Emmanuel Ochayi
The National Bureau of Statistics (NBS) has announced a groundbreaking change in Nigeria’s GDP calculation. For the first time, illegal activities such as drug trafficking and prostitution will be included. This move aims to align Nigeria’s economic metrics with global standards, offering a more comprehensive view of the nation’s economic activities.
During a recent workshop on GDP and Consumer Price Index rebasing, the NBS proposed 2019 as the new base year for calculations. This shift is intended to account for stable economic conditions before the disruptions caused by the COVID-19 pandemic. The rebased GDP will also feature modern sectors like the digital economy and modular refineries, but it’s the inclusion of illegal activities that’s sparking the most debate.
Join our WhatsApp ChannelDr. Madu Explains the New Approach
Dr. Baba Madu, Head of National Accounts at the NBS, provided insights into the rationale behind this controversial decision. He referred to international standards from the 2008 System of National Accounts, which advocate for comprehensive GDP measurements.
Madu stated, “If you are into, for instance, drugs, there are some countries where this drug activity drives their economy. It is illegal here because there is no legal backing. Also, prostitution—these individuals earn income, and some even live bigger than those in the formal sector. The SNA does not say no to these; it is we [who resist]. But the challenge is the legal backing and how to get the data.”
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Challenges in Data Collection
Despite the bold move, Madu acknowledged the significant challenge of gathering reliable data on these illegal activities. He explained how hidden earnings and underreported incomes distort current economic measurements.
“If I ask you how much you earn in a month, you will lower your income,” he remarked, highlighting the issue of unreported earnings. He also cited examples of shopkeepers who discreetly sell illicit substances alongside legal goods, emphasizing, “Those are the things we are seeing. There are challenges all over the world. But the beauty is that they are less than 3.0% to 3.5% of the GDP.”
Implications for Nigeria’s Economy
The NBS believes that by including these hidden and illegal activities, Nigeria will enhance the accuracy of its economic data. This inclusion is expected to provide new insights into sectors that operate outside the law but still contribute to the economy. Dr. Madu suggested that capturing these activities would reflect a more realistic economic landscape.
As Nigeria moves forward with these changes, the broader implications for the economy and societal perceptions of illegal activities remain to be seen.
