By MIKE ABBAH
The proposed rebasing of the Nigerian economy will capture ‘illegal’ activities like prostitution and drugs, the National Bureau of Statistics (NBS) has said.
Stating reasons for its plans to incorporate illegal and hidden economic activities, such as prostitution and drug trafficking, into the calculation of Nigeria’s Gross Domestic Product (GDP), the NBS said it aligns with the new system of capturing prevailing activities.
The statistics bureau disclosed this during a sensitisation workshop on GDP and Consumer Price Index (CPI) rebasing, organised in collaboration with the Nigerian Economic Summit Group (NESG).
At the event, the NBS also proposed 2019 as the new base year for GDP calculations and 2024 for inflation computation. This is contrary to expectations that the base year would be 2014 when the last rebasing took place.
Explaining the choice of 2019, the NBS stated that economic activities during that year were relatively stable, as opposed to subsequent years that were disrupted by the COVID-19 pandemic and other policy shifts.
According to NBS, the rebased GDP will now capture new segments of the economy, including the digital economy, pension fund administration, activities of the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), modular refineries, domestic households employing labor, and illegal and hidden economic activities.
Speaking on the inclusion of the ‘illegal’ and hidden activities, Dr. Baba Madu, Head of National Accounts at the NBS, explained that the decision aligns with the global practice of System of National Accounts (SNA) 2008.
“If you are into, for instance, drugs, there are some countries, it is this drug that is driving their economy. It is illegal here because there is no legal backing.
“Also prostitution, they also earn income. Some even live bigger than those in the formal sector. The SNA does not say no to these, it is we. But the challenge is the legal backing and how we get the data.
“And then, of course, the hidden economy. If I ask you, how much do you earn in a month, you will lower your income.”
He highlighted the challenge of obtaining accurate data for hidden activities, such as underreported income or illegal sales, but noted that these activities typically contribute only about 3.0% to 3.5% of GDP.
“Or if somebody is selling provisions in a store, and before you know it he started selling India hemp. 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,” Madu said.
The NBS had disclosed last October that it would carry out the rebasing of the economy in in November 2024 to ensure that economic data accurately reflect current realities and account for structural changes in the economy.
