Why Nigeria’s rebased GDP figures were postponed again

NBS

The release of the new figures will now be in October.

Nigeria’s National Bureau of Statistics, NBS, has postponed the release of the nation’s rebased Gross Domestic Product, GDP, figures to October 2013.

The announcement was made on Friday.

The rebased GDP figures were initially meant to be released in January 2012, but were delayed following the petrol subsidy strike action to August 2012.

Rebasing of the GDP series means replacing the old base year used for compiling the price estimates to a new and more recent base year.

The NBS said the reason for the delay is the need to gather more information on two or three sectors, to ensure the numbers are as credible as possible.

These sectors include non-profit organisations and the mining industry. The Bureau however said 70 per cent of the rebasing exercise has been concluded.

“This is the second postponement. The rebased GDP figures were initially meant to be released in January 2012, but were delayed following the petrol subsidy strike action to August 2012″ Renaissance Capital, an Investment Bank, said.

The organisation, highlighting the implications of rebasing exercise, said the nation’s GDP may be revised upward.

“We expect Nigeria’s GDP to be upwardly revised by 40 per cent, on the back of this exercise. GDP is currently based on 1990 spending and production numbers” Yvonne Mhango, Sub-Saharan Africa Economist at Renaissance Capital said.

“The updated numbers are expected to also reflect the change in the structure of the economy over the past two decades, including a smaller agriculture sector and bigger services sector,” she added.

The rebased GDP figures imply that various macro ratios will change, Ms. Mhango said.

“The credit/GDP ratio, for instance will shrink, suggesting that Nigeria is more underleveraged than current estimates suggest” she added.

Rebasing of national accounts series means replacing the old base year used for compiling the constant price estimates to a new and more recent base year.

This change usually implies changing the price and quantity base for the individual price and quantity relatives as well as updating the weights used in aggregating the individual quantity relatives into sub-indices.

Aside this, it provides the occasion for methodological and conceptual reviews and improvements.

To work out calculations on the real GDP of countries, government statisticians use the prices of goods and services from a “base year” as a reference, upon which other comparisons would be made.

This allows them adjust for the effect of inflation in subsequent years. However, these calculations become less accurate, given obvious factors such as relative price changes.

Nigeria’s real GDP is based on 1990 prices. It is expected that the bureau plans to update them to ones from 2008.

In an article published by the Economist in Jan 31 and titled ‘Making Africa Count’, it was argued that Nigeria’s GDP estimate, like many statistics in Africa, is wildly inaccurate and that the new figures may owe as much to political calculation as to hard-nosed statisticians.

“In 2013 Nigeria’s GDP could increase by 40 per cent, which would be impressive even by Africa’s recent bouncy growth standards. The rise will come not from a surge in economic activity but because the country is rejigging the way it calculates its accounts” the article stated.

It added that governments in countries such as Nigeria and Ghana that want to make a bigger splash are likely to puff up their GDP, whereas those in countries such as Malawi that want to keep aid money flowing in from the West tend to keep it as low as possible.

“Ghana did the same in 2010, revising its base year from 1996 to 2006. Its GDP shot up by 60 per cent, propelling it overnight from being a poor to middle-income country, defined by the IMF as having a GDP per person of at least $1,026 a year”.

The article added that in a study of 47 African countries by Morten Jerven, an economic historian, only ten used base years less than a decade old.

“Twenty years ago the GDPs of most African countries were underestimated—and were dismally low. Few governments minded. But the likes of Nigeria now want to tell tales of progress, not poverty. It wants to secure its status as Africa’s superpower. Its GDP is growing twice as fast as that of South Africa, the continent’s largest economy. “Rebasing” could see its economy swell from $273 billion to $382, just behind South Africa at $420 billion” the article stated.

It added that Nigeria, as an African Country with a population of 150 million, would be strengthened if it were to outpace South Africa economically, could bid for membership of the BRICS, a club of emerging countries (Brazil, Russia, India, China and, arguably, South Africa) as well as getting a permanent seat on the UN Security Council if it were decided that an African country should get a permanent seat.