The National Bureau of Statistics (NBS) has announced plans to incorporate illegal and hidden activities, such as prostitution and drug peddling, into the calculation of Nigeria’s Gross Domestic Product (GDP). This decision was disclosed during a sensitization workshop on GDP and Consumer Price Index (CPI) rebasing, organized in collaboration with the Nigerian Economic Summit Group (NESG).
As part of this initiative, NBS has proposed 2019 as the new GDP base year and 2024 as the base year for inflation computation. The choice of 2019 was attributed to the relative stability of economic activities during that year, compared to the disruptions caused by COVID-19 and subsequent policy shifts.
The rebased GDP is expected to capture additional economic segments, including the digital economy, activities of pension fund administrators, the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), modular refineries, domestic households as employers, and illegal and hidden activities.
Explaining the inclusion of illegal and hidden activities, Dr. Baba Madu, Head of National Accounts at NBS, stated, “Illegal activities will be in line with the national best practices, that is, the System of National Accounts (SNA) 2008. For instance, in some countries, drugs drive their economy, even though these activities are illegal. Prostitution also generates income and contributes to the economy. The challenge lies in obtaining accurate data, given the lack of legal backing and the hidden nature of these activities.”
Dr. Madu further clarified that hidden activities, such as undeclared income or unregistered businesses, also contribute to the economy and need to be reflected in GDP calculations. He estimated that these activities constitute less than 3-3.5% of the GDP.
Importance of GDP and CPI Rebasing
Speaking on the importance of the rebasing exercise, Statistician General, Prince Adeyemi Adeniran, emphasized its role in ensuring economic indicators accurately reflect current realities. “Rebasing our GDP and CPI allows us to align with economic transformations, providing a precise and relevant picture of Nigeria’s economic landscape. This process is foundational to informed policymaking, strategic planning, and effective governance,” he noted.
The rebasing exercise is also expected to enhance Nigeria’s global economic standing. According to Dr. Tayo Aduloju, Chief Executive Officer of NESG, the benefits of GDP rebasing include improved credibility, enhanced fiscal health, and increased attractiveness for foreign direct investment. Citing Nigeria’s 2014 rebasing, which reduced the debt-to-GDP ratio from 19% to 11%, Dr. Aduloju explained, “Rebasing sends a clear message: we understand our economy, and we are open for business.”
He also highlighted the impact of rebasing on policymaking, using Ghana’s 2010 rebasing as an example, which resulted in a 60% GDP increase and better planning for infrastructure and social investments.
The NBS assured stakeholders that the rebasing exercise would be conducted with professionalism and transparency to ensure the credibility and reliability of Nigeria’s economic data.