NLC, governor, The Economist knock GDP rebasing
ICAN: it’s okay
The President and his Finance experts were under attack yesterday over the “necessary” but “unrealistic” rebasing of Nigeria’s Gross Domestic Product (GDP).
The rebasing makes the country Africa’s largest economy.
To Labour, a good GDP without jobs is meaningless. A governor advised President Goodluck Jonathan to face the reality in the land – hunger, unemployment and poverty – instead of being carried away by the rebasing.
The position of the Nigeria Labour Congress (NLC) is a continuation of the assessment of the rebasing announced on Sunday by the government.
World Bank economists have also cautioned that a large economy does not guarantee foreign investments.
“What matters is living standards for everyone and the productivity that gurantees those living standards,” World Bank Chief Economist, Africa Region, Mr. Francisco Ferreira, said.
The government said the long-overdue rebasing – the last one was done in 1990- places Nigeria’s GDP at $509.9b as against South Africa’s $370.3b.
In a report, the Economist said in spite of Sunday’s announcement of the rebasing, “Nigerians are not richer than they were on Saturday night. The majority of the country’s 170 million people live on less than a dollar a day”.
In a statement by NLC’s acting President Promise Adewusi titled “Good GDP without sustainable and viable jobs: A time bomb”, the labour said the GDP will only make meaning to the labour family if it translates into improved living conditions for the ordinary Nigerian, which is not the case at the moment.
Adewusi said the living conditions in the past couple of years have been progressively nosediving and pathetic.
Deriding the data, the congress said: “Nigeria being the biggest economy in Africa ought to make no news if vital national statistics, such as population, natural resources etc, were to form the requisite assumptions for assessment.”
The congress added that economic growth without jobs and food on the table, meant nothing in reality.
“Unemployment figures are frightening. We have found it necessary to warn time without number that the army of the unemployed youths constitutes a veritable army of the disparate, the desperate and the angry, and that government should urgently address the problem.
“So far, nothing has illustrated this fear better than the recent Immigration recruitment tragedy. We do not need any economist or diviner to tell us that life has improved, because it has not.”
A GDP, said Adewusi, could not be said to have significantly improved if our industries are virtually shut and the operating environment increasingly hostile. Government should worry that the performance index of industries dropped from 46.08 per cent to 25.81 per cent while service industry more than doubled to 50 per cent from 23.03 per cent. “
The NLC submitted that this represents a significant change in the economy, a negative change that points to consumption to the exclusion of production.
The NLC said Finance Minister Dr. Ngozi Okonjo-Iweala, for good measure, added: “We did not set out to become the biggest economy in Africa. We set out to measure how much the economy has changed. And that is the outcome. Becoming the largest economy on the continent is a positive development, but that is not the destination …”.
“As cheering as this news may be, however, we at the Nigeria Labour Congress are not completely swayed by the latest GDP figure, nationalist as it seems.”
The statement added: “As we commend the government for achieving the feat of economic rebasing, we urge it to ensure this figure translates into improved living conditions, jobs, revival of industries and improvement of internal and national security. For those will be the measurable indices and indicators of an enlarging and progressive economy.”
Kano State Governor Rabiu Musa Kwankwaso, also yesterday, dismissed the GDP rebasing as a mere fiction, which does not reflect the true state of the economy.
Kwankwaso, who urged President Goodluck Jonathan not to be carried away by “the fiction”, counselled him to be more realistic by fighting the serious decay in the economy, which he said is threatening the foundation of the existence of Nigeria’s development.
Kwankwaso, who spoke in Kano when the African Democratic Congress (ADC) visited him at the Government House, insisted that any practical economist would understand that what the government is claiming does not reflect what is on ground as hunger, starvation, diseases and insecurity are threatening the country.
Kwankwaso said the so-called Railway development undertaken by the Federal Government, ended up in flooding the country with 1902 category trains, which he said are so dirty and stinking. His view is that what the country needs is real economic development and not paper-based development.
“President Goodluck Jonathan should be more practical in governance and desist from fiction and unrealistic theories that have nothing to do with what is on ground,” he said, adding that Nigeria is in dire need of good governance that would salvage it from the threat of insurgents.
Kwankwaso noted that except the growth in Nigeria’s economy which they are claiming must have fallen in the hands of some selected kinsmen and politicians from the South and North, who reside in Abuja, but to talk to ordinary Nigerians that the country’ s economy has grown tremendously will be “laughable”.
But the President of the Institute of Chartered Accountants of Nigeria (ICAN), Mr. Kabir Mohammed, said the figures have moved Nigeria to its right position.
Speaking with State House correspondents after leading some members on a visit to the President, Mohammed said it was the right time for investors to come in.
“It is an opportunity for Nigeria to come up to date and take her rightful place among the comity of nations. Using these bases, you can see that we have moved into our proper position.
“We have incorporated structures hitherto not considered. This is an opportunity for people who want to invest in the country to make the right decision and come in,” he said.
On classification of Nigeria as one of the countries with extreme poverty, he said: “It does not change our figures at all. It does not change our figures.
“The fact is that two-thirds of the world’s extreme poor are concentrated in just five countries: India, China, Nigeria, Bangladesh and the Democratic Republic of Congo.”
Mohammed said he would continue to uphold the ethics of the accounting and ensure that any corrupt accountant is brought to book.
“As the President of the Institute of Chartered Accountants of Nigeria, ICAN, let me put it to you, if you have any ICAN member involved in corrupt practices, please bring him or her forward. We have our disciplinary procedures. We shall handle the case appropriately.”
On the reasons for the visit, Mohammed said: “I led members of the Institute of Chartered Accountants of Nigeria, ICAN, to pay a courtesy call on Mr. president to congratulate him on the wedding of his daughter this weekend and the rebasing of the GDP as well as discuss issues of national importance.”
Also speaking on alleged corruption by accountants, Minister of Trade and Investment Olusegun Aganga said: “Accounting anywhere in the world is a noble profession and that is why not every body is chartered to practise. It is the only profession where you study Economics, Law, taxation and everything, to do with business.”
How Nigeria’s economy grew by 89 per cent overnight
ON Saturday, April 5th, South Africa was Africa’s largest economy. The IMF put its GDP at $354 billion last year, well ahead of its closest rival for the crown, Nigeria. By Sunday afternoon that had changed. Nigeria’s statistician-general announced that his country’s GDP for 2013 had been revised from 42.4 trillion naira to 80.2 trillion naira ($509 billion). The estimated income of the average Nigerian went from less than $1,500 a year to $2,688 in a trice. How can an economy grow by almost 90% overnight?
Nigeria has a deserved reputation for corruption, so a sceptic might think the doubling of its economy a result of fiddling the numbers. In fact it is the old numbers that are dodgy. An economy’s real growth rate is typically measured by reference to prices in a base year. In Nigeria the reference year for the old estimate of GDP was 1990. The IMF recommends that base years be updated at least every five years. Nigeria left it far too long; as a result, its old GDP figures were hopelessly inaccurate.
The new figures use 2010 as the base year. Why was the upgrade so big? To come up with an estimate of GDP, statisticians need to add together estimates of output from a sample of businesses in every part of the economy, from farming to service industries. The weight they give to each sector depends on its importance to the economy in the base year. A snapshot of Nigeria’s economy in 1990 gave little or no weight to fast-growing parts of the economy such as mobile telephony or the movie industry. At the time the state-owned telephone company had a few hundred thousand customers. Today the country has 120m mobile-phone subscriptions. On the old 1990 figures, the telecoms sector was less than 1% of GDP; it is now almost 9% of GDP. Motion pictures had not shown up at all in the old figures, but the industry’s size is now put at 1.4% of GDP. Nigeria’s number-crunchers have improved the gathering of statistics in other ways. The old GDP figures were based on an estimate of output. The new figures are cross-checked against separate surveys of spending and income. The sample on which the data are based has increased from around 85,000 establishments to 850,000. Only businesses with a fixed location are included: the traders who weave precariously between the traffic are not captured. Even so, many small businesses are now part of the GDP picture.
Of course, Nigerians are no richer than they were on Saturday night. The majority of the country’s 170m people live on less than a dollar a day. What the revised GDP figures show is that its economy is far more than just an oil enclave, exporting crude to pay for imported goods from richer countries. The oil industry’s share of GDP is now put at just 14%, compared with 33% according to the old figures. Manufacturing is much larger than previously thought. Services are booming. It is still a tough place in which to do business. But any company or investor who wants exposure to Africa’s fast-growing markets cannot afford to pass the continent’s largest economy by.
