9 April 2014

Nigeria: Kudos, Knocks As Experts X-Ray GDP Rebasing

Photo: Wikipedia
Eko Atlantic City.

The Nigeria Labour Congress (NLC), the organised private sector, stakeholders in the manufacturing sector and others have expressed mixed views on the rebasing of the gross domestic product (GDP) announced Sunday.

The exercise, they said, would not solve economic problems unless the country was ready to plan more effectively, given the improved access to more credible information about the economy to run a less import-dependent country.

The National Bureau of Statistics has just changed the base year for calculating the nation's GDP to 2010 from 1990, a development which has reflected changes in the composition of output in the Nigerian economy and allowing more accurate estimation of the size of the economy.

In a statement made available to journalists in Abuja yesterday, NLC acting president Comrade Promise Kanayo Adewusi stated that "an improved GDP will only make meaning to us in labour if it translates to improved living conditions for the ordinary Nigerian, which is not the case at the moment".

Living conditions in the past couple of years have been progressively nose-diving and pathetic, he said: "Similarly, economic growth without jobs and food on the table means nothing in realty. The unemployment figures are frightening. We have found it necessary to warn time without number that the army of the unemployed youths constitutes a veritable army of the disparate, the desperate and the angry, and that government should urgently address the problem. So far, nothing has illustrated this fear better than the recent Immigration recruitment exercise tragedy. We therefore do not need any economist or diviner to tell us that life has improved, because it has not."

He stated that a GDP could not be said to have significantly improved if our industries are virtually shut and operating environment increasingly hostile.

"Government should worry that the performance index of industries dropped from 46.08% to 25.81% while service industry more than doubled to 50% from 23.03%. This certainly represents a significant change in the economy, a negative change that points to consumption to the exclusion of production."

According to the director-general of Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr John Isemede, rebasing the nation's GDP has not improved the economy. "Nigeria is a giant of Africa with 170 million population; in another 20 years, in terms of population Nigeria will be number four in the world. The question is, how are we going to feed this population? With the rebasing, it suggests that the government should invest heavily in infrastructure.

The head, investment research, Afrinvest, a research and advisory firm, Mr Ayodeji Ebo, said Nigeria is already a growing market for consumer goods with firms such as Nestle, Heineken, Cadbury and Unilever,as well as construction material firms such as Lafarge and Dangote Cement.

He called for increased interest in manufacturing and service companies, which could further help Africa's top oil producer to move away from its over-reliance on crude oil. Despite roaring growth in recent years and a bigger GDP, without basic infrastructure like power and roads which are necessary to lift the bulk of its population of 170 million out of absolute poverty, it will not make any sense.

The president of the Lagos Chamber of Commerce and Industry (LCCI), Remi Bello, said that there is need for caution in celebrating the new GDP figure because of the weak revenue base of government. He pointed out that the rebased GDP has thrown up the very important issue of growing inequality in the Nigerian economy which has implications for economic and social stability.

"This underlines the need for urgent steps to be taken to reduce poverty and inequality. Given the new GDP ranking, it is clear that the economy has the capacity to make this happen," Bello said.

He added that there is an urgent need to address the issues of investment climate as well as welfare of the citizens so that the country's performance in GDP would be appreciated by the business community and the generality of the citizens.

Reacting to the new GDP figures, Mr Tunde Oguntade, an industrialist, said that while the rebasing was good because the old figures were dated and needed to be recalculated, what needed to be addressed is the persisting high level of poverty in the country.

He said, "Yes, we needed to rebase; but there is nothing to celebrate that we are now the biggest economy in Africa. The level of poverty in the country is too high and besides very little production is done here. It is only until the country starts producing things that we can say we are making progress."

In his reaction, the president of Association of Small Business Owners (ASBON), Dr Femi Egbesola said, "As far as I am concerned, the rebasing was largely an academic exercise."

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