Nigeria to count illegal activities in new GDP calculation
Nigeria says it will include illegal and hidden economic activities when calculating the country’s Gross Domestic Product (GDP).
The GDP measures the size of an economy by calculating the value of goods and services produced.
Nigeria’s National Bureau of Statistics (NBS) says this change will give a clearer picture of the country’s economy.
“There are economic activities that have no legal backing,” Moses Waniko, a senior official at the NBS told Agence France-Presse
Citing prostitution as an example, he told the AFP, “These activities bring in income, and sometimes the people involved live better than those in the formal sector. The income earned impacts the formal economy.”
Nigeria, which was once Africa’s largest economy, is now ranked fourth behind South Africa, Egypt, and Algeria, according to the International Monetary Fund.
The last time Nigeria revised its GDP was in 2010. This new calculation will use 2019 as the base year and include new sectors such as the digital economy, health, social insurance, pensions, modular refineries, mining, and households employing workers.
Waniko said the changes are likely to show that Nigeria’s economy is bigger than currently estimated. “We expect the size of the economy will be bigger,” he said.
He added that the tax-to-GDP ratio and debt-to-GDP ratio could improve with a bigger GDP. Nigeria’s debt-to-GDP ratio was 18.5% in September 2019. Per-capita income may also rise after the rebasing.
Waniko noted that the crude oil sector now contributes less to the economy. It has dropped from third place to fifth. Agriculture and trade remain the top sectors, while real estate is now in third place.
