The National Bureau of Statistics (NBS) has announced that illegal and hidden activities, such as prostitution and drug peddling, will now be included in Nigeria’s Gross Domestic Product (GDP) calculations.
This move comes as part of the rebasing exercise for both GDP and the Consumer Price Index (CPI), which is aimed at reflecting a more accurate and current state of the country’s economy.
The NBS has proposed using 2019 as the new base year for GDP calculation and 2024 for inflation computation. According to the Bureau, 2019 was chosen because it represents a period of economic stability, unlike the subsequent years, which were disrupted by the COVID-19 pandemic and various policy changes.
The rebased GDP will also incorporate additional sectors, such as the digital economy, pension fund activities, the National Health Insurance Scheme (NHIS), modular refineries, and households as employers of labor. Additionally, illegal and hidden economic activities, which include activities such as drug dealing and prostitution, will now be considered in the calculation of Nigeria’s GDP, in line with the System of National Accounts (SNA 2008) adopted by international best practices.
Head of National Accounts at the NBS Dr. Baba Madu, elaborated on this inclusion, explaining that while activities like drug trafficking and prostitution are illegal, they contribute to the economy. He cited the example of some countries where such illegal activities can significantly drive economic output, despite their legal status. Madu further pointed out that these activities typically make up only about 3.0% to 3.5% of GDP.
The rebasement of GDP and CPI is a significant exercise, which the Statistician General, Prince Adeyemi Adeniran, emphasized is necessary to keep the country’s economic indicators current. He noted that as economies evolve, new sectors emerge, and consumer habits change, making it essential to update statistical measures.
The Chief Executive Officer of the Nigerian Economic Summit Group (NESG), Dr. Tayo Aduloju, also highlighted the key benefits of rebasing, such as improving Nigeria’s creditworthiness and making the country more attractive to foreign investors. He pointed to the 2014 rebasing of Nigeria’s GDP, which lowered the country’s debt-to-GDP ratio from 19% to 11%, enhancing investor confidence. Rebased data also helps policymakers identify growth sectors and allocate resources efficiently to drive balanced development.
By rebasing its GDP and CPI, Nigeria aims to provide a clearer and more accurate picture of its economic health, boosting the credibility of its economic data.
