Thoughts on Nigerian statistics

Peace

As a researcher in the Office for National Statistics (ONS) in London between 2005 and 2007, I worked at the newly created UK centre for the measurement of government activity (UKCeMGA). The essence of the centre was to develop measures of government expenditure in the country’s Gross Domestic Product (GDP) to reflect actual activities for which the expenditure was made. Because of the peculiar nature of the activities of government, essentially because they are not purchased, there was the critical issue of how quality improvements in those activities should be incorporated.

I have pondered over this experience since my last week article on the “thoughts on inflation”. My thoughts and motivation for this piece were motivated by two discussions I have had since last week – one with retired director of the Central Bank of Nigeria (CBN) and one at a meeting involving three other economists.

Following my experience from the ONS, I know that gathering, developing and maintaining relevant statistics can be very arduous. It is perhaps because of that the Nigerian Bureau of Statistics (NBS) has been touchy of late, especially whenever the public or a section of the public question the authenticity of its statistics. The NBS believes so much that it has moved on from the deplorable conditions of data gathering and development after the injection of funds from the World Bank in 2003.

Read Also: NBS dispatches TOT to 36 states, FCT ahead of its Oct 12 Census

On this premise therefore, it is only logical to query if today’s data made available by NBS adequate for Nigeria’s needs? And my simple answer is ‘no.’ NBS needs to be reminded that while significant progress has been made, the journey to a more frequent, wider scope and detailed availability of relevant data in Nigeria are still many years and efforts away. But the progress required cannot be made by the NBS alone. I will give some relevant examples here.

First, if you look at the gathering of inflation data. The field recorders are expected to go to specific places and determine the changes in the prices of goods that have been predetermined. But I can imagine that one of the problems they face is that of fragmented markets, and a Nigerian shopping style that is heavily reliant on haggling. Ours is a terribly peculiar situation such that prices can go up or down on the bases of what you wear, the way you speak and the language you speak. And in terms of haggling, is there a way of determining the actual price without buying the product? And even after buying, there is every sense that the price may change if it is another price recorder that carries out the same process the following month.

Second, last week, I agreed with the NBS for bringing down the weight of our expenditure on food. I agreed for two basic reasons. I reckon that in the urban areas, I will be very surprised if most people expend more than 50 percent of their income on food. I argued that expenditure on transportation will compete closely with that of food. In the same vein, I mentioned that the value of expenditure on food in the rural areas, though significant, will be about the same on the value that can be attached to that, which they get through subsistence farming. The other reason is that bringing down the weight attached to food gives an inflation rate that many will say somehow looks reasonable. I also mentioned that bringing down the weight of food in the inflation basket is supposed to be a reflection that the country is getting richer, but quickly added a caveat, that many will disagree with that assertion. The reason many will disagree with the assertion that we are getting richer is because there is seriously widening income distribution in the country, which often distorts broader progress on wealth.

This should be interesting to anyone that cares about data and how it is measured and interpreted in the country. There are a number of distortions in the Nigerian economy and these distortions also help in distorting the measures of data and the interpretation that we give to the result. For instance, a lot has been said of Nigeria’s growth rate in the last one year. The argument, a very valid one, has been made that Nigeria’s growth rate is a jobless growth rate. Even government officials agree this is this case. However, that is not the whole story.

The current measure of growth in Nigeria is at least distorted by two things. The first is the result of the changes to the weight of the goods in the inflation basket. The implication of that is that growth has been overstated for a while. Effectively, we are not growing as we thought we have been growing.

But there is the other issue that has not been mentioned by anyone yet. It is that of corruption, which as widespread as it is currently, is distorting government expenditure and the value of government contributions to the GDP. No matter what the weight of government expenditure and value added to the GDP is, the contributions should be discounted by the estimated weight of corruption in the Nigerian economy. That weight is anyone’s guess.