Wednesday, April 16, 2014

Nigeria's GDP Rebasing: A Time for Exasperation

Nigeria: Petroleum-based Economy
 Overnight Nigeria has become the largest Economy in Africa. 

At Center for Modern Nigeria, we consider this report a distraction and a sideshow from the tedious task ahead for this administration. 

We could have postponed this re-basing for another 20 years after the ongoing transformation agenda has taken hold.  After all, we have not done it as routinely recommended by the World Monetary  System for many years. We are definitely exasperated by this report. It may breed complacency and slows the momentum on this administration.

The previous base year of 1990 has become outdated due to changes in the structure of the economy. The National Bureau of Statistics (NBS) now estimates Nigeria’s GDP at 80.22 trillion naira in 2013 compared to 42.4 trillion naira prior to the rebasing.

This translates into nominal GDP of 509.9 billion dollars last year compared to Statistics South Africa’s reading of 323 billion rand for the South African economy during the same period. These revised figures make Nigeria the world’s 26th largest economy, up from the 33rd position prior to the rebasing.

Abuja, Nigeria
The number of economic activities surveyed for the purposes of the calculation of GDP increased to 46 from 33 previously. Better coverage (including of the informal sector), the inclusion of new industries, and methodological improvements led to significant increases in the contribution of the services sector, manufacturing, construction, and water & electricity. On the other hand, value added by the agricultural and the oil & gas sectors declined notably relative to GDP.

Lagos Mainland
The agricultural sector contributed 35 per cent to GDP prior to rebasing, but is now only estimated to account for 22 per cent of GDP. Meanwhile, the services sector’s contribution increased from 29 per cent of GDP to 52 per cent of GDP, with the telecommunications sector rising from 0.9 per cent of GDP to 8.7per cent of GDP.
The manufacturing sector is now estimated to contribute 6.8 per cent to GDP, compared to just 1.9 per cent previously, while the oil and gas sector’s contribution has been revised down to 14.4 per cent from 32.4 per cent before rebasing. Final rebased GDP figures are scheduled to be released by June 2014. The NBS plans to rebase GDP figures every five years to ensure that estimates remain up-to-date.

We have accepted this data on the paper; so let us move on to real work ahead.  Nigeria is the most populous Black African Nation with a population three times that of South Africa.  

At Center for Modern Nigeria, we will not pop champagne to celebrate until:- 
Oshodi, Lagos
  • Unemployment rate is down from the current 24%  to single digit and our graduates are contributing more positively to the economy through gainful employment.
  • Our infrastructures including transportation system, are revamped and brought to the international and modern standards.
  • Our energy/power production and output are more than adequate to meet the demand of Nigeria manufacturing and general consumption.
  • Our health care system is upgraded to service the nation and comparable to international standard so as to minimize medical tourism. 
  • Our educational system is fully funded and research-focused, and the pandemic lecturers' strikes become history. 
  • There is diversification from petroleum-based economy to vibrant multi-sources economy. 
  • Our industries are turning out advanced tech products for domestic consumption and exports.
  • Improved living standard in Nigeria.  More than 100 millions (61%) Nigerians live on $1.00 per day. This poverty level is unacceptable in the largest economy in Africa.
  • Our agriculture is mechanized and the output is sustainable to meet Nigeria needs.
  • Nigerian-owned Corporations are more involved in the Nations development and constructions as opposed to the current obsession with foreign corporations..  
  • Corruption by the public and political office holders is outlawed with severest sanction for the perpetrators. 
This is just to list a few.  We wonder what could have been if we had a stable and strong enabling environment that promote strong economic growth. Those wasted years of dictatorships have come home to roost.

With our current democratic dispensation and the human capital, we are definitely on the road to becoming the Africa's economic and political powerhouse as the ongoing transformation agenda take hold.

We are just not there yet

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