Nigeria Adopts Broader Metrics for GDP Rebasing
The National Bureau of Statistics (NBS) has announced plans to include illegal activities like drug peddling and prostitution in the calculation of Nigeria’s Gross Domestic Product (GDP). The update, revealed during a workshop on GDP rebasing held in collaboration with the Nigerian Economic Summit Group (NESG), aims to adopt the 2008 System of National Accounts (SNA) framework. This international standard encourages capturing both formal and informal economic activities to provide a comprehensive measurement of economic output.
Rebasing Focuses on Stability and Modern Sectors
The NBS revealed that the rebasing exercise would use 2019 as the new GDP base year, a period marked by relative economic stability before the disruptions of the COVID-19 pandemic. Additionally, inflation calculations will shift to a 2024 base year. The updated GDP will incorporate new and emerging sectors, including the digital economy, modular refineries, activities of pension fund administrators, and domestic household labor.
Challenges in Capturing Hidden Economies
Dr. Baba Madu, Head of National Accounts at the NBS, acknowledged the difficulties in gathering data from hidden and illegal sectors. He pointed out that while activities like drug trade and prostitution generate significant income in some countries, they face legal and data collection barriers in Nigeria. Despite these challenges, the NBS estimates these sectors contribute less than 3.5% of the nation’s GDP.
Implications for Economic Policy and Growth
The NBS’s decision aligns with President Bola Tinubu’s call for more robust economic measurements following recent GDP growth figures. In November 2024, the President noted the need for comprehensive strategies to sustain and expand the 3.46% growth recorded in the third quarter. By including previously overlooked sectors, Nigeria aims to present a fuller picture of its economic activities and attract more informed policy discussions.
Balancing Controversy and Innovation
Critics have raised concerns over the moral and ethical implications of incorporating illegal activities into GDP calculations. However, proponents argue that the move is pragmatic and aligns with global standards. This broader approach is expected to enhance Nigeria’s ability to evaluate its economic strengths and weaknesses comprehensively.
Future Outlook for Nigeria’s Economy
As Nigeria’s economy evolves, the inclusion of unconventional sectors underscores the need for adaptive economic measurement tools. The updated GDP figures, set to reflect modern industries and hidden economies, promise to reshape discussions on Nigeria’s growth potential. Stakeholders will closely watch how these changes impact economic policies and investment strategies.\
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