Nigeria’s GDP To Include Illegal And Hidden Activities In Economic Calculations – NBS.
January 10, 2025 – In a move that reshapes how economic activity is measured, the National Bureau of Statistics (NBS) announced that activities previously outside the formal economy, including prostitution and drug peddling, will now contribute to Nigeria’s Gross Domestic Product (GDP).
This revelation came during a sensitisation workshop on GDP and Consumer Price Index (CPI) rebasing, which was co-hosted with the Nigerian Economic Summit Group (NESG). The workshop aimed to discuss the recalibration of economic indicators to reflect current realities more accurately.
According to a report by Vanguard, the NBS has chosen 2019 as the new base year for GDP calculations due to the relative economic stability during that period, before disruptions from the global health crisis and subsequent policy changes. The year 2024 has been set as the new base year for inflation computation.
Dr. Baba Madu, the Head of National Accounts at NBS, elucidated on the decision to include illegal and hidden activities in GDP computations. “Illegal activities will align with the national best practices under the System of National Accounts, SNA 2008,” he explained. He pointed out that in some countries, these activities significantly drive the economy, despite their illegal status in Nigeria due to lack of legal support.
“The SNA does not preclude these activities; rather, our challenge lies in legal recognition and data collection,” Dr. Madu added. This includes the hidden economy where individuals might underreport their income or engage in unregistered trade like selling contraband alongside legal goods.
The rebased GDP will also incorporate emerging sectors such as the digital economy, pension fund administration, activities of the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), modular refineries, and domestic households employing labour.
This recalibration aims to provide a more comprehensive picture of Nigeria’s economic landscape, reflecting not only formal economic activities but also those in the shadows. The inclusion of these sectors is expected to increase the reported size of the economy, potentially improving key metrics like the debt-to-GDP ratio and per capita income after rebasing.
The NBS’s initiative to include such activities in economic measures is part of a broader effort to make Nigeria’s economic data more reflective of actual economic activities, thereby aiding in more informed policy-making, strategic planning, and governance.
This development has sparked discussions among economists, policymakers, and the public about the implications for national statistics and the socio-economic policies that might follow. However, it also raises questions about the methodology of capturing data from such sources and the legal and moral implications of officially acknowledging these activities.
