Rebased GDP and Un-rebased Realities By Waziri Adio
Nigeria has earned a new badge of honour. Based on the figures from the rebased Gross Domestic Product (GDP) released yesterday, our country has edged out South Africa as Africa’s largest economy. Countries regularly rebase their GDP to measure changes in the size and the structure of their economies. Some countries do this every five years or less. However, the last year such was done in Nigeria was 1990, almost a quarter of a century ago, a time when the current high-growth sectors like Nollywood, music and telecoms were very marginal players or practically non-existent. This means that the magnitude and the texture of our economy have been under-measured for so long. Not anymore.
Now, we hold the dual honour of being the continent’s most populous and most productive country. According to the new figures, Nigeria’s GDP has leapt from $262 billion to $510 billion, an increase of 94.6%. With this new figure, South Africa, whose GDP is $370.3 billion, has been elbowed to a distant second place. Of course, our new status comes with bragging rights and possible opportunities in terms of appeals to investors and manufacturers. Besides, it adds more heft to our strategic importance. But it also comes with additional responsibilities as the fate of the continent has become more intricately twinned with that of our country. For instance, volatility in Africa’s most populous country and largest economy will have more serious implications for the entire continent. However, that should be the least of our bother at the moment.
When combined with data on our macro-economic outlook, our new status provides some cause for cheer. Our economy has grown at an average of about 7% for the past decade; inflation rate is now down to single digit (7.7%); we have a healthy current account surplus; we have a strong external reserves (about $40 billion); and, on the continent, we are the destination of choice for foreign direct investments. All these are well and good, and those who only want to claim credit should be allowed to. But for those interested in real development (as measured by the welfare of the people), it is a good moment to ponder why poverty, unemployment, and inequality sit cheek-by-jowl with stable growth. This is not to say nothing has been achieved over time. But the economic growth-human development gap underlines the stubborn fact that there is still a lot more to be done. That is our un-rebased reality.
It needs to be stated upfront that unemployment, poverty and inequality are global problems, from the developed to the least-developed countries, but especially so in Africa. So these challenges are not peculiar to Nigeria, but that does not mean we shouldn’t pay attention to them, especially given their larger implications for growth, peace, and development.
While managers of the economy, investors and economists may find data from the rebased GDP useful, the inconvenient truth is that it means next to nothing to the average Nigerian. What is the practical utility of being a citizen of Africa’s largest economy to someone who is jobless or someone who doesn’t know where the next meal will come from or someone, who though employed, cannot pay most of his/her bills? Zero! As a minister of this administration memorably said recently, “GDP is good, but you cannot eat it.” So rather than get us blind-sighted or get us side-tracked into the predictable and non-useful habit of chest-thumping, the new GDP figures should focus our minds on critical and urgent areas of work. And the work is well cut out: how to leverage on new growth areas to expand the capacity for more growth and, more importantly, how to translate growth to jobs, less poverty and shared prosperity. Any other thing is work avoidance, pure and simple.
As if keen to rain on our party (or just eager to stop us from luxuriating in work-avoidance), the President of the World Bank, Dr. Jim Yong Kim, last week told the Council on Foreign Relations that our country is one of the five countries with the most number of extremely poor people in the world. “The fact is that two-thirds of the world’s extreme poor are concentrated in just five countries—India, China, Nigeria, Bangladesh, and the Democratic Republic of Congo,” he said. “By extremely poor, we mean people living on less than $1.25 a day.”
Our Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, herself a World Bank alumnus, has explained that we are in that group because we have a large population and a significant poverty rate. This is very true. You can trust Okonjo-Iweala to give reasonable explanations as opposed to a Dr. Doyin Okupe who would rather engage in pointless fights on Twitter on an issue that is so obvious. According to our official figures, we have more than 100 million Nigerians living below the poverty line. India with a population of 1.2 billion has 400 million people (32.7%) living below the poverty line; and China with a population of 1.3 billion has 172 million people (13.1%) living below the poverty line.
On the surface, there is nothing to beat ourselves up on this. Being in the company of better-performing countries like China, India and Indonesia could even give us some comfort. But while the percentages and the absolute number of poor people in these other countries are falling, ours are rising. In China, for example, poverty rate shrunk from 85% in 1981 to 13.1% in 2008. Within three decades, China lifted 600 million people (almost four times our entire population) out of poverty. In Brazil (a country cited by Okonjo-Iweala), just one government intervention, Bolsa Familia (a conditional cash transfer programme) is reputed to have reduced poverty rate by 27.7% during the first term of former President Lula.
But here the reverse is the case. According to the 2010 Poverty Profile from our National Bureau of Statistics (NBS), the number of Nigerians living on less than a dollar a day rose from 51.6% in 2004 to 61.2% in 2010. This is our official figure, which shows that almost two-thirds of our nationals live in unremitting poverty. Other data on human welfare reinforce the paradox of rising poverty in a growing economy.
Our unemployment rate is among the highest in the world. According to the NBS, unemployment rate in Nigeria is 23.9%. The rate for youth unemployment is much higher, estimated between 41.6% and 60%. (We should all be grateful to Comrade Abba Moro and the NIS for recently helping to dramatise the unemployment crisis in the country.) In the 2013 Human Development Report of the United Nations Development Programme (UNDP), Nigeria ranked 153 out of 186 countries in terms of human development (measured through composite indicators of income adjusted for purchasing power parity, literacy and life expectancy).
In that same report, UNDP listed 11 African countries that had made remarkable progress in human development since 2000. Those countries were: Angola, Burundi, Democratic Republic of Congo, Ethiopia, Liberia, Mali, Mozambique, Niger, Rwanda, Sierra Leone and Tanzania. Well, an excuse can be made for us by saying some of these countries advanced based on what some economists call the ‘advantage of relative backwardness’ as some of them were actually coming from close to ground zero. It is remarkable still that our country was not on the list, despite the fact that the period coincided with a time of consistently high oil prices.
My purpose here is not to deny the progress being made or to diminish the importance of rebasing our GDP or to heap all the blames for the problems of this country on the present administration. Rather, my goal is to restate that we have a major problem if growth is not translating to more jobs, lower poverty and less inequality. Okonjo-Iweala recently said “we need to grow faster than 7%.” Again, this is very true. But while economic growth is a necessary condition for development, it is not a sufficient condition. And while growth may be self-occurring, development is consciously created.
We need job-led (not jobless) growth and we need a growth-plus approach. Beyond strong and stable macro-economic environment, we also need to upgrade our infrastructure, make it easier for people to do business, and provide smarter incentives for the private sector to thrive. We need to radically scale up investments in education and health to increase the productive capacities of our people. We also need a robust national strategy on job creation, not some superficial, box-ticking interventions that some people make a song and dance of. And while on this, it is important to find out what happened to the report of the Alhaji Aliko Dangote-led National Committee on Job Creation, a committee set up by this administration.
With the level of unemployment, poverty and inequality in our midst today, there is urgent need for audacious and apolitical interventions in social welfare along the line of Bolsa Familia and a massive public works programme which in addition to putting people to work will create additional dividends in terms of incomes and infrastructure. But then, a certain N50 billion was appropriated for a National Job Creation Scheme in the 2011 Budget. (For evidence check line 18 of page 11 at www.budgetoffice.gov.ng/2011appropriation_actnew.pdf). Pray, what happened to that money and how many jobs did it create?
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