Hoping on GDP rebasing?, By Zainab Suleiman Okino

For President Tinubu’s bold financial targets to materialise inside the stipulated timeframe, GDP rebasing emerges not merely as a statistical train however as a strategic crucial. Whereas sceptics (and we’re many) could query the feasibility of a trillion-dollar Nigerian financial system by 2026, a correctly executed rebasing course of would possibly properly bridge the hole between aspiration and achievement, reworking what seems an financial fantasy right into a tangible actuality.

President Bola Ahmed Tinubu has set forth an bold imaginative and prescient for Nigeria’s financial transformation — a $1 trillion financial system by 2026, with projections reaching $3 trillion by the top of the last decade. This daring declaration, made on the twenty ninth Nigerian Financial Summit, outlines a roadmap centred on revitalising agriculture, bolstering manufacturing, selling made-in-Nigeria items, and supporting native producers by the indigenous sourcing of uncooked supplies. Whereas the timeline has sparked scepticism about its feasibility, there exists a statistical mechanism which may simply make this financial utopia achievable: the rebasing of Nigeria’s Gross Home Product (GDP).

The Nationwide Bureau of Statistics (NBS) has signalled its intention to undertake this significant financial recalibration, a course of lengthy overdue on condition that Nigeria’s financial system was final rebased over a decade in the past. Within the intervening years, the structural composition of Nigeria’s financial system has undergone vital transformation, significantly with the exponential progress within the know-how, communications, and leisure sectors. The worldwide recognition of Nigerian artists, the increasing affect of Nollywood, and elevated web penetration, symbolize only a fraction of the brand new financial indices that stay uncaptured in our present GDP calculations.

When Nigeria’s financial system underwent rebasing in 2014, the outcomes had been nothing in need of transformative. In a single day, Nigeria emerged as Africa’s largest financial system, surpassing South Africa, with its GDP increasing dramatically from $270 billion to $510 billion. This rebasing train revealed Nigeria because the twenty fifth largest financial system globally, showcasing a much more diversified and strong financial panorama than beforehand understood.

Eleven years have elapsed since this recalibration, making one other GDP rebasing not merely advisable however crucial. The NBS appears to recognise this necessity, having already introduced that Nigeria’s GDP grew by 3.25 per cent year-on-year in actual phrases throughout the fourth quarter of 2022. Additional information from the bureau signifies that the financial system’s combination GDP within the remaining quarter of 2022 stood at N56.76 trillion in nominal phrases, in comparison with N49.28 trillion throughout the identical interval in 2021 — representing a year-on-year progress of 15.18 per cent.

Towards the backdrop of Nigeria’s multifaceted social and financial challenges — skyrocketing costs, runaway inflation that’s partly fuelled by meals insecurity and ensuing from widespread banditry and insurgency — it turns into tough to examine how President Tinubu intends to grasp his financial ambitions with out leveraging the rebasing of the GDP. Given our historic expertise, such rebasing will undoubtedly inflate financial indicators, doubtlessly making a pathway towards the trillion-dollar milestone.

Statistical integrity varieties the bedrock of efficient nationwide planning. A complete GDP rebasing train would equip the Nigerian authorities with important instruments to formulate methods that genuinely handle the twin challenges of financial progress and poverty alleviation. It’s only by correct assortment, interpretation, and evaluation of information, coupled with exact identification of key financial sectors requiring intervention, that our coverage prescriptions can successfully reply to the precise wants of Nigeria’s financial system.

Past mere numerical changes, rebasing facilitates a deeper comprehension of the financial system’s structural composition. It illuminates sectoral progress drivers and identifies precedence areas the place insurance policies and assets ought to be channelled to stimulate financial enlargement, create employment alternatives, improve infrastructure, and scale back poverty ranges throughout the nation.

The United Nations Statistical Fee recommends that international locations ought to undertake GDP rebasing each 5 years, with some nations conducting such workouts much more ceaselessly. By this normal, Nigeria has already exceeded the really useful interval for this significant financial evaluation. The delay could also be attributed partly to the substantial assets required for conducting institution surveys, agricultural assessments, and inhabitants censuses — foundational information that won’t but be totally out there.

However, vital preparatory work has been ongoing behind the scenes. The groundwork for the present rebasing initiative commenced in 2018, with actions like area surveys, analysis and growth research, commerce and transport margin assessments, and evaluations of water provide, waste administration, and remediation providers — parts absent from earlier rebasing workouts — already built-in into the framework.

As a member of the worldwide neighborhood, Nigeria can not function in isolation. A nation looking for world respect and recognition, significantly one blessed with Nigeria’s immense inhabitants and financial potential, should elevate its profile and credibility by processes like GDP rebasing. Whereas bizarre Nigerians understandably prioritise private financial well-being (or extra precisely, survival), a efficiently rebased financial system enhances our GDP, strengthening our place in world competitiveness rankings and underscoring the timeliness of this train.

If correctly managed, a rebased GDP can catalyse quite a few optimistic outcomes: elevated overseas direct funding, enhanced income technology (particularly with new tax reforms), improved world rankings, and positively influenced coverage choices. Rising information can even inform financial reforms and assist stem inflationary pressures which have burdened the populace.

There isn’t any disputing that rebasing serves as a complete measure of general financial actions, whereas signalling the route of financial progress. It features as a barometer for assessing the well being of the financial system and stands as an internationally recognised indicator for measuring an financial system’s measurement at particular intervals.

At its core, rebasing entails changing an outdated base 12 months used for compiling quantity measures of GDP with a newer reference level or worth construction. Economies are inherently dynamic — they increase, contract, incorporate new sectors, merchandise, and applied sciences, whereas shopper behaviours and preferences evolve frequently. Rebasing and re-benchmarking account for these transformations, offering a extra present snapshot of the financial system whereas enhancing the protection of financial actions included in GDP compilation frameworks.

“The bottom 12 months offers the reference level to which future values of the GDP are in contrast. It’s a regular statistical process undertaken by the nationwide statistical workplaces of nations to make sure that nationwide accounts statistics current probably the most correct reflection of the financial system as doable,” explains the methodology presently employed by the NBS.

The first good thing about the rebasing train lies in its capability to furnish policymakers and analysts with a extra correct set of financial statistics that actually mirror present realities, enabling evidence-based decision-making. Moreover, it reveals a extra exact estimate of the financial system’s measurement and construction by incorporating new financial actions beforehand excluded from computational frameworks.

For President Tinubu’s bold financial targets to materialise inside the stipulated timeframe, GDP rebasing emerges not merely as a statistical train however as a strategic crucial. Whereas sceptics (and we’re many) could query the feasibility of a trillion-dollar Nigerian financial system by 2026, a correctly executed rebasing course of would possibly properly bridge the hole between aspiration and achievement, reworking what seems an financial fantasy right into a tangible actuality.

Nevertheless, we should acknowledge that real financial progress extends past statistical changes. For bizarre Nigerians to expertise significant enchancment in dwelling requirements, the Tinubu administration should complement GDP rebasing with substantive insurance policies addressing infrastructure deficits, safety challenges, agricultural productiveness, manufacturing capability, and the general ease of doing enterprise.

The success of President Tinubu’s imaginative and prescient will in the end be measured not by statistical milestones alone, however by the extent to which financial progress interprets into prosperity for the hundreds of thousands of Nigerians craving for aid from hardships. The trail to a trillion-dollar financial system could start with GDP rebasing, however it should culminate in real transformation of Nigeria’s financial panorama.

Zainab Suleiman Okino is chairman, Blueprint Editorial Board and a syndicated columnist. She could be reached by way of: zainabokino@gmail.com