount in navigating the complex contractual and regulatory landscapes that emerge from these changes.
Ultimately, the successful adaptation to this economic recalibration hinges on a collective commitment to transparency, data-driven decision-making, and a thorough understanding of the evolving economic terrain. By embracing these changes, Nigeria can ensure that the rebasing exercise serves as a catalyst for sustainable economic growth and expansion.
About DealHQ
We are a Pan-African transactional advisory firm dedicated to enabling businesses operate efficiently within Africa’s dynamic market. We provide stellar business solutions which help businesses navigate the unique challenges and opportunities in the African business landscape whilst enabling them to operate efficiently within their market sphere.
Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support amongst others.
The content of this Article is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.
info@dealhqpartners.com
www.dealhqpartners.com
+234 (0) 201 4536427 , +234 (0) 809 093 8104
Click here to access the pdf file
