Kehinde Fajobi
The National Bureau of Statistics (NBS) has announced plans to incorporate illegal and hidden activities, such as prostitution and drug trade, into Nigeria’s Gross Domestic Product (GDP) calculation.
The bureau also proposed using 2019 as the new GDP base year and 2024 as the new base year for inflation computation.
The announcement was made during a sensitisation workshop on GDP and Consumer Price Index (CPI) rebasing, organised in collaboration with the Nigerian Economic Summit Group (NESG).
Explaining the rationale for 2019 as the base year, the NBS noted it was chosen because economic activities were relatively stable compared to subsequent years, which were affected by COVID-19 and policy changes.
The rebased GDP will also account for the digital economy, activities of pension fund administrators, the National Health Insurance Scheme (NHIS), modular refineries, domestic households as employers, and other emerging segments.
Dr. Baba Madu, Head of National Accounts at the NBS, elaborated on the inclusion of illegal activities, stating that it aligns with the System of National Accounts (SNA) 2008.
“If you are into, for instance, drugs, there are some countries where drugs drive the economy. It is illegal here because there is no legal backing. Also, prostitution earns income; some even live bigger than those in the formal sector,” he said.
He acknowledged challenges, including the lack of legal frameworks and reliable data, but noted these activities typically account for only 3% to 3.5% of the GDP.
Statistician General of the Federation, Prince Adeyemi Adeniran, highlighted the significance of the exercise, saying, “Rebasing ensures our economic indicators are current and accurately reflect economic realities.
“As economies evolve, it is imperative to update statistical measures to capture changes. This process is foundational to informed policymaking and effective governance.”
Dr. Tayo Aduloju, Chief Executive Officer of NESG, emphasised the broader benefits of GDP rebasing.
He cited Nigeria’s 2014 rebasing, which reduced the debt-to-GDP ratio from 19% to 11%, boosting the country’s creditworthiness and attracting foreign investment.
He added, “Rebasing sharpens policymaking by providing a detailed economic map, helping governments target high-growth sectors for development and address low-growth areas.
“For instance, after Ghana’s 2010 rebasing, its policymakers could better plan for infrastructure and social investments.”
The NBS described the rebasing as crucial to capturing Nigeria’s evolving economic landscape and enhancing transparency for investors and policymakers alike.