GDP Rebase, The Optimism

So many events generate so many diverse reactions in Nigeria and when you think you are done with one another steaming event crops up and you are caught in the eye of the gossip storm. On Sunday, April 6, 2014, Nigeria rebased her GDP from the primordial date of 1990 and the ensuing reactions from Nigerians have been as predictive as usual; “whats in it for me?”

GDP or Gross Domestic Product is the total value of goods and services produced in a country within a specific period of time. GDP rebase, according to The United Nations, is the process of replacing present price structure (base year) to compile volume measures of GDP with a new or more recent base year. Countries rebase their GDP regularly to get a recent view of how their economy is faring. Nigeria lagged behind for 23 years. The arguments have however come in thick and fast; newspapers are selling again, interviews are being granted left right and centre, professionals are airing their views and bloggers are having a field day blogging the rebase away. But one thing that has struck my mind is the disenchantment that has ushered in the rebasing of Nigeria’s GDP. Many (or is it almost all) Nigerians cannot find the effects in their pockets or bank account balances and they do not hesitate to say so whenever the issue comes up in discussions.

However, more irking to me is the World Bank’s dampening reactions through her personnel. If anything I expect them to congratulate and urge Nigeria to turn figures to reality, if they did and shut up if they had nothing more to say, rather Mr. Francisco Ferreira and Ms. Chuhan Pole are playing partisan politics with South Africa. Mr. Ferreira, a Chief Economist with the World Bank, Africa Region, is quoted to have said that South Africa should not worry about losing the topmost position to Nigeria as investors had other things to consider rather than the size of a country’s GDP when making investment decisions. If I am the only one getting the idea of World Bank’s big brother relationship with South Africa here then I think I am nuts.

I cannot remember Nigeria being in competition with South Africa on the GDP issue. The South African Government even had the grace to congratulate Nigeria in her climb to 26th in the world per GDP. I never even knew that South African needed consolation from no other than the supposedly World Bank. Or is Nigeria no longer a part of the World? The World Bank recently stated that two-thirds of the world’s extreme poor are in 5 countries; India, China, Nigeria, Bangladesh and Democratic Republic of Congo. And people are mudslinging with that. With a combined population of almost 3 billion and a percentage to world population of 42.3% the statistics should not be far-fetched for these down-trodden five. However, if India and China are being considered to be on the rise then so can Nigeria if her leaders get their acts right. (Note I didn’t say so is Nigeria.) See link http://news.yahoo.com/nigeria-vs-south-africa-size-matters-does-development-110225470.html

A Nigerian governor said “The GDP rebase is invalid and unsound” but since he is from the opposing party I will not dwell on his words. And maybe it is just me but I have not heard as much negativism as I thought I would from the All Progressive Congress (APC). Maybe they have learnt that you don’t need to counter everything the sitting government does in the name of opposition. Or am I not reading the right dailies and listening to the right radio stations? Many Nigerians have called the rebase a farce and an economic jamboree to get the attention of Nigerians prior to 2015, they say the results are not visible and what we have been told are mere figures that translate to nothing. Do you think so too? But I differ. And unapologetically too. My conviction is not based solely on paper talk nor is it based on friendship with Nigeria and her ruling elite, rather it is based on personal experiences that I have witnessed over the years. This is not theoretical economics but evidence of the growth in Nigeria’s GDP.

I grew up in one of the most impoverished parts of Nigeria inside modern Benin City. And I grew up half-way impoverished too. As at 1990, when the GDP was last rebased, I walked to school without shoes (School-without-shoes is not the sole prerogative of President Goodluck Jonathan). I couldn’t afford school fees as at 1992. The normal three square meal that is the normal in Nigeria was not three for me. I trekked many kilometers to school because transport fare was out of question. I couldn’t remember as at then when last I drank tea. There was nothing like pocket money but to compound it, I was BETTER than half of my peers.

As at 1990, there were houses in my street in metropolitan Benin that were not connected to the national electricity grid. Some houses didn’t have a latrine (yes, as at 1990). Only one or two houses had VCRs in additional to televisions and you can count the number of black and white televisions that we prided our households with. No household had a cable satellite, it was either Bendel Television (BTV)or Nigerian Television Authority (NTA). Women could not afford napkins for their babies so they used pieces of cloths. Personal cars were as scarce as honesty in government. It was so bad that I told a friend in 2002 that people buy brand new cars in Nigeria and he didn’t believe because all around him were third-hand jalopies.

Let us come now to 2014, the new rebase year, and things have greatly changed in my street and its environs. Young girls don’t tolerate napkins they go for diapers. Luxury apartments are springing up and people are renting them. Brand new car slush the country because we cannot afford mechanic wahala and yet we say the country has not grown? Unemployment is very high now but percentage of employment is higher now compared to then.

For those looking for additional money in their wallets it has been coming and going since 1990 but it has been coming more frequently and in a greater value than it would have had the country not grown.

For those asking how does it affect the common man and others give a reply of nothing, the effect has been visible in the common man over time. It is not one that he should expect to see on Sunday immediately after the announcement but the rebase was the result of the economic status change that he said had been undergoing over the past 20 years. Let every common man check around and he will that he is now capable of buying grocery, finding meat in his soup without rigorous checking and drinking ‘pure water’ of five naira consistently

If you are asking how it reflects in Nigeria then check the streets. Do you see so many cars and a significant percentage of it are brand new? Check the landscape, do you see state-of-the-art buildings? Check the number of one-man businesses that pay substantial income are they not more than a 200 percentage rise compared to 1990? Okay. Let us look at a table I culled from an article in www.online.wsj.com which collated data from the World Bank, The African Development Bank, and other reliable sources

.

GDP in billions GDP per Capita Life Expectancy Population in millions FDI in billions
1990 Nigeria $31 $329 46 96 $1.0
South Africa 112 3044 62 37 -0.07
2013 Nigeria 510 1780 51 174 7.0
South Africa 320 6621 55 53 4.6

Permit me to interpret the data on the table:

GDP has increased more than a thousand fold. Compared to South Africa’s which just trebled. Nigeria’s per capita income had a five hundred percent increment compared to South Africa with a two hundred percent positive change. While South Africa have a 12 percent decrease in life expectancy between 1990 and 2013, Nigeria had 9.8 percent increase within the same period. Population figures easily tells us Nigeria is a better place for business and diverse human capital population wise. It is only in Foreign Direct Investment that South Africa gets the upper hand with a hundred percent increase in relation to Nigeria’s 85 percent. If Nigeria can reduce the nation’s insecurity and high level of bribery and corruption we can improve on this index too.

This, however, should not call for celebration because although we have grown we are growing at a very slow pace despite our numerous natural resources and population. But this should call for some positivity. If we can do this then we can do better. If we are here now despite the high level of corruption then we can get to anywhere we want to. The picture below from http://www.tradingeconomics.com shows the growth since 2004

Image

Putting it in perspective, the growth of the country is directly related to the efforts of the people rather than the efforts of government. In short the government’s efforts over the years have been targeted at killing the spirit of the people to succeed through their mind-boggling thefts, inappropriate tax regime, unaccountability, unconducive business environments, poor roads, and the likes. Succinctly put, Dr. Obiageli Ezekwesili, a former Solid Minerals and later Education Minister and Vice President of the World Bank, and an ardent critic of the present government misadventures says that the rebase is timely and would project the country better… but the present government have no right to claim the years of sweat of past governments. (Quote is rephrased) and if I may correct the sweat of indefatigable Nigerians. But there should not be any argument that the new GDP is fictitious and does not reflect on the economy. Or where have you been?

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