The rebasing of Nigeria’s GDP by the Bureau of Statistics is one major step that is long overdue to recognize officially the complexity that this nation has attained. It comes with both the glory of climbing up the ladder of how we stand with other nations as well as the challenges of meeting the performance standard of our new ranking. It speaks much more of how enormous the task of our economic governance has become than beating other countries on the table.
The bigger the economy, the greater the challenges of attaining effective governance of the human and material resources at our command. While we rightly take the deserved glory of being Africa’s largest economy and one of the 26th largest economies in the world, the development has placed greater responsibility on the managers of the significantly enlarged economy.
GDP is a key economic index, which even as a single figure, contains the entire economic picture of a nation. When it changes, the entire economic picture changes and upon it are so many other economic indices drawn. It is therefore quite important that we get the GDP structure right for us to have the right picture of the state of the economy. It is therefore a welcome development for Nigeria to take the long overdue step to rebase the nation’s GDP.
We agree completely with finance minister, Dr. Ngozi Okono-Iweala, that rebasing the GDP provides accurate data on the economy and this would enable policy-makers take informed decisions and evaluate policy options in tackling social problems like poverty and unemployment. We can then plan and work with figures that reflect accurately the structure and size of our economic activity.
Effective governance of the economy cannot happen unless we have the right economic indicators. Appropriate indicators are necessary to show accurate results of macro-economic policy measures. The results need to be accurately indicated for us to see what the next right policy direction should be.
The rebasing of the GDP has therefore reflected the true structure of the Nigerian economy. It will provide the basis to see how far the old structure has changed and therefore lead us to change policies and actions based on the old production and consumption functions.
Some major economic activities have developed and expanded in the economy since the last update of the GDP data. An example is telecoms, which was an insignificant part of our GDP in 1990 but has expanded to the extent of contributing between 8-9% of GDP presently.
The same is true of financial services that attracted the largest volume of investment capital from within and outside the country during the banking industry consolidation in 2007. Internet-based activity has also expanded so rapidly that we cannot afford to ignore the high and growing output and consumption levels that are internet driven in the present technology driven world.
We have to capture as well the enormous household consumption that is driven by the new service sector – Nollywood. It has become a large industry that produces for both a large home market and for export. Without rebasing of the GDP, we will continue to under estimate our household consumption figures.
It is apparent therefore that the old GDP framework under estimated the level of economic activity going on in the country. It is quite easy to appreciate that the Nigeria economy is far larger than that of South Africa. South Africa’s population is just a fraction of Nigeria’s and the 170 million people that live here are both producing and consuming actively.
Nigeria is Africa’s largest telecoms market with more than two and half times the size of South Africa’s mobile lines. By internet subscription, it has more than three times the number in South Africa. These are the modern definitions of the level of productive activity going on in an economy.
It is in any event necessary to emphasise the point that whatever improved ranking that Nigeria obtains from the rebasing of its GDP isn’t as important as the responsibilities it has attached to the management of the economy. For instance, the inclusion of the more rapidly growing sectors in the new GDP structure has resulted in a more rapid overall economic growth.
Even at the level of growth we have been recording before the rebasing, it has always been a concern that the economy is growing without economic development. The demand to balance growth with development will be prompted further by the new GDP structure that indicates even higher growth rates in the economy. Government should therefore prepare to face the challenges the new GDP structure involves in terms of a more effective economic management.
We can expect that government and its economic management team will come under constant pressure to defend our GDP growth numbers by making the stronger economic growth manifest in the living standard of our people. By placing Nigeria at a higher income pedestal within the global community, government has been given a new responsibility to meet the benchmark standard of its enhanced economic status.
There is a big job for government to ensure that Nigeria matches the critical indices of the successful economies where it now belongs. We have to brace up to the fact that Nigeria will no longer be eligible for international aids and grants meant for poor nations. We therefore have no choice but to move the nation out of poverty.
The largest economy in Africa has to be an example of how to create new job opportunities, reduce poverty and improve living standard. It has to show the way to infrastructure development. It cannot lead Africa in the darkness of electric power failure. It can no longer afford to do nothing about inequality in distributing the wealth of the nation that the new numbers will be showing to us and to the world.