Olufemi Adeyemi
Recent data from the ongoing rebasing of the Gross Domestic Product (GDP) and Consumer Price Index (CPI) indicates that the real estate sector has surpassed oil and gas, becoming Nigeria's third largest sector.
Nigeria's economic landscape has undergone a significant shift, with the real estate sector surpassing oil and gas to become the nation's third-largest industry, according to the most recent data from the GDP and CPI rebasing exercise.
This re-basing effort aims to refresh the nation's economic statistics to align with current realities, revealing that crop production has surpassed agriculture to become the second-largest industry in Nigeria. Overall, agriculture—which includes livestock, forestry, and fishing—contributed 28.65 percent to Nigeria's GDP in the third quarter of 2024, while the crop production segment is progressively gaining prominence.
Telecommunications, which was previously classified under information and communication, is now acknowledged as an independent sector, ranking fourth in GDP contributions and playing a crucial role in redefining Nigeria's economic landscape. Collectively, the information and communication sector contributed 16.35 percent to the GDP in Q3 2024.
The trade sector has also emerged as a vital contributor, now standing as Nigeria's second-largest economic sector, accounting for 14.78 percent of GDP.
Despite facing obstacles such as reduced purchasing power, Nigeria's real estate sector continues to thrive, exhibiting remarkable growth. In nominal terms, the sector expanded by 46.52 percent in Q3 2024, marking a substantial increase from the previous year.
Real estate represented 5.43 percent of real GDP in the third quarter of 2024, slightly down from the 5.58 percent contribution recorded in the same quarter of 2023.
The demand for housing in Nigeria remains robust, fueled by a significant housing deficit. Experts estimate that the country requires approximately 700,000 new homes annually to address a current shortfall of around 28 million units. Despite existing challenges, the sector is anticipated to reach a valuation of $2.61 trillion by 2025, with residential real estate leading this growth.
According to Statista, Nigeria's real estate market is projected to grow at a compound annual growth rate (CAGR) of 6.91 percent, potentially reaching $3.41 trillion by 2029.
In contrast, the U.S. real estate market is anticipated to reach a value of $136.6 trillion by 2025, highlighting the significant potential within Nigeria’s real estate sector.
The National Bureau of Statistics (NBS) has been updating Nigeria’s GDP and Consumer Price Index (CPI), a process aimed at aligning the country’s economic data with current realities.
The previous re-basing in 2014 resulted in a notable increase in Nigeria’s GDP, positioning it as Africa's largest economy at that time.
The latest re-basing, which incorporates data from 2019, now accounts for emerging sectors such as the digital economy and national health insurance initiatives. Moses Waniko, a technical assistant to the statistician general, noted that re-basing enhances the accuracy of economic indicators, offering a clearer understanding of the economy for improved planning and policy formulation.
“Rebasing is vital for ensuring that our economic indicators accurately reflect present conditions. It provides us with a clearer insight into the structure of our economy, which is essential for making well-informed decisions,” stated Adeyemi Adeniran, the Statistician General of the federation.
Tayo Aduloju, CEO of the Nigerian Economic Summit Group (NESG), likened GDP re-basing to refining the lens through which we assess the economy. Without this process, there is a risk of misinterpreting Nigeria’s actual economic potential.
The revised GDP figures will serve as an essential resource for businesses, especially within the private sector, as they strategize for growth in an evolving economic landscape.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that certain key sectors vital for economic advancement are still lagging, which may result in a skewed understanding of the economy's overall health.
Nigeria's economic trajectory and policy decisions will significantly benefit from GDP rebasing as the nation advances. Given its expanding influence, the real estate sector is poised to drive Nigeria's economic growth in the years ahead.