Nigeria, after over twenty years will be rebasing her GDP. This long delay after the last rebase has raised the air of discussion in the public domain. Coming on this heel, Youthhub Africa engaged with the office of the Statistician General of the Federation, Dr. Yemi Kale on the subject difficulty of generating statistics in Nigeria, the progress made by the Bureau and the Nigerian economy. He spoke with Rotimi Olawale, find excerpt of the interview here –
Q: From our findings we discovered that the last time the Nigerian GDP was re-based was in 1990, so why do we want to rebase it now and what implication does it have for the economy?
A: Let me start by briefly explaining what GDP is. GDP is basically the value of output of goods and services produced in an economy in a particular area. GDP should not be mixed up with development. They are not the same thing and I will explain why.
Q:Why do we use GDP as a measure to track economic wellbeing?
A: It is because economic theories and logic say that the producers cannot produce more than they can sell because they are producing for people that can buy. So if output is increasing, it means producers are producing more because they see that people can buy their products. And if people can buy more output, it means that their ability to buy the output is increasing and it means their income and welfare are increasing so that they can buy the output. And so if you are tracking output growth you are directly tracking the direct welfare of the people.
Now the limitation of GDP is that it doesn’t take inequalities into account. So one individual might be the one buying all the cars, but in terms of output, more people are buying cars as a whole. I will give you an example of inequality. Assuming that the two of us: myself and you own many companies in the country. Year one, I made ten million and you made ten million, GDP is now twenty million. If in year two I made N50m and you made zero naira, GDP is N50m. So GDP has actually gone up but your company has collapsed. But we are looking at the overall average. The thing is, definitely the GDP is rising but people are getting poorer. The answer remains that it’s not the wealth, GDP is not spread properly.
You cannot have development without growth, but you will have economic growth without having development. Now, there is a link between growth and development. What translate growth into development is what we do with the growth. Without that link properly plugged, we just keep having output growth up to the point that nobody can consume again. And that is what happens in the most advanced countries where you hear that the US grew by one percent or point something because they have grown to a point where they cannot consume again because people are not much again. Countries like Nigeria where we have large unemployment, large, large poverty and so on, there is still more hope for that scope to grow. All you can do is if you have reduced poverty by 1% you have now added another millions of people who can continue to buy this product. That is why developing countries grow faster than developed countries.
Now going back to GDP rebasing. I have tried to explain why GDP is important because it affects so many things. When you are using the 1990 base a lot of things are done. You first have the master framework of all the establishments you have and GDP is simple. You now take a representative samples from all the sectors, and you make sure that everybody is represented, and the assumption is that whichever one you select, everybody else in the same sector or size probably has the same challenges. So in 1990, you take a stock of what was existing and you draw a sample. Assuming you had ten hotels in 1990 which is the base year we are using, and by 2014 you have a thousand hotels, you now can select five of those ten (50%) represent the sector which then was five hotels because you are using 1990 as your yardstick. You are now still using that five to represent a sector that now has a one thousand hotels. You will be understating or overstating GDP depending on what happens.
There were some economic activities that were not existing then but they are happening now and you are restricting our survey to 1990, the only economic activities you saw in 1990. A lot of new things have come in and have not been captured. In statistics, you cannot just add it like that. The methodology you used in the previous year you have to use it in the new year. If you have to change methodology you have to go back to historical records and adjust it in line with the new methodology otherwise it won’t make any sense.
International best practice is, it should be done periodically. Some countries do it every year or very two years, but they say at least five years. We have not done this for 23 years. In fact, in 1990 we were still under military rule. There are so many things that have changed since then, and we are still assuming that the activities and the products in 1990 are still existing today, and that gives you an incorrect picture
We are doing it now because we are trying to ensure that the data we produce match the function: which is to inform policy makers, to inform our public what government is doing, to inform our investors where the money can be made in Nigeria; what sector is doing well and where, and so on.
Q: On rebasing the GDP, you have not told us the exact date and also there are some reports that this re-basing is directed towards the election period so that the economy will suddenly increase.
A: Let me explain what re-basing is to you again so that you understand that it cannot be beneficial to anybody during elections. First of all if we are going to just come up with fake numbers, it won’t take us two years. The two years makes me look incompetent. But I have said, look, the accuracy of this is more important. I have sacrificed my time for this: after 20 years this thing has got to be done properly.
We shifted the deadline because in Nigeria people are very secretive. You send emails and the people do not reply on time. So this has to drag on. For some we are getting data after twenty something years. If we were updating, we would have been done by now. But after 20 something years to expect to get accurate data of what has changed in this huge country of ours is a huge task.
At this point we have completed the work, as far as we are concerned. So I can actually tell you that we have now re-based our GDP. But I will not because we want to ensure that we are very transparent with the IMF, World Bank, ADB. We want them to come and validate the figures so that they can subscribe to it. The same will happen with renowned people who will come and look at these figures: Professors, Managers in the economic society etc. they will come and look at it and then they can say that we did a good job.
Q: Besides the GDP rebasing, what other thing do you do that is very vital to our economy?
A: We are not just rebasing. It is the whole process of methodological improvement. The one that is paid the most attention is the GDP. We are also doing the CPI. We say since the partial removal of subsidy, the prices of PMS (Fuel) went up, the ban on importation and so on. Households have to adjust their expenditure because their salary remained the same.
CPI is based on consumption expenditure. The last one we did and are using, is 2003/2004. So, if since then people have altered their expenditure, so that they are not spending as they were before, it gives you a wrong information. So we are yet to update that.
We are updating our poverty figures that we think is very stringent. We have the most stringent poverty definition in the world. We use 3,000 calories and they compare us with countries that use 1,500-2000. If we use 2,000 our poverty rate will drop significantly. The recommended minimum calories intake by the WHO is 2,000. So a lot of countries use 2,000, some use 1,500. We are using 3,000. Of course if you use 3,000 as your minimum benchmark, all those that don’t get up to 3,000 are cut off. Now if you have a lot of people that got up to 2,800, which in some other countries would have been classified as not poor, but in Nigeria, that is classified as poor, it pushes the figures up. So, we are revising our poverty methodology, we are reviving unemployment methodology.
The problem with unemployment is that, the ILO says, if you work for one hour a week you are employed. When we did that, 15 years, we got employment rate of less than 1% because Nigerians are industrious. Nigerians don’t just sit down, they will always find something to do. So you will get unemployment rate of almost 0%. This doesn’t make sense for our own environment. We cannot use the ILO definition here. We now say, okay, what is the definition of full-time employment? Usually 8 hours a day, 40 hours a week. So if you don’t work 40 hours a week, we don’t classify you as employed. That also has a problem. It means if you work for 39 hours, you are also classified as unemployed. So the question is, where do we put that cut-off point? It is very difficult. It is very subjective. We cannot use ILO because for one hour in Nigeria, almost everybody will do something for one hour.
So it is a general process of statistical accuracy and rebasing is just one of that. We need to get our statistics right, we need to get our information right. We are the custodians of all official data and the authoritative source of data. We are not manipulated by anybody.
Our job is to give accurate data so that government can use it to design policies that will affect the common man. Now if our data is not accurate and our government uses it, the policies would be there. I have seen lots of extremely good policies on paper, but then, two, three years after, they are not effective as you thought, and you wonder why. Most of the time, it’s because it was not informed on facts. What is actually the problem? If you want to solve unemployment, you have to know how many of them are there, what their qualifications are, whether they are males or females, in what sector, and so on. So you have to give people the right information, the right data so that they can design right policies to tackle the problem. We do not design policies, we do not advice anybody. Ours is just to tell them what the situation is. It’s up to them to use it or not.
Q: In some countries like the US we see monthly data, for example for employment. They will tell you x number of jobs have been created in the previous month. Is that possible for Nigeria?
A: It is possible for Nigeria. I remember I was talking to a friend, one of the Statistician General of one of the other countries and he was saying how Rwanda is doing well in their statistical office. They are getting monthly data or so. And I said, Rwanda is less than the size of Abuja population. So I have to get data for 170m Nigerians across 36 States and the FCT, 774 Local Government with over 200 languages and cultures and religions, and a country where things are still done manually.
In the US, everything is done electronically. So it is easy for them to process data faster. As you buying with your credit card, your record goes straight to their records office. In Nigeria you don’t have that system. They have to visit you to get your information. Even if I want to use technology like phone, who says you will understand properly the questions I am asking. So my staff have to go there to explain to you the actual questions. Some people are not educated so the need you explain to them. Some people will naturally want to lie. So you have to see the person, let him see you, let him feel comfortable answering questions. So these are some kinds of the things that slow down the speed in which we can get some of these things done. It requires money too. The speed to which you get money for the work and the quantity of money you get, and the fact that things are done manually slows done everything. We can get there, we are taking certain steps to get there. For instance the use of computer assisted personal interview devices to get our surveys. We cannot improve everything but again we can introduce some of these ICT concepts that make the work faster.
Q: Looking at NBS now, young people have said it has not been currently engaging on social media. What’s your take on that?
A: Well, it depends on the extent of social media use. We have a Facebook page, we are on twitter, we have a revamped website. Our job is data. So for the first time we have released a calendar so people know when a particular data is coming out. So you can plan. In our website, we have everything there so you can access from wherever you are in this country. You can ask questions if you have any. So on twitter for example, if we have change of release date, we announce saying: please note that the date for this has changed. If we are going on job creation survey, we announce it. I think what you mean is we are not arguing with the youth on facebook.
Q: Not necessarily arguing. I think it’s not active.
A: You see, we have to be careful. We are a National Statistics office. We are not for or against the government. We are just trying to report what we see whether good or bad. We don’t want to be seen engaging in social media discussions because we are trying to reserve the independence of the statistic office because when the independence is removed, the authenticity of any data is in doubt. We just want to do our work.
What I have noticed, to be fair over the last two years is there is less of suspicion. There are still some people who question our data but the number has reduced. They are instead using the data to hold certain people accountable. I am very comfortable that we have made a huge amount of progress.
One of our major problems is getting who understands statistics. People misquote things easily. Even the 54% youth unemployment that is going on around the place. That’s not what we said. What we said in the report is 54% of youth are not working. Now, to be technically defined as unemployed, it means you are looking for work, and are able to work, and are unable to find work. And we just said 54% are not working. After that we said why are they not working? The fact that 20% or more are not working, they are students in which case they are not unemployed. They are students, they are not looking for work. About 2 to 3% said they were ill. But the website went ahead to say 54%. So, for the fact that they are not working, they are not unemployed. If you choose not to work you are not unemployed. There is difference between not working and unemployed.
By the time you consider the fact that 27% of the 54% are students. At least 80% are not unemployed. They now calculate 80% of 170 million. The 170 million include children. You cannot just conclude 80%. It’s of the labour force which is about 50 million. So when you say 100 million unemployed, that’s higher than people that are able to work. There are children that fall within the ages of 0 to 15 that are not supposed to work, there are elderly people that are too old to work and make up 170 million. There are house wives that do not want to work. They are not employed. You cannot add up all of them as unemployed. We know there are challenges. There are areas that are doing well, there are areas that are not doing well, which is the area people want to talk about. I think it is wrong, particularly for you the youth. It affects our psychology if all we hear is negative things about our country and our future. When we have that situation where you are demotivated it has a way of syphoning your creativity because you are already losing hope. So I think it is important to let our youth know this is where we have problems, this is where we are doing ok and this is where we can change
Q: Your final message to the youth.
A: My message is that it’s not about being youth, very many youth have done so many wonderful things in Nigeria when they are given the opportunity and even for those that have not been given their opportunity, they have found their way around it. Whether old or young I think that if everybody does the right things for the right reasons, I think that our country will progress. Let everybody do what they are meant to do at the right time for the right reasons. I think that is the Adam Smith principle and the economy and the whole country will move forward.
Q: Thank you for giving us your time.
A: It is my pleasure.
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