The National Bureau of Statistics (NBS) has announced plans to incorporate illegal and hidden activities, such as prostitution and drug peddling, into the calculation of Nigeria’s Gross Domestic Product (GDP).
This initiative aligns with international best practices under the 2008 System of National Accounts (SNA).
According to Vanguard, the announcement came during a sensitization workshop on GDP and Consumer Price Index (CPI) rebasing, organized in collaboration with the Nigerian Economic Summit Group (NESG).
At the event, the NBS proposed 2019 as the new base year for GDP due to relative economic stability before disruptions caused by COVID-19 and subsequent policy shifts.
The rebased GDP will also capture emerging segments, including the digital economy, activities of pension fund administrators, the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSITF), modular refineries, domestic households as employers, and illegal or hidden activities.
Dr. Baba Madu, Head of National Accounts at NBS, explained the rationale behind including illegal activities in GDP calculations.
“Illegal activities will be in line with the national best practices, that is, System of National Accounts, SNA 2008. If you are into, for instance, drugs, there are some countries where 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 do we get the data.”
Dr. Madu also highlighted challenges in capturing the hidden economy, saying, “If I ask you how much you earn in a month, you will lower your income. Or if somebody is selling provisions in a store and then starts selling Indian 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.”
NBS Statistician General, Prince Adeyemi Adeniran, emphasized the importance of the GDP and CPI rebasing exercise.
“The rebasing is a vital exercise that ensures our economic indicators are current and accurate reflections of the economic realities on the ground. As economies evolve, new industries emerge, and consumption patterns shift, it becomes imperative to update our statistical measures to capture these changes. Rebasing our GDP and CPI allows us to align with these transformations, providing a more precise and relevant picture of Nigeria’s economic landscape.”
In his welcome address, NESG CEO Dr. Tayo Aduloju highlighted the benefits of rebasing.
He said, “Accurate data enhances credibility. Our debt-to-GDP ratio, a critical indicator of fiscal health, dropped from 19% to 11% after the 2014 rebasing. This improved Nigeria’s creditworthiness, making us a more attractive destination for foreign direct investment.
“Rebasing sharpens policymaking. It provides a detailed map of our economic terrain, enabling governments to identify high-growth sectors for scaling and low-growth sectors that require targeted interventions to drive impactful and balanced development.”
He pointed to Ghana’s 2010 rebasing, which resulted in a 60% GDP increase, as an example of how rebasing can enable better planning for infrastructure and social investments, fueling sustained growth.
