Rebasing is a standard global practice that updates national economic data to better reflect current realities. In Nigeria’s case, the updated figures now capture newer sectors like fintech, digital media, renewable energy, and gig work, segments that were previously underrepresented or ignored in the country’s economic calculations. As a result, the picture of Nigeria’s economy is now more accurate, dynamic, and revealing. But what do these numbers really mean for the country’s fiscal strategy?
With the rebased GDP, Nigeria’s debt-to-GDP ratio has dropped significantly—from around 42 per cent to an estimated 37 percent. On paper, this suggests greater fiscal breathing room and gives government officials a more favourable profile when negotiating with creditors and international partners. However, this cosmetic improvement masks a deeper problem: debt servicing remains dangerously high, swallowing over 62 per cent of federal revenue.
The rebasing must not be used to justify more borrowing without productive investment. A lower debt ratio is meaningless if the revenue base is weak, and if loans are not directed toward sectors that drive real growth.
Rebasing has also pushed Nigeria’s already low tax-to-GDP ratio, previously about 10 per cent, further down to an estimated 8 per cent or lower, depending on the new GDP size. This is far below the African average of 16 per cent, and even further behind emerging economies globally. This new ratio exposes how poorly Nigeria mobilises domestic revenue in relation to its economic potential.
If the economy is indeed larger, the Federal Inland Revenue Service (FIRS) and related agencies must act swiftly to expand the tax net, formalise segments of the informal economy, and eliminate leakages. Fiscal policy must shift from revenue desperation to revenue intelligence, focusing on efficiency, equity, and digital compliance.
A rebased economy changes the fiscal map. For example, sectors like ICT, digital services, and entertainment now account for a larger share of GDP than previously acknowledged. Fiscal policy must respond by allocating more resources to high-growth sectors, encouraging innovation, and investing in infrastructure that supports modern industries.
Likewise, capital budgeting and fiscal projections must now be based on updated assumptions. Sticking to outdated growth models and spending patterns would be both inefficient and fiscally irresponsible.
Rebasing can influence how development partners and international lenders view Nigeria. A larger economy implies a greater ability to raise domestic funds. As a result, donors may reduce aid commitments, and concessional borrowing could face more scrutiny. This means Nigeria must strengthen fiscal transparency and credibility, to reassure partners that it can manage a larger economy with discipline.
The rebasing exercise has implications beyond Abuja. Many state governments rely heavily on federal allocations and often base their budgets on national projections. With the new figures, subnational governments must re-evaluate their own economic assumptions, improve revenue collection strategies, and align spending with the actual structure of their local economies.
Nigeria’s 2025 rebased economy offers a more accurate mirror of its economic structure and size. But what the country does with this new reflection is what will define its fiscal trajectory. This is not the time for complacency or celebratory borrowing. It is a moment to refocus fiscal policy on sustainability, efficiency, and inclusion.
The rebased figures are a wake-up call to deepen tax reforms, recalibrate spending priorities, and drive investment toward sectors that can deliver long-term value. A bigger economy should not lead to bigger deficits, it should inspire smarter governance.
In the end, the goal is not to have impressive statistics, but to create a fiscally sound, economically inclusive, and globally competitive Nigeria. Rebasing provides the tools. Sound policy must now do the rest.
