NBS to Rebase GDP, Inflation Estimates to Capture New Economic Frontiers

*Outcomes may return Nigeria as Africa’s economic powerhouse, lower fiscal deficit to GDP ratio, remarkable decline in tax-to-GDP

James Emejo in Abuja

Statistician-General of the Federation/Chief Executive, National Bureau of Statistics (NBS), Prince Semiu Adeniran, yesterday said the statistical agency had commenced the process for the rebasing of the country’s Gross Domestic Product (GDP) and Consumer Prices Index (CPI) estimates.
The United Nations Statistical Commission recommends that countries rebase their GDP every five years to reflect more updated economic conditions.
The last rebasing exercise was carried out in 2014 and the current exercise will be the second in almost a decade.
Speaking at the opening of the sensitisation workshop for stakeholders on the GDP and CPI Rebasing Exercise, Adeniran said in an era of rapid change and global interconnectedness, the need for accurate and timely data had never been greater.

He said the workshop seeks not only to sensitise the critical stakeholders in the process but also solicit feedback, inputs, and support towards achieving an output that will satisfy the needs of all users and reflect a better picture and understanding of our economy.
The NBS pointed out that these exercises, which are routine statistical practices, need not attract much noise and ceremonies in an ideal situation.
However, he said that given the delays and irregularity in some major statistical activities, this had become a significant part of the country’s data production.
Furthermore, he noted that given the informal nature and structure of the economy, which creates an additional burden for data collection, these exercises have become much more pronounced in statistical production.

He said, “It is for this reason therefore, that when the decision was made to embark on the rebasing exercise, we made it a cardinal objective to ensure inclusivity, collaboration, and partnership throughout the process of these rebasing exercises. “
In his remarks however, former Chief Executive, National Planning, Ode Ojowu, explained that since the last rebasing in 2014, Nigeria had witnessed a structural shift in the field of technology and digital sectors, encompassing the rise and adoption of fintech, e-commerce, and digital service.
He said in agriculture, various agricultural value chains like agribusiness, processing, commodity exchanges, and export activities and in renewable energy had emerged, including the growth in solar and other renewable energy production.
According to him, the skit industry, Nollywood and music production in the entertainment and creative industry had gained international recognition; as well as the growth in urbanization and infrastructural development which had also enhanced the value of real estate among other sectoral shifts that the rebasing of the CPI and GDP will capture.

Ojowu said the sensitization workshop was a testimony to the NBS’s relentless effort to ensure that governments and private sector users of statistics have a variety of reliable and timely data that meet their needs.
He pointed out that rebasing the GDP will alter the values of the current macroeconomic indicators which are used by the government to inform policymaking.
He said, “For example, in 2013, some financial indicators were lower than in the pre-rebased period, with the private sector credit to GDP dropping from 37.2 (before rebasing) to 19.7 per cent (after rebasing) in 2013 and expanding to 27.2 per cent in 2023. Broad money supply declined from 35.8 (before rebasing) to 18.9 per cent of GDP (after rebasing) in 2013 and rose to 34.3 per cent of GDP in 2023.

“From the policy perspective, these ‘overnight’ drops looked like a lower private sector credit expansion and constrained financial system development. Similarly, the 2014 rebased GDP lowered the fiscal deficit as a ratio of GDP by half from 2.1 to 1.1, but within a decade the government has rapidly expanded the fiscal deficit to the current level of 5.6 percent of GDP.
“With the anticipated rise in the size of the GDP when the current rebasing exercise is concluded, we expect a further lower fiscal deficit to GDP ratio. Will the new fiscal deficit-to-GDP ratio be an incentive to the government to ramp up expenditure and slow down the drive to cut down on the high cost of governance?”

According to the former economic adviser to former president Olusegun Obasanjo, “In 2014 the rebased GDP pushed the debt stock-to-GDP ratio down from 23.7 to 12.5 per cent in 2013. But within the decade, the government has again ramped up the ratio to 42.3 percent. At the current ratio of 42.3 per cent, debt service is threatening the fiscal stability of the state. With the anticipated lower debt-to-GDP after rebasing, could the government be tempted to expand its debt closer to the international threshold? What would such a move imply for the fiscal viability of the state? “

“With the previous rebasing of the GDP, the federal government tax revenue to GDP fell from 11.3 percent to 6 percent in 2013. Deploying various tax measures, tax revenue to GDP improved to 10.9 percent of GDP in 2023, which is still among the lowest in the world. With the anticipated rebasing of the GDP, Nigeria’s tax-to-GDP ratio could drop significantly. Will the government be tempted to then raise taxes to ramp up the tax revenue as a percent of the GDP?”

He said, “The piece of advice here is that while we may jubilate over the size of the GDP that could reconfirm our position as the biggest economy on the continent of Africa, we will do well to continue to critically examine the composition of the GDP, its ability to create employment, enhance incomes and generate revenue, sector-by-sector.”