(Ecofin Agency) – Changing the calculation of GDP in Nigeria could affect key indicators such as per capita income or debt in relation to GDP. However, no information has been given regarding the date of entry into force of this new calculation basis.
In Nigeria, illegal and hidden activities such as prostitution and drug trafficking will now be included in the calculation of the country’s gross domestic product (GDP). The information was reported by local media on Friday, January 10, 2025 citing the National Bureau of Statistics (NBS).
Speaking at a sensitization workshop on the rebasing of GDP and Consumer Price Index, Baba Madu, Head of National Accounts at the NBS, explained that the move is in line with international standards of the System of Accounts (SCN) 2008. As a result, the year 2019 was proposed as the new base year for GDP calculations, due to the “ relative stability » economic activities observed during that year and in 2024 for the calculation of inflation.
The rebased GDP will incorporate new segments of the economy including the digital economy, pension fund administration, National Health Insurance Scheme (NHIS) operations, Nigerian Social Insurance Trust Fund (NSTIF) , modular refineries, domestic labor employing households and illegal and hidden economic activities.
For the head of national accounts, this approach aims to better reflect the economic reality of the country, despite the challenges linked to the collection of precise data for illegal activities and the underground economy, which represent around 3 to 3.5% of GDP. .
« If you use drugs, for example, in some countries it’s the drug that drives the economy. Here, it is illegal because there is no legal framework […] Prostitution is also a source of income […] But the challenge is finding legal support and knowing how to get the data “, he indicated.
Nigeria is Africa’s fourth largest economy by GDP behind South Africa, Egypt and Algeria, according to assessments by the International Monetary Fund (IMF). Despite this decline, President Bola Tinubu welcomed the signs of economic recovery observed in the third quarter of 2024, which according to him, are supported by ongoing economic reforms.
The objective of the Nigerian government is to achieve a GDP of 1000 billion dollars by 2030. Thus, for the Head of State, the revision of the economic base will make it possible to better reflect the sectoral transformations underway.
Note that changing the calculation of GDP could affect key indicators in Nigeria such as per capita income or debt relative to GDP. However, no information has been given regarding the date of entry into force of this new calculation basis.
For 2024, the Nigerian government forecasts economic growth of 3.76%, surpassing the IMF’s estimate of 2.9%.
Charlene N’dimon
Edited by MF Vahid Codjia
