Monday, 7 April 2014

Rebasing the Economy: Young Nigerians React

 “Nigeria has moved to be the largest economy by GDP size in Africa and has moved to be the 26th largest economy in the world," finance minister and coordinating minister of the economy, Ngozi Okonjo-Iweala said. According to the newly-released data rebasing the country's gross domestic product (GDP), Nigerian economy grew to $453 billion in 2012, instead of $264 billion as measured by the World Bank for that year, overtaking South Africa's economy which the World Bank put at $384 billion in 2012.

 This news elicited mixed reactions from citizens across the country ranging from the congratulatory chants to the most cynical remarks exuding disbelief and rage considering the rising poverty and unemployment levels in Nigeria that sharply contrast with the super-bright statistical data. Now trending on Twitter and across social media sites is #RebasingTheEconomy and tons of similar hashtags created by both the fascinated and disenchanted commentators.

Consistent with our dedicated work of using the social media to promote citizen engagement in democratic governance and strategically crowd-source public opinion on critical social and economic policies of government, Spaces for Change’s Discussion Room has since Sunday evening, witnessed an unprecedented traffic of commentary, intense debates and web postings interrogating the accuracy of the latest data. Is this another game of numbers or the ripe time to celebrate real economic progress?

We happily present to you, excerpts from the continuing conversations:

Olusegun Mark Oludoyi GDP rebasing is GDP re-calculation. Just a GDP update. Nothing reflective or representative of the realities of the standard of living of the average Nigerian. The GDP has only grown basically because it has the space to do so (the population ensures that) and with the resilience of Nigerians. It is not as a result of any government intervention.

What exactly is the government doing to halt the growing rate of poverty in the land? 60% poverty rate is sure not commensurate with the "largest economy" toga "Despite its roaring growth of recent years and now a bigger GDP, Aljazeera recently reported that Nigeria still trails behind South Africa in basic infrastructure - power and roads - necessary to lift people out of poverty"

Victoria Ibezim-Ohaeri Another paper progress! The rebased data appears to be NOI's veiled response to Standard’s & Poor's recent low rating of the Nigerian economy. All that they did was to re-base Nigeria's GDP by changing the reference dates. That's all. No major economic intervention. No change in the quantum of deliverables. Nothing except paperwork. Youth unemployment rate is still towering above 50%. NOI herself admitted that 1.8 million youth enter the labour market annually. I wish the energy dissipated on the weekly generation of paper statistics would be channeled towards job-creation ventures.

The issue is that the economic data manufactured everyday does NOT match the reality on ground. These paper statistics seem to be designed only for western audiences. These shiny statistics sharply contrast with the rising poverty levels, soaring unemployment and insecurity ravaging the country.

Awazie Chinomnso NOI recognized this much while announcing these figures. This increase simply reflects our increased population, that's the point of the 'Gross' in front.

Ayodele Emmanuel Poverty is the worst form of violence. Any government that can only connect with the people via paper statistic lacks street credibility.

Olasunkanmi Olapeju With the volume of foreign direct investments (FDIs) we have recorded in the telecom and IT sector, oil and gas, educational sector, and other industries in the past decade, only rabid and unreasonable cynicism will explain why one should despise the data output of the economic re-basing as exaggerated, provided one is able to fathom the scope of the concept of GDP as a mere value of the quantum of economic activities within a country. As a matter of fact, I feel $510 billion could be an undervaluation with the volume of informal trading activities likely not to be officially recognized.

We should get it straight, aggregate value of production and services, which is GDP, is not tantamount to income per capita. This is where countries like South Africa have notch above us, as they would equally have above countries like India with huge GDPs and huge population.

However, I strongly think the GDP improvement is pointedly non-inclusive. It is only when it is translated to development that it becomes sustainable. Official graft, which had taken enough toll on us, explains this lacuna between our growth and development, why growth is not commensurately trickling down to the population at its increment rate, and I think we should deal with it head on, while not losing sight of other clues towards improving our productivity.

For instance, true federalism can help enhance our GDP. The idea is that with federalism, economic diversification will be inevitable. Regional economies will be galvanized to optimally unleash their inherent potentials, and the corollary will be increased economic activities in the direction of more FDIs, increased engagements of local labour, and an ultimate booming of national output.

Having said that, I think the new data offers the citizenry the opportunity to raise the bar of expectations of deliverables from government. For government, the new mantra should be 'translating growth to tangible development'.

Mimi Hotcrush Tyokyaa I watched the minister of labour on TV last week boldly saying that FG created at least 2.6million jobs last year. What I'm still asking is that were these said jobs given to ghosts?

Katch Ononuju Rebasing is auditing the gains of economic expansion.

AkpoBari Celestine Voodoo economic practitioners with their fake analysis

Ify Okoye They are just trying to score cheap political/election point. Concentrate on what puts food on the table of the masses. If you like be the biggest economy of the world, no foreigner will want to invest in a place where they have to spend more to do business because of the absence of infrastructures that makes life easier. The insurance these foreigners pay just to come do business in Nigeria is very high because it’s considered a very risky country to do business.

Celebrate it for all I care, but Nigerians can’t be bamboozled. All they want to have is light, fuel, security, food, jobs, houses, access to finance to do business and everything that makes life worth living.

Funmi Balogun I don’t know when economists will start basing progress based on the 10million poor people rather than the progress of top 1,000 people! Most investments to Nigeria are in the oil sector. How many people does the oil sector employ except fund the corrupt lifestyles of our leaders? What about investments in agriculture? In financing small businesses? In mortgages?  In education? We are the only country without electricity and we say we are 'No 1 in Africa'!

Ekundayo Awe Paper progress. That's the right depiction. We are dealing with practical issues for the common man. How is this ameliorated by theoretical jargon (which rebasing represents)?

Paul Odinka Agreed most people don't have jobs, but those figures from the re-basing says that Nigeria is a productive economy since this is a measure of productivity and these work were done by Nigerians and not spirits. What we need to see is the desired impact on job creation and standard of living.

One of the essences of the GDP rebasing is simply for branding. US and China are the biggest economies in the world, and this alone puts them in the minds of investors. That Nigeria is the biggest economy in Africa rings a bell. The rebasing may not directly put money in our pockets in the short term, but it can do that in the long term by attracting investors who would eventually create jobs. The size of any economy in terms of GDP simply tells any investor the capacity of that economy to absorb different goods and services at any point in time. These are part of the things discussed in board rooms when the fortune 500 companies take decisions on the countries to invest. With this new status, Nigeria has become number one investment destination in Africa.

 Most of the infrastructural deficit we are always talking about, be it roads, water, power, education, health etc. can be taken care of by private investors who are only looking for people to patronise their goods and services. It was a big surprise to a lot of international investors how MTN blossomed when they came to Nigeria. This was because they did not know the size of Nigeria economy, and MTN was handsomely rewarded later; even Vodacom as at then said they would not touch Nigeria with a long spoon which they later regretted when they saw how MTN ripped hugely from the risk they took on Nigeria.

So like I said earlier, the rebasing would not immediately put money in our pockets; but it could help to brand our huge market potentials to the world; which could guide investors when they take decisions on the countries to invest their money. MTN, DSTV, Dangote, GLO, etc are all making it because of the huge market potential that Nigeria presents and the rebasing is only there to confirm it for people that need figures to take business decisions.

I am not an economist by profession, but as someone who did quite a bit of economics in secondary school, I will not pretend that the current re-basing of our economy to its current position as Number 1 in Africa (ahead of South Africa and Egypt), and number 26 on the globe (6 positions away from the coveted G20), is not good news. In fact, it’s a positive development. But as someone who has lived in Nigeria, visits relatively frequently, and has keenly followed her socio-economic development, such feelings are bound to become mixed.

The main denominator of the most recent rebasing exercise which catapulted our economy to the top spot is the services sector (e.g Telecommunications, Banking, Transport) which accounted for 51% of our GDP. This is very interesting. If we made Africa's number 1 (and global number 26) with a virtually non-existent manufacturing sector (we import virtually everything), an informal, mostly non-mechanised agricultural sector, and an in-efficient electricity generating infrastructure, imagine where we would be if these other sectors were functioning even at half their full capacity. And I mention these sectors not because they are only what Nigeria has to offer, but simply because they fit into simple comparative cost advantage economics.

1.   The Northern part of Nigeria, with its fertile lands can feed the West African sub-region. With mechanised farming, farm produce can be doubled or even tripled with surplus for export.
2.   The Eastern part, with a people very creative in manufacturing, can churn out products which if well nurtured, can become Global brands. The most obvious example is the wonder Innoson vehicles, based in Nnewi, Anambra state is doing in this regard.
3.   The Niger-Delta, can churn out the Continent's most advanced petro-chemical industries seen for miles around with a lot of petroleum based products (which by the way are numerous). We have no excuse to be importing petrol when we are an oil producing nation.
4.   The West, which obviously accounts for a good chunk of the services sector, can still improve on this by creating a further enabling environment. The West also has a good comparative advantage in agriculture, as witnessed in the economic miracle of cocoa farming decades ago.

Of course, we all know about the trickle-down effect. That is about the most important indicator of citizen well-being. The Nigerian economy has failed woefully in this regard. In fact, a lot of people would rather our economy was smaller, but more effective at trickling down benefits to the masses. It doesn't matter how big an economy is, if there is still wide-spread poverty, the aim is defeated. However, the potential which a large economy portends still gives hope. We have no excuse to keep failing. This slumbering giant has no other choice but to wake up.

Ekundayo Awe Whatever the objectives of rebasing are or are not should not be the priority for a serious government that has infrastructural and developmental challenges like ours. The conversation should be more about food on the table for the common man. This rebasing thing is a distraction and a propaganda tool to avoid the real discussions that need to take place.

Saya-Braide Ebi What brings food on the table of the common man? Economic activities. What is GDP? Economic base. The base on which the economic activities that will put food on the table of the common man is getting larger.

Charles Chidi Anyaso The GDP rebasing soothes the ears of Washington Consensus and other neoliberal ideologues.  The data could be correct; but when you analyze it within the proper context, it pales into nothing as far as an average Nigerian is concerned.

Now for a country of 160 million people with such GDP compared with South African with 1/3 of our population or less, it becomes clearer why our human development index is much more lower. Again, they should come up with our in-come per capita and that of South Africa. Then the debate would move from superficiality to profound.

Furthermore, we equally need the data regarding the proportion of this GDP that has been cornered by top 1% of our population vis-à-vis those of the middles class and those on the bottom rung of the ladder, you see why we have all those tragedies of humanity on our streets.
They know the truth and as such should summon the political will to place our country on the path of prosperity. God has given us all we need. It is in our hands to better ourselves.

Paul Odinka Even in US and China, the two biggest economies in the world, we still have people that are very poor. But the intention would always be to carry along a vast number of the population to cross the poverty line. That of China took more than three decades to manifest. What we are witnessing in Nigeria in terms of poverty did not start today and even a magician cannot solve the problem in less than a decade. It is a gradual progression. The most important thing is that we are moving in the right direction albeit the hardship being experienced the moment. We shall be there; after all, Rome was not built in a day.

Cecil Chukwuma Anopueme One thing Nigerian don't understand in Marketing is Re-Branding. We cannot market ourselves to the world without rebranding our country. Even Ghana did it to their currency and investors rushed there.

Ekundayo Awe It is not about politics and it is not about slogans. Corruption is a big reality in Nigeria and any developmental initiative that wants to put that in the back-burner is likely to fail
Rebranding like window-dressing, does not change your quality. If you dress up a poor man to act rich, it is only an act... the truth will always be revealed eventually.

Olusegun Mark Oludoyi I actually thought we all knew Nigeria's growing population will naturally spur economic growth? If we could just ditch politics to see clearly that our GPD/capita is $2600 while S'Africa (with 1/3 of our population) has a GDP/capita of $7,900, that SA's population below poverty line equals 31% and Nigeria's equals 70%. These are some of the things that should concern Nigerians..not some correction of GDP figure.

Nzeribe Enzo Uzordimma It is hard to see how Nigeria has managed such economic growth with barely 4,000MW of electricity compared to Denmark’s 30,000MW. Economies like Singapore, Switzerland and United Arab Emirates will suddenly be left in Nigeria’s wake in terms of size. All of this is coming on the back of Professor Morten Jerven’s controversial 2013 book ‘Poor Numbers’ which highlighted the poor quality of data gathering in African economies and how this is then replicated in published GDP figures.

A cynic might argue that some countries like Nigeria and Ghana have an incentive to exaggerate their GDP figures while poorer countries that are heavily dependent on foreign aid want to keep their GDP numbers low to keep the aid coming in. This was the case in Malawi where maize harvests were overstated in 2006 to ‘prove’ that fertilizer subsidies (paid for with foreign aid) introduced the previous year were working. But in 2010, new figures released suggested that the touted harvest was nothing of the sort. The biggest problem in all of this is that it might give African governments desperate to report good news, a way to do this without actually putting in the hard work. And there is plenty of work to be done.

Renowned Princeton economist, Dani Rodrik, has written about how African economies have been de-industrializing at a worrying pace in spite of all the economic growth being reported. The kind of economic transformation that should come with dramatic changes in GDP numbers such as we are about to see with Nigeria has been happening very slowly. Perhaps the current GDP figures are an accurate reflection of reality then. Nigerians will of course become richer on paper – the equivalent of $1,000 per annum increase in GDP per capita – but the effect of this might be that an already cynical population takes it as reasons to trust the government even less. How does one become richer according to statistics without any actual money in the bank?

Venatus Okafor The announcement made few hours ago is actually the outcome of a process that started last year. The final analysis was actually delayed. It was supposed to be done earlier this year. And as for the rebasing itself, the idea was conceived during Obasanjo's administration. So it is not a response to the recent downgrade of our Sovereign rating by S&P. We have been expecting the announcement since January/February.

Oladipo Badru I have constantly engaged myself in a deep thought, why PURE SCIENCES has proven to be more empirical and have reduced the gaps between its theories and empirical results.Why are there such wide gaps between the SOCIAL SCIENCES theories and their empirical results,maybe a reconfiguration of the economics academics is really needed to close the gap between its theories and empirical outcomes.

Venatus Okafor Standard of living is virtually non-existent in this country because all the metrics that are factored into this measurement (standard of living) are all below 50% and in most cases below 30%. These include; income,
• quality and availability of employment,
• class disparity,
• poverty rate,
• quality and affordability of housing,
• hours of work required to purchase necessities,
• number of paid vacation days per year,
• affordable access to quality health care,
• quality and availability of education,
• life expectancy,
• incidence of disease,
• cost of goods and services,
• infrastructure,
• political stability,
• environmental quality,
• security.

Ibrahim D Itsenyabi They should keep their data with them and give us good jobs.

Bernard Ezenagu Anyiam If everybody should 'create one job' for him/herself, why then does Nigeria need a government? Better you suggest Nigeria dissolves, and under such auspices, people will feel free to create themselves jobs. Why have a country and government that cares less of the people's welfare? The government creates or provides those incentives as you mentioned. In our Nigeria, are these available so that Nigerians can be able to provide jobs for themselves? However, the government also creates jobs in the strict sense of it!

Edwin Nwankwo Please we need better economic environment than these figure economics.

Babatunde Eletu Abdulkareem Keep your data! We want light, food, jobs, fight corruption, and build hospitals so the rich will stop travelling abroad to undergo surgery like the president’s wife does very often.

1 comment:

  1. I had initially thought newly publicised GDP figure (Which stands at $510 Billion) was a product of voodoo economics, Janjaweed analysis and a sordid expression of vanity. Looking expansively into the meaning for about 45 minutes, thanks to IMF, World bank and U.N for making the materials available. Here is a faint clarity on what it is not and how it affects us.
    1. It’s not some huge cash stashe...d up somewhere in Swiss bank as some people were asking where he money is.

    2. It’s not a measure of overall standard of living or wellbeing of a country.

    3. It won’t say the price of Garri will drop tomorrow. So don’t get it twisted.

    4. It won’t tell you if electricity is better or that the roads are now free of potholes and death-traps, neither will it show that corruption had reduced nor poverty had been eradicated.

    5. GDP is the total dollar value of goods and services produced in a country within a period usually a year. If it increases continually as in this case, then it simply means more goods and services were produced in 2013 than in 2012 which suggests that either companies have expanded their production capacity, or that newer companies came into being (For manufacturing sector)

    6. It tells which sectors of the country that is growing and the ones declining.

    7. It tells Olamide as an investor which industry to invest his money. E.g. if there is a year-on-year decline in the GDP contribution of the healthcare industry then it simply means he should stay away from stocks that has to do with that.

    8. It tells foreign investors where the best opportunities are for foreign investment.

    9. It tells Chukwudi, the billionaire that Nigeria is a better place to invest your money than Greece or Portugal which had experienced Year-on-Year decline in GDP value.

    10. It could also guide Andrew who wants to check out as an asylum seeker which country to stay away from and the ones where he could seek greener pasture.

    11. The economy may be growing though, but the investors may also not show up because of other required paraphernalia that should be in place e.g. Power failure, Efficient transport system, Infrastructural deficits, Challenges of insecurity and terrorism, etc.

    It can be a good news for Nigeria if we re a serious country. The most important advantage for me is that it will significantly help our Debt to GDP ratio. That will make creditors find it easier to give us loans
    What the govt will use the excess loans for, may be to oil their political machinery for 2015.

    I’m not an economics please, so I’m open to correction should there be any flaw in the above write-up. This not JANJAWEED ANALYSIS………lol


Simple theme. Theme images by gaffera. Powered by Blogger.