The Nation Newspaper

Tag: Rebasing

  • CBN: N2b spent on rebasing of economy

    CBN: N2b spent on rebasing of economy

    The Federal Government is said to have spent N2billion for the rebasing of the economy last year.

    Mr. Moses Tule, the Director Monetary Policy of the CBN, made this disclosure at the 20th Seminar for Finance Correspondents and Business Editors in Calabar, Cross River State.

    This amount, he said, is different from what the federal government and other agencies contributed to the exercise.

    In spite of these contributions, Tule noted that Nigeria’s economy is living on the illusion of being strong as some sectors considered informal were not captured in the rebasing exercise yet the country brags of being the largest economy in Africa.

    Tule cautioned that “if we do not control our consumption pattern, we will not have a Naira, because you cannot plan on the volatility of the price of crude oil alone. We need change our structure of production to avoid a further forex crisis, and we need to be very careful how we share money from Excess Crude Account (ECA).”

    The CBN director also expressed concern that as the country approaches the end of 2015, there has not been any implementation of capital projects across the country noting that “when a government does not execute capital projects there is no future for the country. Execution of capital projects like hospitals, roads and bridges help to reflect the economy with the jobs they create and the opportunities they provide.”

    Also speaking on the issue of funding statistical exercises, the former director of research of the CBN Mr. Charles Mordi lamented that “government does not spend enough money on statistical information, and has not investing enough in gathering or generating statistical information, which has lead to poor record keeping.”

    said Nigeria’s external reserve and foreign exchange rate crisis is tied to both resource and management problems as “resources are dwindling and management of these is not improving.”

  • GDP rebasing ignites multinationals’ interest

    GDP rebasing ignites multinationals’ interest

    The rebasing of Nigeria’s Gross Domestic Product (GDP) and its subsequent rating as the biggest economy in Africa and the 26th globally has bolstered the confidence of foreign investors in the country,  Managing Director, Cartier Africa, Alessandra Patti, has said.

    Speaking during a visit of Cartier’s management team to Nigeria, Alessandra said the rebasing has shored up the economy profile, as well boos the confidence of foreign investors. He said conglomerates abroad are seeing Nigeria as a new investment destination in Africa, and are ready to invest in it.

    He said the visit was aimed at deepening business in the country and maximising the economy potential in the country.

    He said: ‘’Cartier has huge portfolios in economies abroad.  Being a renowned producer of wristwatches globally, we decided to come to Nigeria to strengthen our partnership with Polo Limited and further explore new opportunities. Since we arrived the country two days ago, we have not seen a district luxury. We are planning to establish them in Nigeria. It is a five-year plan and we hope to make luxury products available to the people.

    “We plan to implement a long-term and sustainable policy in the area of luxury of business. Our plans include getting the rising middle class and top flight managers patronise wrist watches and other luxury products.   Africa is an emerging economy, and with Nigeria’s economy growing at a faster rate, the sky is the limit for anybody that  want to invest in the country.

  • Nigeria’s GDP rebasing and boosting intra-Africa trade

    Nigeria’s GDP rebasing and boosting intra-Africa trade

    Data released by the Nigerian Bureau of Statistics following the recent rebasing of the country’s Gross Domestic Product (GDP) shows that the economy is much more diversified than we had thought or acknowledged. But it was not altogether surprising.

    Efforts in structural transformation of the Nigerian economy have been ongoing for the better part of the last 10 years. The Transformation Agenda of President Goodluck Jonathan has provided additional fillip in the last four years of supporting private sector-led, non-oil sector growth.

    So here we are. And this is what we now know about the Nigerian economy after the rebasing. Agriculture, largely subsistence farming, which used to contribute 35 per cent to the GDP now contributes 22 per cent. The oil and gas sector which used to account for 32 per cent of the GDP now contributes 14 per cent. Those are the headline downward adjustments. The structural adjustment that has taken place shows these sectoral gainers. Manufacturing, which had accounted for approximately 2 per cent of the country’s GDP jumped to 6.8 per cent. From 0.9 per cent, the contribution of the telecommunication sector has expanded to 8.7 per cent. The biggest leap was made in the services sector with a rise in contribution from 29 per cent to 52 per cent.

    Past trade trend

    Data provided by Central Bank of Nigeria (CBN) for the period 1981 – 2010 shows structural rigidity to Nigeria’s external trade. In 1981, crude oil accounted for 96.89 per cent of the country’s exports. All through the 30-year period, there was no noticeable change in the trade pattern; oil export stood at between 95 per cent and 98 per cent of total export merchandise. A 2004 data shows that roughly 60 per cent of non-oil exports from Nigeria consisted of cocoa and rubber – primary products as well.

    In this period, the country’s very narrow export goods base invariably meant that Nigeria was trading with very few countries. Indeed, the United States received about 50 per cent of Nigeria’s oil export. A handful of developing economies, mainly China and Brazil also received Nigerian oil export. Nigeria’s imports are mainly in finished products. Thus, our imports are mainly from the industrialised world, again principally the United States and China, and from few countries in the European Union (EU).

    With this trend, Nigeria was not able to lift intra-Africa trade. Trade within the continent has been very low. At 11 percent of total trade volume by African countries, trade within Africa has been the lowest compared with trade within other regions of the world. An assortment of policy, tariff and non-tariff barriers to intra-Africa trade has been identified. In addition to this, lack of political will to integrate the economies of Africa beyond fruitless policy engineering to aid trade has been cited. However, many African countries have exactly the same economic structure as Nigeria; they export primary goods to the leading industrialised nations while they import finished products from the same countries. For this reason, the most knotty of the issues that constitute barriers to intra-Africa trade is the narrow base of economic activities of scale on the continent. This issue then expresses itself in the narrow external trade channels.

    Likely new trade scenario

    The possibility that Nigeria will now influence a new trade scenario within Africa is established in the far-reaching structural adjustment in our domestic economy, as revealed in the new GDP data. The trade influencers are tied in both the absolute size of the country’s $509.9 billion GDP (which is by a wide margin the biggest in Africa), and the structural diversification that is revealed in the recent GDP rebasing. For example, the Nigerian services sector is now worth $265 billion. With the banks accounting for significant part of this economic value, little wonder that over the past few years, Nigerian banks have been playing big in international trade in banking services in Africa. Like it played out for the South African external sector performance, the widening footprint of Nigerian banks across sub Saharan Africa will pave the way for other sectoral trade in Nigerian goods and services in Africa. Financial market infrastructure is a facilitator of international trade. With the linkages the banks have established with other SSA markets through the operations of their subsidiaries, a key facilitator of Nigeria’s external trade within Africa has gained ground.

    However, a unidirectional trade flow from any African country cannot, mainly because of geopolitical concerns, lift intra-Africa trade. What we now see with the Nigerian services sector’s value of $265 billion is that it will accelerate on foreign participation. While trade flows in the Nigerian services sector will be led by the Western countries because they are more able to tap the Nigerian opportunities, the sheer size of this sector leaves enough head room for other African countries to come in. We also expect the export of services from other African countries into Nigeria. Cross-border trade in research and legal services are immediately contemplated to influence trade flows into Nigeria. Several foreign acquisitions which Nigerian businesses are expected to make in Africa makes this quiet imaginable.

    The Nigerian manufacturing sector, now worth $35 billion and constituting 6.8 per cent of GDP, has also assumed scale. Gradually, we have begun to see the outflow of Nigerian manufactured products into our sub-regional markets. From cement, sacks to biscuits, Nigerian manufactured products are making a showing outside our borders. Now that the sector has become recognised again with its 6.8 per cent contribution to GDP, coupled with the consumption profile of Nigeria’s over 170 million population, Nigeria will evolve to be a major manufacturing hub, attracting investments as well as merchandises from other African countries, thus maintaining desired two-way directional trade flows.

    The big lesson

    The most important structural adjustment to note in the Nigerian economy is that it is now dominated by the private sector. Indeed, further transfer of public sector assets through the ongoing privatisation programme, including in the power sector, will unlock resources, accelerate growth and broaden the economic base. Therefore, policies supporting private sector development and broader economic base are critical to opening the clog in intra-Africa trade pipelines. As we look to leverage Nigeria’s diversified economic base to boost trade within the continent, the example Nigeria has set is worth emulating by other African states.

    Why DFIs are relevant

    Nigerian Export-Import Bank (NEXIM Bank) is the designated trade policy bank of the Federal Government of Nigeria. As a development finance institution, NEXIM Bank has been supporting the process that is leading to the more diversified Nigerian economy. In the last five years, NEXIM Bank has pushed forward, through its communication programme, the policy agenda which accentuated the big sectoral gainers in the structural adjustment that was revealed by the GDP rebasing. Through our “MASS Agenda”, we have presented Manufacturing, Agro-processing, Solid Minerals and Services as the key sectors for economic diversification and job creation. This being the case, the bigger contribution we now see from services and manufacturing, as well as the strong showing of the entertainment industry in the Nigerian GDP basket, is a big plus for this Administration.

    While policy support for economic transformation is very important, it is not enough. Accordingly, NEXIM Bank and other DFIs in the Nigerian space have received institutional reinvigoration and financial backing from the Federal Government so as to be able to effectively intervene in the sectors that made good showing in the GDP data. Moving forward, financial intervention in SME manufacturing, services and the other areas of our focus at NEXIM will be critical to maintaining growth momentum. As we know, lower cost credit, which development banks provide is important for lifting businesses in these sectors to the point where they can afford and therefore attract commercial credit. NEXIM Bank has lifted a number of firms to this position, helping them to realise export potentials.

     

     Orya is Managing Director/CEO, Nigerian Export-Import Bank   

  • GDP rebasing ‘to assist Nigeria attain Vision 20:2020 project’

    GDP rebasing ‘to assist Nigeria attain Vision 20:2020 project’

    The Gross Domestic Product (GDP) rebasing exercise suggests that by mere statistical adjustments and better measurement of Nigeria’s economic activity, the country is on its way to achieving the Vision 20:2020 target, Opeyemi Agbaje, CEO, RTC Advisory Services Limited, has said.

    Agbaje, who spoke  in Lagos, said the rebasing makes Nigeria the 26th largest economy in the world and biggest economy on the continent.

    Speaking on  Nigeria’s Economy in first quarter 2014: Issues and Outlook, he said GDP rebasing does not imply an increase in national income and productivity. He said GDP is not a measurement of income, but of economic output and production within an economy.

    “GDP rebasing doesn’t alter our poor performance in terms of poverty, unemployment and inequality-GDP rebasing doesn’t change the material conditions of individuals, homes and firms within the economy,” he said.

    Agabje said what GDP rebasing does is give Nigeria a more accurate picture of the current state of our economy and presents a more credible and contemporary report of the state of sectors and overall activity within the economy.

    He said: “Nigeria’s GDP rebasing clarifies some previously unresolved incongruities in our economy, like why the large global telecommunications companies and sector analysts under-estimated the potential depth and size of the sector pre-digital mobile license auction in 2001.”

    The exercise, he said, also clarifies issues relating to why per capita GDP appeared somewhat larger than previously thought. He added that i is a commonsense measure consistent with global best practice that simply updates a country’s assumptions and templates for measuring our level of economic output.

    “Continuing to use a base year of 1990 to quantify output in Nigeria contrary to global convention of rebasing at least every five years would have been irresponsible and incompetent. On the other hand, no one earns any plaudits for merely re-basing GDP just like no one receives commendations for using a time piece that correctly tells the time. We simply now know the reality about the size of our economy, which is a good thing,” he said.

    On the benefits of the exercise, Agbaje said Nigeria would now have better economic data for policy analysis and planning. Also,  the size and global ranking of Nigeria’s GDP means it has acquired increased strategic stakes within the context of the global economy. “The case for Nigeria being a BRINCS (Brazil, Russia, India, NIGERIA, China, South Africa) economy is probably compelling in the light of us becoming a $510 billion economy.

  • Rebasing of Nigeria’s GDP

    After more than two decades, the announcement of $507 billion GDP, almost an 80 percent rise on Nigeria’s last GDP should not come as a surprise. Imagine what it could have been if this country were well run and if this country had patriotic and knowledgeable leaders since independence. Imagine what it would have been if agriculture still had the pride of place and if we were still the largest exporter of palm produce, peanuts, gum Arabic and substantial amount of cotton and cocoa as well as rubber and hard wood timber. Imagine what it would have been if we still exported tin and columbine and if we were tapping the huge deposits of minerals like gold, uranium, bauxite, coal, bitumen and if we can feed ourselves from the vast arable land of our country. Imagine if we had peace and security at home and if Boko Haram did not exist and if we did not have the constant killing of farmers by herdsmen in many parts of Nigeria, we would have had a GDP substantially more than what was declared.

    Unlike many critics I do not see anything wrong in declaring that Nigeria has the biggest economy in Africa. Ordinarily, this should not be news at all; it should be the normal expectation of a country of 170 million people. What these figures do not mean is that we are a rich people because we are not.

    Sixty percent of Nigerians or more still live on one dollar a day. What these figures actually show is what lies in the future for us. If we get our acts right, Nigeria should be comparing itself with Brazil rather than with puny African countries. We have always known that in Africa, Nigeria, South Africa and Egypt belong in the same league. Although until now our economy was rated third but it is good news that we are number one. Of course in per capital GDP we are way down the ladder. If we get our acts together, we can only move forward. Imagine if we had 50,000 mega-watts of electricity supplied to Nigerian homes and industries we would not only have our youths in gainful employment, there will also be peace and security in our country. The cost and availability of energy is a great factor in industrialisation. If we had sufficient energy to industrialise our country and with a huge market of 170 million people internally and almost the same captive market in West Africa, we will not only be prosperous but also live in a co-prosperity area in West Africa.

    My hope is that rather than our leaders celebrating this rebased GDP it should be a clarion call for action. We need to open this economy much wider to foreign direct investment than we have done previously. The stupendous growth of the Chinese economy in recent times is due primarily to investment of overseas Chinese money and western capitalist investment. Admittedly these investments are predicated on excellent Chinese manpower and skill but without the opening up of China by Den Xioping, China would still have remained the back waters of the world as it was several generations ago but today China rivals the US economy and may yet catch up and surpass the US economy by year 2020s. Imagine if we did not have the level of corruption we have in this country and if we have the legal and governance regime that are attractive to foreign and domestic investments, the sky will be the limit for our country because we have huge agricultural land spread across equatorial, tropical, savannah and sahel regions of Africa. This geographical diversity makes us able to grow several types of crops both for domestic use and for export. We have a lot of work to do in Nigeria and if this country were working, we would not need all the time we spend on constitution making and politicking rather than on development. If most of our people were productively engaged, it will not matter which ethnic group is in or out of power because every region of the country will be contributing to the national purse from areas where they have comparative advantages. It is because we are not working that we have time to exaggerate the little differences in our languages and culture. Let us take this revelation of our GDP as a first step on a long journey to development. We are still a very poor country in spite of our rich endowments; we need to add value to our primary produce including the hydrocarbons that has put us on a high global pedestal. Is it not a shame that a country that has been exporting crude oil since 1956 and that has four refineries built is still importing refined petroleum products because of our inability to maintain the refineries? Instead of selling these refineries to whoever wants to buy them even at give away prices, we continue to corruptly make budgetary provisions for their maintenance when we know that such provisions are meant to fill the pockets of some of our rapacious leaders because the refineries never work and when they work, they only produce at minimal level. What amazes many commentators about Nigeria is the inability of our leaders to see that if the right kind of policies are adopted and best practices are inculcated into our system of governance, Nigeria will be in a win-win situation because the potentialities of this country are so great and enormous that all we need to actualise them is to find that leader or group of leaders who will galvanise them both material and human into productive processes. Let it be said that many patriotic Nigerians see this rebasing of our GDP as a pointer to the trajectory of development Nigeria must take. It is not the end; in fact it is the beginning. It is not something the current leadership should celebrate because they did not make it. It is a challenge to all of us. It is a revelation that we belong to a country that has a destiny which though not manifest can be attained if all work together for the good of all. To get to our destination, we will need friends in the international community as well as on the continent of Africa. We will need to harness our resources, we will sometimes need to throw our pride away and listen to our trading partners.

    Some leaders of South Africa have justly remarked about that country’s contribution to the rise of our GDP. We are all witnesses to South African investment in our retail trade, telecommunication and banking industries. That is the truth and we can also turn back and tell the South Africans that we also contributed to their political liberation and that is the truth also. We can still draw more support from South Africa with its vast pool of technological know-how and investible capital. South Africa has a more sophisticated economy and banking system and we can draw support from them. We also need to open up to Asia particularly India and China because of their vast pool of foreign reserves which we will need to open up our infrastructure which right now is at the primitive stage of development. We need to build railways to crisscross our country to move goods and people across the country. We must of course never forget our traditional trading partners in the west with which we have had more than a century and a half of economic collaboration. In other words, continuing rise in our GDP which hopefully will be rebased normally every five years should be a collaborative effort in which we will enlist the support of international community and graft this support on our own domestic readiness and ability to work and to resolve whatever internal political contradictions inhibiting progress in Nigeria.

    In conclusion, any progress recorded in any aspect of Nigeria’s life is worth-celebrating because we have very little to celebrate. Therefore becoming the biggest economy in Africa is worth celebrating but we must not get drunk on it because this rebased GDP is just the end of the beginning of an end which will not only see our economy grow, but also our people lifted from the morass of poverty which the insensitive policies and poor leadership of the past and present have condemned us to.

  • Rebasing highlights Nigeria’s inequalities

    Some time around the time of independence from Britain in 1960, Nigeria began to be referred to as the Giant of Africa, a promise that soon fizzled out in the wake of a civil war and a succession of military dictatorships.

    Today Nigeria is once more hailing itself the continent’s new colossus. An update of its gross domestic product estimates places it as Africa’s biggest economy, overtaking Johnny-come-lately giant South Africa. The country has become a favourite among international investors including Temasek, Singapore’s state-owned investment company, and Atlas Mara, a venture of former Barclays chief executive Bob Diamond.

    Much attention has been paid to the restructuring of the national economy revealed when the government nearly doubled estimates for GDP. The services sector is now thought to contribute half of GDP while agriculture and oil and gas have fallen significantly. Nollywood, the homegrown film industry, has finally been officially acknowledged. Manufacturing has also increased.

    But this is only part of the story. Differences in poverty and unemployment rates across the country’s 36 states are remarkable. Ninety per cent of the total value of cash transactions in Nigeria are accounted for by only seven states, according to the central bank. Ali Mohammed Pate, a former health minister, points out that there is a 14-year gap between life expectancy across the country’s states. Average poverty rates range from 30 per cent in the wealthier south west, where cities such as Lagos are located, to 60 per cent in the impoverished north east.

    When the rebasing is interpreted on a state-by-state basis, the disturbing gap between the country’s frontline states and its laggards – of which there are several – will become even more stark.

    Consider Lagos, Nigeria’s biggest state economy and the hub of the banking and telecommunications industries, home to the country’s biggest port complex, and also its most populated state. Renaissance Capital, the investment bank, estimated that it contributed about 12 per cent of Nigeria’s GDP between 2009 and 2011. That statistic may have changed as a result of the rebasing exercise. But if not, it implies that the Lagos economy is worth $61bn. That is one-and-half times Kenya’s output, and larger than all but a handful of African countries.

    In Kano, the commercial hub of northern Nigeria built around agriculture and manufacturing, rebasing indicates that the state economy rivals Ghana’s. This might make investors rethink the widespread view of the north as nothing more than a benighted haven for the Islamist terrorists of Boko Haram, blamed for this week’s deadly bomb attack in Abuja and the kidnap of more than 100 girls from a school in Borno state.

    But securing a perch as Africa’s largest economy means little to the tens of millions struggling with routine power cuts, recurring fuel shortages, persistent unemployment, and rising inequality. The country’s Gini coefficient, a measure of income inequality, rose from 0.429 in 2004 to 0.447 in 2010. In GDP terms Nigeria may have shoved South Africa to second place, but the real achievement will lie in jumping up 32 places needed to meet South Africa on the UN Human Development Index.

    The new GDP figures shine a spotlight on the alarming gap between Nigeria’s potential and its reality. It is, for example, a glaring anomaly that the world’s 26th largest economy has one of the lowest levels of electricity consumption per capita, well below the African average, and occupies 147th position on the World Bank’s Ease of Doing Business Index for 2014 – nine spots down from 2013. The percentage of the total population living below the poverty line is far higher than in the major emerging economies. Fewer than 10 per cent of Nigerians have any form of health insurance.

    Nigeria needs to focus less on economic abstractions and more on improving the lives of ordinary citizens. Even if government claims that 1.6m jobs were created last year prove accurate – youth groups are not convinced, and are demanding evidence – this would hardly make a dent on an unemployment rate approaching 24 per cent. Forty thousand households can now claim conditional cash benefits, but this too is a drop in the ocean.

    If Nigeria is to become a real economic giant, it needs to stand on its own two feet. At the moment, this colossus is shuffling along on feet of clay.

     

    • The writer, a Lagos-based journalist contributed the piece to The Financial Times

  • GDP rebasing will attract investors to Nigeria, says World Bank chief economist

    GDP rebasing will attract investors to Nigeria, says World Bank chief economist

    Mr. Francisco Ferreira, World Bank Chief Economist, African region, said the rebasing of Nigerian economy would attract more investors into the country. He made the remark in an interview with the News Agency of Nigeria (NAN) in Washington on the sideline of the Spring Meeting of the International Monetary Fund and the World Bank.

    It would be recalled that the rebasing of Nigeria’s nominal Gross Domestic Product (GDP) placed it at 509.9 billion dollars in 2013 from initial 285.56 billion dollars. The rebasing then placed the country as the biggest economy in Africa, ahead of South Africa. The World Bank chief economist then said “Nigeria’s GDP, which placed the country as Africa’s largest economy, has exposed its investment potential to the world.’’ He added that the rebasing had exposed sectors where Nigeria’s economy recorded dynamic growth, stressing that such areas would attract more investment inflows. He noted that apart from attracting investors, the rebasing would also expose those areas of the economy that had not witnessed astronomical growth.

    Ferreira called for aggressive regional integration drive to drastically reduce cost among African countries. He said that “a situation whereby different countries in the region pursue immigration and trade policies that hinder trade and movement is expensive and wasteful.” Earlier in his presentation on “Sustaining Growth in Africa: State of the Africa Nation’’, the World Bank official said Africa had recorded about 20 years of resilient growth with per capita rates hovering around 2.4 per cent in the last decade. According to him, growth is investment-driven rather than consumption everywhere on the continent. He noted that fast-growing non-resource rich economies generally have solid balance of payment profiles, pointing out however, that there was no room for complacency. He added that growth was uneven across countries, adding that what he described as “growth spurt” was not recorded in 22 countries over the 1995-2012 period.

    “Among the 22 fast growers are oil producing countries, including Nigeria, Equatorial Guinea, Angola, Sudan and Chad, while non-oil resource nations in the fast growers scale are Liberia, Mozambique, Tanzania, Botswana, Ghana, Namibia, Sierra Leone and Zambia. In the category of non-resource rich fast growers are Mauritius, Cape Verde, Uganda, Burkina Faso, Malawi, Rwanda, Lesotho, Ethiopia and Central African Republic.”

  • Rebasing rhetoric

    Rebasing rhetoric

    Rebasing rhetoric

    TWENTY-three years after, Nigeria has finally revised its Gross Domestic Product (GDP), the total value of its goods and services. The results have been startling: the country’s GDP nearly doubled, rising 89 per cent from U.S. $283 billion to $510 billion, making it Africa’s largest economy and 26th largest in the world.
    For a country that has long touted itself as the “Giant of Africa”, rebasing appears to confirm its self-perception and justify its sense of its place in the world. Virtually overnight, Nigeria has put itself at the vanguard of the exciting new developments that characterise the world’s emerging economies. Economic sectors like telecommunications, information technology and entertainment have been incorporated into GDP, showing that the economy is in fact far more diversified than had hitherto been acknowledged.
    The jump in nominal GDP brings with it an improvement in significant credit ratios, such as that of debt-to-GDP and interest payments to GDP, both of which are well within positive parameters. The country’s GDP per capita has risen to $2,689, higher than that of the Philippines and close to that of Morocco.
    In spite of the good news Nigeria’s GDP rebasing appears to have brought, it does seem that it raises more questions than answers. There is the issue of why a five-yearly exercise took more than 20 years to carry out. Given the Jonathan administration’s growing desperation to present a picture of economic growth ahead of the 2015 general elections, it is to be wondered whether the timing of the rebasing is more than mere coincidence. The current Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, was finance minister between 2003 and 2006; why did she not make a case for GDP rebasing then?
    There is also the point that GDP rebasing does not alter fundamental economic facts. Nigeria may now be Africa’s largest economy, but it still contends with an enormous infrastructural deficit, especially in the areas of power, roads, health and education. At about the same time that Nigeria’s new economic standing was announced, the World Bank declared that Nigeria, India and China had the greatest number of poor people in the world; the proportion for Nigeria is greater, given that the other two nations each have populations in excess of one billion people.
    Rebasing has, in some cases, negatively affected important indicators of economic well-being: fiscal revenues relative to GDP have fallen from 25 per cent to 14 per cent, on a par with Bangladesh and Guatemala; foreign exchange reserves relative to GDP are now much smaller. The ratio of interest payments to revenues remains unchanged, as is government’s revenue-generation capacity.
    Nor does the GDP revision do anything to improve the negative attitudes that are the bane of the country. Far from lessening corruption and greed, it actually conveys the impression that the so-called national cake is even bigger than hitherto imagined, and therefore that there is more to share: this appears to be the thinking of the House of Representatives which last week demanded that the quarterly allowance of each member be increased to N45 million from the current N27 million. The country is still grappling with a host of corruption scandals in oil subsidies, pensions, duty waivers, employment recruitment and revenue remittances.
    The best way to approach the rebasing of Nigeria’s GDP is to see it as an opportunity to embark on a new beginning. It does not only demonstrate how big the country actually is, but how great its potential is, and it offers indications of the ways in which that potential can be transformed into reality. If Nigeria can become a half-trillion dollar economy with all the infrastructural challenges it is facing, how much more would it achieve if the most pressing issues were properly dealt with? That is what government and the citizenry should focus upon.

  • Rebasing our pure-water economy

    Our dear Dr. Ngozi Okonjo-Iweala has disappointed some of us so sorely that we come to tears each time we contemplate the persistent regress of our dear country into a non-economic entity. And in our private discussions we can’t stop wondering whatever happened to Ngozi? Could she have been weighed down by the oversized portfolios of Finance Minister and Coordinating Minister for the Economy? For sure, the Jonathan administration is less luminescent than Olusegun Obasanjo’s but… We dare say that if she scored a pass mark in her first coming under President Obasanjo’s regime, this time she’s mixed up the script entirely and cannot put a handle on neither the economy nor our finances.

    This so-called economy is in dire need of radical restructure to get the damaged ship back on sail; but it’s either that she cannot see it or she prefers to roll with the punches. For instance, the annual budget never comes on time anymore (2014 budget just passed after first quarter!); she has been unable to whip down recurrent expenditure which still gulps over 75 percent of total budget; industries continue to atrophy; the huge agric sector has become mere statistical confabulations by a smooth-talking agric minister and both power and oil and gas sectors, which ought to heave the turbines of the economy, are in perpetual recession under people without a vision for the nation. We thus have an economy which is prostrate and gasping for air.

    It is from this sad milieu that we were gleefully informed that Nigeria’ economy is now the biggest in Africa and ranks 26th globally. One could not help having a good laugh at this farce; we are a people without shame, a people intent on achieving greatness through the back door. We are told that by a magical re-jigging of our Gross Domestic Product (GDP) figures, we have suddenly become the big, bad, wolf; the economic tiger of Africa! To think that we could not sustain a vision 20-20-20- we willingly formulated: the so-called vision died a natural death because we are so unserious; the former Planning Minister had to pronounce the vision dead.

    For an economy that can at best be described as pure-water economy, not necessarily because it is terribly small, but because it is impure, embroiled in the mire, disheveled and uncoordinated. One quick indication that Nigeria does not have a properly structured economy is to check the back pages of The Economist, which publishes economic and financial indicators of major economies weekly. The only African countries worthy of mention have been Egypt and South Africa. The economic indices showcased by this London journal include: GDP, industrial production, unemployment rate, current account balance, interest rates, etc.

    Were we a serious people who appreciate our dire situation and who are hard at work seeking solution, we would have further down-graded our GDP to show the magnitude of our wretchedness. Here are some of the reasons why a downward review would have been more appropriate now:

    ONE: No defined economic agenda: The present government is merely tumbling along; it has no clearly defined economic vision or goal. All it does largely is collect rent from oil, shares it out like the national cake we call it. Most of it is eventually frittered away. In addition, the third tier of our polity, the LGAs, is near-moribund, thus a swathe of the land, more than half of the people and a chunk of the economy is left in the lurch. Who gives a damn; where then is the economy?

    TWO: No institutions: most of our social, political and economic institutions are in shambles. They are lacking in the capacity to steady the ship of state and make it sail smoothly. It is not possible to organise an economy to a world standard where these institutions have failed.

    THREE: Statistics, what statistics: The National Bureau of Statistics simply lacks the capacity to produce any valid and reliable data. That explains why it couldn’t do routine rebasing of GDP for 24 years.

    FOUR: No economic base: It is shocking that our economic managers deigned to compare Nigeria’s economy with South Africa’s. Apart from our abundance of crude oil and gas which we largely dispel into the seas, so to speak and expel into the atmosphere, we do not have an added-value production base; we are still highly import dependent including for our main food staple, rice. South Africa on the other hand is a massive industrial and agricultural entity that has proven that Africa can be first world. It is mischievous and in bad taste to compare these two economies by any indices whatsoever.

    FIVE: Wasting population: If we seek the harsh truth, Nigeria is but a mass of wasting population – comprising a horde of vibrant but impoverished youths, ill-educated, jobless and angry. What really have we done to earn the 26th position in the world? In the comity of nations, we probably have the worst power situation, we have the worse infrastructure situation, we have among the most endemic corruption and we have about the worst poverty and life expectancy indices.

    SIX: Bleak future: While the South African may have planned 20 years ahead, there are no socio-economic indices around here to bring a smile on the face of the Nigerian, yet we are told we have a big economy by our leaders. What this means is that they do not understand the magnitude of our troubles. What this means again is that we face a bleak future with no redemption in sight because nobody is working to change our situation. They fiddle and revel while our country dies.

    LAST MUG: Take heed Borno State Govt

    It was a beautiful and colourful photograph as published in the newspapers last week. Borno State Governor Kashim Shettima posed with a bevy of young ladies resplendent in their spotted orange hijab over dark flowing gowns. The young, beautiful Borno lasses have won the state’s scholarship to study medicine at the University of Khartoum, Sudan. Great idea (if you don’t mind that Sudan is strife-stricken). What troubles Expresso is that all the young ladies, by their attire, are all Muslims. Borno is not an all-Muslim State is it? Or are the non-Muslims in Borno second class citizens? Seemingly small matter like this goes a long way to brew rancor and disaffection.

    NOTE: Enquiries about the book, Blood on the Niger, by Emma Okocha may be directed to Toyin on 08065289740 or Deji on 08060205914

  • GDP rebasing meaningless, says LCCI

    GDP rebasing meaningless, says LCCI

    The Lagos Chamber of Commerce and Industry (LCCI) has said rebasing Nigeria’s Gross Domestic Product (GDP) is a fruitless exercise that has failed to translate to economic prosperity to the people.

    Its President, Alhaji Remi Bello, said yesterday that rebasing has not done any good to the common man on the streets, adding that it is not likely to going to do so in the future. Rather, he said the exercise has thrown up issues of inequality, weak tax base, inadequate social spending, inadequate infrastructure spending, low private sector credit and low market capitalisation.

    He recalled that the last rebasing was done in 1990, warning that the latest effort should not be seen as an evidence of growth because the character of the economy has changed from what it was in 1990 in sectors such as communications technology, agriculture, and the manufacturing.

    He said: “Nigeria with the rebased GDP is now ranked number 26 with regard to the size of the economy in 2013 but ranked 147 in its ease of Doing Business report of the World Bank out of the 189 countries profiled. Even Sierra Leon and Liberia had better ranking. In the same vein, our ranking in the UNDP Human Development Index is 153, out of 210 countries. This is a graphic illustration of the disconnect between the growth and development; between the growth and quality of investment climate.”

    Bello took a swipe on the debt profile of the country which stood at $48 billion in December last year out of which domestic debt was $40 billion.

    He said: “The use of the global benchmark of Debt to GDP ratio may not be applicable to the Nigerian economy because a major component of the GDP, which is agriculture, is not a major revenue generating activity. If we discount the agriculture component of the GDP in the ratio analysis, the ration will be much higher than the threshold. The rebased GDP should not be an excuse to increase borrowing.”