The National Bureau of Statistics (NBS) announced Thursday that Nigeria will now factor in illicit activities such as prostitution and drug trafficking in its Gross Domestic Product (GDP) calculations.
The move aims to offer a more comprehensive view of the economy, including activities that have traditionally been hidden from formal economic measurement.
In addition to this, the NBS has proposed adopting 2019 as the new base year for GDP, while suggesting 2024 as the reference year for inflation.
The updates were shared during a workshop on GDP and the Consumer Price Index (CPI) rebasing, organized in collaboration with the Nigerian Economic Summit Group (NESG). The NBS explained that 2019 was selected for the new GDP base year due to relatively stable economic conditions before disruptions caused by COVID-19 and changes in government policies.
The revised GDP will also encompass emerging sectors such as the digital economy, pension fund operations, the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), activities of modular refineries, and even the domestic employment practices of households. Moreover, the inclusion of illegal and informal activities marks a significant shift toward capturing a broader scope of the economy.
Dr. Baba Madu, Head of National Accounts at NBS, addressed the inclusion of illegal and informal sectors, explaining that this aligns with global standards such as the 2008 System of National Accounts (SNA). “Illegal activities will be in line with national best practices,” Dr. Madu stated. “For example, in some countries, drugs are a driving force of their economy, even though they are illegal here. Similarly, prostitution generates income for many, some of whom earn more than people in the formal sector. While there’s a lack of legal backing for these activities, the challenge lies in gathering accurate data on them.”
He added, “There’s also the hidden economy, where people underreport earnings. Even small businesses sometimes shift from legitimate trade to illicit ones, like selling illegal substances. Globally, these activities account for less than 3.5% of the GDP.”
Prince Adeyemi Adeniran, the Statistician General, emphasized the importance of the rebasing exercise: “Rebasing ensures our economic indicators reflect the current realities. As industries evolve and consumption patterns change, it’s crucial that we update our measures to keep pace with these shifts. This process not only supports informed policymaking but also strengthens governance.”
Dr. Tayo Aduloju, CEO of NESG, highlighted the benefits of GDP rebasing during his opening remarks: “Accurate data boosts credibility. After the 2014 rebasing, our debt-to-GDP ratio dropped from 19% to 11%, improving Nigeria’s creditworthiness and attracting foreign investment. Investors value transparency and see rebasing as an indicator that we understand our economy and are open to business.”
He further pointed out that rebasing sharpens policymaking by mapping out the economy in greater detail. This allows governments to target growth sectors and address lagging areas. Drawing from Ghana’s 2010 rebasing, which resulted in a 60% increase in GDP, Dr. Aduloju emphasized that such data-driven strategies can fuel long-term growth and infrastructure development.
(VANGUARD)
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