Rebasing the gross domestic product (GDP) of a country has been likened to a fish farmer who was not sure of the number of fishes in his pond and therefore was ignorant of his exact wealth position until the water was drained from the pond to reveal the number and size of fishes in the pond. This knowledge does not actually change his wealth position; it only makes him aware of his net worth before the wealth accounting exercise.
It is instructive that Nigeria’s statistician-general, Yemi Kale, who on earlier occasions explained the concept of rebasing “as the updating of the GDP computation framework using new data sources, definitions and methods”, admitted that “rebasing changes nothing; it only means measuring better”.
This explains why the rebased numbers that make Nigeria the largest African economy ahead of South Africa and the 26th globally do not have any direct impact on the welfare of the average citizen.
The rebased nominal GDP of $482.2bn or N81trn for 2013 represents an increase of 89 percent in the size of the economy while the per capita (per head) figure of $2,836 (N476,529) means that the average Nigerian citizen has been made richer on paper with an increase of over $1,000 (N168,000) in the amount of money available to him to spend in a year.
Of course, this is a mere statistic because given the highly skewed distribution of income in the country, about 80 percent of Nigerians will get less than the national per capita income of N476,529 to spend yearly. The fat cows among the remaining 20 percent of the population will appropriate 80 percent of the GDP.
Read also: OPEC more optimistic about demand for own crude in 2015
Despite these realities, there are two principal benefits of the GDP recalculation exercise that government officials are not likely to emphasise. The first is what some analysts have called “bragging rights over South Africa and others”. This means that with the new league tables based on the new GDP estimates, Nigerians can now walk tall as citizens of the largest African economy knocking South Africa to second place ($350.8bn). On a global scale, Nigeria’s economy is also larger than those of Austria ($416.1bn), Denmark ($330.6bn), Venezuela ($227.2bn), and all other MINT countries. ”
A caveat is in order here. This bragging effect is likely to be moderated by depressive social statistics such as the large number of the poor and the number of women who die yearly from pregnancy-related causes.
The second benefit of the rebasing exercise is that Nigerians now live in a country where managers of the economy have more access to credible information on the composition of the GDP. This harbours the hope that political leaders and technocrats in government will have less excuse to underperform in their quest to create more jobs and reduce inequality in the society.
For the government, this is a potent risk. An already cynical population, as one analyst has noted, might look at getting richer on paper as reason to trust the government even less. For example, the revelation that the services sector now accounts for 50.2 percent of GDP while the manufacturing sector is virtually non-existent at 7 percent of GDP is a solid explanation why Nigeria has been experiencing “jobless growth”. Our governments have been managing an import-dependent economy where jobs are exported due to lack of competitiveness worsened by decaying infrastructure and low value for public spend, especially on infrastructure.
All over the world, the services sector creates quality jobs but strong policy is required to achieve national objectives. Take the example of GSM service providers. How many of them would want to manufacture their recharge cards in Nigeria without official policy to that effect? How many of them manufacture handsets locally? Nigerians now know that our economic managers have been exporting jobs over the years while tolerating unacceptably high rates of unemployment (over 23 percent of the workforce) and over 60 percent of graduate unemployment.
With GDP rebasing exercises conducted at intervals of five years or less, Nigeria’s underperforming political managers will have no place to hide. This is the beauty of GDP rebasing.
WENESO OROGUN
