GDP not synonymous with development – Kale

Nigeria’s national statistician has warned that unless the country adopts a holistic approach to assessing all indices of economic activity, development may continue to elude her.

Nigeria overtook South Africa as Africa’s largest economy last year, after a rebasing calculation almost doubled its gross domestic product to more than $500 billion. But the global oil price has fallen more than 50 percent in recent months, affecting the country’s currency with it.

“Relying on GDP figures alone is not ideal, because the problem with GDP is that it does not take income inequality into account and GDP is not synonymous with development but it is required for development,” Yemi Kale, Statistician-General of the Federation and CEO, Nigerian Bureau of Statistics.

He was speaking last Friday, at a post-election discussion series on the economy organized by BudgIT, a civic organization focused on making Budgets and public data easily accessible.

Nigeria is Africa’s biggest oil producer and its largest economy, but has failed to reap benefit with nearly half of its population living below the poverty line and youth unemployment has stayed relatively static at 17 percent.

According to the Statistician general “in the 90’s, only 3 activities accounted for 70 percent of GDP, today it has grown to 6 activities. Investment has been increasing but investment to GDP is really not improving.”

He noted that most of the largest sectors with the biggest contribution to GDP contribute the least tax revenue to the government.

Some of the top contributors to Nigeria’s GDP are: Chemicals, Petrochemicals and products, which account for 48 percent of GDP; Textile apparel and footwear – 36.08 percent, Accommodation & Food services – 36.01 percent, while Trading accounts for 17 percent of GDP.

Over 60 percent of jobs created in Nigeria are informal jobs, Kale argued that the “GDP structure should be used to compare current tax receipts and bridge gaps by formalizing job sectors,” and the “focus should move from Direct taxes to Indirect taxation.”

Kale conceded that with Nigeria being a large economy and having a low per capita GDP, the nation may require significant time to reflect more progress.

“Sometimes, it takes many years of continuous growth to cross the poverty line… If we do the right things at the right time we need to for right reasons, Nigeria can be a great nation,” he said.

The International Monetary Fund downgraded Nigeria’s economic growth forecast for 2015, predicting its GDP will increase by just 4.8 percent, down from 6.1 percent in 2014.

Growth is slowing. The Nigerian economy is experiencing lower oil prices as well as structural shortcomings, in particular relating to energy supply. Despite the restructure of the energy sector, electricity shortages leading to shut downs that affect households and industry are still frequent.

The budget deficit is deepening. The 2015 budget was revised earlier this year on the basis of a reduced oil price $53 per barrel against $65 per barrel previously. But fiscal consolidation plans will hamper diversification efforts and negatively impact domestic demand.

Kale urged Nigerians to “put more interest in what forms Government revenue and how it is spent and ask questions.”

JOSEPHINE OKOJIE