Economics

Largest Economy: Irony of Numbers

Nigeria is now Africa’s largest economy and the 26th world over. True or false? Saturday Vanguard in this special report tried to get answers from Nigerians

Jonathan and Okonjo-Iweala

Jonathan and Okonjo-Iweala

It is a miracle but the reality is lost in its own incredibility.
Ordinarily, it calls for celebration, but no one would dare. That Nigeria has become the biggest economy in Africa and the 26th in the world after a recent rebasing exercise that has shot its Gross Domestic Products (GDP) to $509 billion, ahead of South Africa’s $350 billion is cheery. But that was only a paper work and politics of statistics.

With a vast array of intractable social problems such as power, poverty, illiteracy, infrastructural deficits, corruption, unemployment, insecurity, etc, it would be a herculean task to convince any Nigerian that this is so.
Meanwhile, like every other organization in Nigeria,  Vanguard family was overwhelmed by the news last weekend. Consequently, Saturday Vanguard went out to harness the views of the people on the development as it affects the common man on the street. Below were the submissions.

Act One, Scene One
Five O’ clock, Sunday evenings, is usually the time for our weekly editorial meetings at the Abuja Bureau of Vanguard Newspaper. But 30 minutes past the hour last Sunday, the meeting was yet to come on stream. The newsroom was full and we were all seated, waiting for the Bureau Chief, Mr. Emma Ujah to come with the briefs, reviews and previews of past and upcoming weeks’ works. Such has been the practice: a conscious in-house exercise to evaluate our individual and collective copies and then, articulate ways of improvement subsequently.

But he was stuck in his office. This was as far as some of us who had gone to his office earlier on to greet him upon our arrival for the meeting could tell. He sat glued to his computer system and was battling with freshly knitted papers before him, flipping through the pages. Of course, he appeared too engrossed and wouldn’t welcome elongated salutations. That would distort this chain of thoughts. It was already production time and Lagos was waiting for the copy which would make news the next day.

Aside being the Bureau Chief, he also reports Business and Finance, and so covers the Federal Ministry of Finance. So, we left him alone and went back to the newsroom, patiently waiting.
Just when our patience had started wearing out, he emerged from his office. “Gentlemen, have you all read the short email I sent to your boxes? He asked.

Swiftly, some of us reached for our BlackBerry phones, IPads and Androids. Those who had previously powered the office computers began to surf them again.

The message was simple.
”Nigeria’s nominal Gross Domestic Product, GDP, now stands at $509.9 billion, making the nation’s economy the largest in Africa and the 26th in the world, according to the preliminary results of the rebasing exercise of the federal government.

”The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala announced this yesterday at a press conference jointly addressed with the Statistician-General, Dr. Yemi Kale, in Abuja yesterday.

”The rebasing exercise on the Nigerian economy which also saw the Per capita rising to $2, 688, covered 2010 to 2013. It came after two decades of the last exercise.

“The debased estimates indicate that the nominal GDP for Nigeria was much higher than previously estimated .  In 2010 the estimate was $360. 644 billion; in 2011 it was $408.805 billion; 2012 $453.966 billion ; and in 2013 $509.970 billion.

The growth rate is driving by the services sector with it contributing about 51 per cent of the GDP. Details later,” the piece reads.

buses-todayThat was the news.
Captioned “Nigeria’s GDP hits $510 billion, now largest in Africa, 26th in the world,” the essence of that mass reading was to enable all of us get reactions from Economists, financial experts, politicians, scholars and ordinary Nigerians.

But a couple of us were monetarily lost at the news he just broke. “Nigeria becoming the largest economy in Africa? No, something enigmatic must have happened. We thought mutely.
Even as he rushed through a transient explanation of what rebasing and GDP meant, some of us still showed some ignorance, nay indifference on the topic. Yes, we are all Journalists with degrees, some of us, post graduate diplomas and masters degrees in Mass Communications, Literature, Linguistics etc.

Also, quite a number of us have attained an age in the practice of journalism that  we could not, in reality, feign ignorance of the import or total meaning of GDP and rebasing. But we somewhat, temporarily wore the garb of a lay man at the mention of Nigeria becoming the biggest economy in Africa.

And so as Journalists who report the daily glories and woes of the contemporary Nigeria, we already had our reasons for our indifference at the finger tips: infrastructural decays, abject poverty, gargantuan unemployment vis-a-vis the harvest of deaths of youths at the recent job recruitment test of the Nigeria Immigration Service (NIS); perennial threats of insecurity which has consumed uncountable lives in the last

four years especially in the north eastern geopolitical hemisphere, the almighty corruption and sundry funds wastages in some public institutions, the serpentine queues at the petrol stations, epileptic power supply, just to mention but a few. Then a flurry of thoughts engulfed us.

We thought of how to break this news to the clotheless “Danfo” bus driver and his emaciated conductor who ply the motor ways in Lagos daily for food. We thought of how to tell the young man who has traversed the streets of Abuja, Port Harcourt or Aba looking for a job after many years of graduation from the higher institution. So many things rushed through our minds that made us square up for an argument with the Bureau Chief.

But that was an assignment we needed to do. It was not in our plan to provide answers. Ours was to investigate and gather views from Nigerians. But we are still Nigerians living not in the moon.
Meanwhile, that was much we could do as some of us left for the assignment.  But that was not to say that we don’t know what GDP meant.

Act 1 Scene 2
What is GDP?
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time. GDP per capita is often considered an indicator of a country’s standard of living.

To a layman, rebasing the economy is simply an economic exercise aimed at producing current statistics of goods and service produced locally. In the case of Nigeria, the inclusion of Telecommunications and information services; motion pictures and sound recording; cement production; food, beverage and tobacco; construction and real estate sectors produced the information that jerked the country on the front row.
A belated exercise.

Adamu Aliero

Adamu Aliero

The rebasing exercise is obviously coming 24 years late. The last time it was done was in 1990. According to experts, countries rebase every 5 years but Nigeria’s has taken such a long time. Analysts are of the opinion that not heeding the frequency is by itself a failure on the part of the country.

Act One Scene Three
—Nigerians react
It is growth without real economic development —Alhaji Adamu Aliero, ex Governor, Kebbi State
It is good that there is an economic growth in Nigeria but at the same time, this growth has not translated into real economic development because we still have extreme poverty in the country. We still have unemployment on a very large scale and we still have over 15 million people in Nigeria that are illiterates.

They cannot read or write. This growth we are talking about is concentrated in a very few hands. It is not growth that transcends at every stratum of the society simply because the economic policy we have adopted is largely antagonistic.

It is all about statistics —–Ray Ekpo, Journalist and former Editor of defunct Newswatch Magazine
I don’t doubt that is the biggest because when you look at the population of Nigeria, the consumption level, it is entirely possible that we may have gone past South Africa which was the leader. Because, for instance, if you look at the telecommunication industry, Nigeria has done very well.

If you look at the music and movie industry, Nigeria  is rated the second in the world after Hollywood and the enterprise called Nigeria has really developed over the last 10 years. That is why you are able to find a Nigerian being named the richest man in Africa. So, the Nigerian economy has developed. Of course the oil industry has been quite an important factor in this growth.

But it is growth without development as far as I can see. If you have growth and the people are suffering, if you have growth and you don’t have employment, full or near full employment, if you have growth and you still have the level of poverty we have here, then it is not real growth. It is just statistics as far as I am concerned.

For me, the government ought to worry about the other aspects of growth which is the reduction of poverty, the reduction of unemployment, the increase in capital development and the improvement in infrastructure. If these do not happen, then your bigness means nothing.

It doesn’t change anything—Atedo Peterside, Chairman, Stanbic IBTC Bank
Whether Nigeria is the biggest economy in Africa or not, it does not change anything immediately for the citizens. It is simply a case of correctly establishing our income.

People have confused that and imputed all kinds of motives. There is nothing to rejoice about, nothing to celebrate. All we have done is to correct the national income figures and the GDP figures that we have been compiling. Most countries are supposed to rebase every five to ten years. We have not done so for over 20 years. So, certainly our figures might be distorted and incorrect.

It is almost like saying you are measuring your height with a faulty tape. All you have done now is to use the correct tape to measure your height. Or you were trying to measure your weight with a faulty scale? You have removed the faulty scale and brought a correct scale and you have established the rightful way. That’s all. There is nothing to celebrate about it. If you are poor before, you are still poor. If you are hungry before, you are still hungry.

So, I don’t understand why people are trying to impute motive and to a simple exercise of rebasing. It is simply a case of producing more accurate data. It will only help those managing the economy with better data because you know where the income lies. For instance, with better data on income, you can better assess those who are paying their cooperate income taxes and things like that. That is where the benefit comes from.

But if you are hungry before, you will still be hungry for now. What you have in your wallet before has not changed. The only thing that can change is that those managing the economy with better data might be able to target policies and programmes that are more accurate because it is now based on accurate information as to where income lies, as to where the various sectors will contribute and so on.

NIGERIA, Abuja : Job-seekers applying for work at the Nigerian immigration department scramble as their exam papers fly in the air, on the pitch of Abuja National Stadium, on March 15, 2014. AFP PHOTO

NIGERIA, Abuja : Job-seekers applying for work at the Nigerian immigration department scramble as their exam papers fly in the air, on the pitch of Abuja National Stadium, on March 15, 2014. AFP PHOTO

Unemployment rate still high—Alhaji Mohammed Ibrahim, National Publicity Secretary, Arewa Consultative Forum(ACF)
This GDP issue they are talking about is something that is more academic in the sense that they are talking about products and services on a higher scale in Nigeria. But for a common person who doesn’t understand the way the economy works, it is difficult for him to acknowledge the fact that Nigeria is the biggest economy in Africa. Because a lot of things are not working. For example, power.

If you talk of improved services and your power is going down, there seems to be a problem because there has to be some corresponding effect in this kind of situation. But recently, we read in the papers that our electricity generation that was 3,000 megawatts has dropped now to about 2.8 and it is going down due to so many factors. And yet, you said the economy is improving. It is very funny. Not only that.

Even our unemployment rate is so high. According to a lot of figures being bandied around, you have a lot of Nigerians, over 10 million, qualified Nigerians that are out of job and that is a very serious issue. So many things are really incomprehensible for a lay man for him to understand that the economy is really improving.
So to me, my reaction is that the government should come out with things that can convince the common man.

Let there be jobs. Let’s have food. Let’s have power. Let’s have people who are self employed, really doing something productive so that Nigerians can see just like you have in other countries like Malaysia. We see a lot of their products here and that tells me that their economy is booming. But do we really have our products outside apart from the petroleum? Do we? We don’t.

Another issue is, if you look at the economy or money critically, it is in the hands of few people. I was very shocked when I heard someone saying that Nigerians have progressed because we have people like Dangote. We have so many big people, he mentioned. But out of 170,000,000 people and you have less than 10,000 who are controlling the economy; to me, that is a very serious issue. Otherwise, gradually, these 170,000,000 people will consume these 10,000 people they think have the resources.

Nigeria is getting somewhere —-Chief Mike Ozekhome (SAN)
Yes, on paper, theoretically, it is the biggest economy. But in practice, it has not yet impacted on the people of Nigeria. There are certain indices that this world body looks at and you may discover that Nigeria is a quietly growing big elephant, humongously so that we yet have not taken note of.

As time goes on, the development they are talking about will begin to manifest in terms of physical showing. We may not see them yet. But Economists, the world over do get the indices right and I think I believe them. We are getting somewhere.

We speak too much of grammar—-Hon. Zakari  Mohammed, House of Representatives spokesman
Nigeria, we need to be very realistic with certain developments. For me , I think that all those indices are just things that one can just place on paper. Rather, what is important is meeting the standard. There is too much of grammar being spoken. What about the living standard of the average Nigerian?

All of us know that in this clime, so many people live on less than two dollars per day and if a country is in that bracket, I exactly do know what indices that are being used to propound those theories. I think  we should deviate from theories and go into practicalities where the basic necessitates of life will be provided for the Nigerian people and that has been the problem over time.

We speak too much of grammar when it comes to economics but in the reality, how much is an average Nigerian worth on the street? I think those are the things that should concern us. Going to unemployment, all of us know exactly what is going on. So, my own take is that all of us must look at those things that retard our economy so that rather than our youths being job seekers, they can become employers of labour because government cannot provide all the jobs in this world.

And in the economy too, power is at the lowest ebb now and there is no stable economy that runs on diesel. So, for me, we should depart from all those theories and at least address the issues. How can infrastructural deficits be addressed? Security, employment, etc, should be addressed.

Translate it to food—-Rep. Ogbonna Nwuke
Of course, it is nice to hear that the nation’s GDP is registering an upward swing, with economic  analysts saying the average 6.8% growth rate annually makes the Nigerian economy one of the most vibrant in the world. But the progressive rise in GDP is yet to translate to more food on the table given that many still live below poverty line.

We are still importing from South Africa-—Odilim Enwegbara, Development Economist
Despite Nigeria’s per capita GDP rising by 89 per cent standing at as low as $2,688, ranked as number 121st in the world’s per capita GDP ranking, Nigeria remains one of the poorest countries not only in the world but also in Africa. It has a population of 170million with $509.9billion while South Africa with 51 million has $370.3billion GDP.

Just like the most populous nation with highly unproductive youthful class, Nigeria as the largest economy status in Africa also comes with all its ironies. Yes, Nigeria is Africa’s largest economy and the 26th largest in the world, and yet to be an industrial economy has virtually all its consumables imported, including from South Africa. Also, it has overtaken South Africa with mere 4,500MW against South Africa’s 43,000MW.

Therefore, while South Africa’s economic competitive advantage is dependent on its high industrial and financial sectors, which are driven by the country’s world-class infrastructure, Nigeria’s economic competitive disadvantage is caused by moribund industrial and financial sectors because of equally moribund infrastructure.

In other words, whereas South Africa’s economy is dependent on internally generated revenue made possible by horizontal economic activities, Nigeria’s, being an oil rent seeking economy with externally generated revenues is vertically economic system, which grows without development.

This means that South Africa’s economy enjoys both multiplier and trickledown effects, and as a result creates jobs and reduces poverty. Nigeria’s economy on the other hand experiences mere multiplier effects without trickledown effects, making a jobless and poverty-ridden economy.

Whereas Nigeria is a nation of two economic extremes — extremely rich and extremely poor without middle-class; South Africa on the other hand is a vibrant middle-class striving economy where the extreme rich pay the right taxes as a way of not only lifting the poor out of poverty, but also making them productive citizens.

That is why while the euphoria following this announcement couldn’t be overemphasized, particularly around Nigeria’s corridors of power, especially for Nigeria to have finally beaten its hegemonic challenger in Africa, becoming largest economy in Africa  isn’t different from the most populous country in Africa and the devil with the details.

That is why unless we understand that GDP rebasing has little significance beyond handing government clearer picture about the structure of the country’s economy as well as providing it with the most reliable tools in tackling the challenges facing the economy should the goodwill be there. That explains why there was little or nothing to celebrate by Nigeria’s millions of poverty-ridden and jobless citizens.

Yes, while the rebasing has confirmed that the most populous nation in Africa shouldn’t be fighting with South Africa over which of the two African countries has larger GDP; the unhidden truth remains that despite larger GDP, Nigeria’s per capita income remains a fraction of South Africa’s. This means Nigeria’s largest GDP in Africa has to be considered along with the cost and ease of doing business.

To reverse the country’s vertical economic growth, which is dependent on externally generated revenues and multiplier effects without corresponding trickle-down effects, we have to start  addressing head-on the country’s high infrastructure deficit, especially if all now agree that without world-class infrastructure there is no way Nigeria could emerge as a modern industrial economy genuinely driven by the real sector.

Bottom line
No doubt, all things being equal, it is indeed a giant leap into economic greatness for Nigeria to emerge the Africa’s largest economy. But according to some analysts, this greatness can only be substantiated if it is translated to food and wealth for the citizenry. Having got the figures correctly, according to Peterside, the leadership is hereby tasked to ensure proper planning that will usher in a better tomorrow henceforth.

Anthony-Claret Onwutalobi
Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
https://www.codewit.com

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