The National Bureau of Statistics (NBS) has announced plans to incorporate illegal and hidden activities, such as prostitution and drug peddling, into the calculation of Nigeria’s Gross Domestic Product (GDP).
The NBS made this revelation during a sensitization workshop on GDP and Consumer Price Index (CPI) rebasing, organized in collaboration with the Nigerian Economic Summit Group (NESG).
As part of the rebasing exercise, 2019 has been proposed as the new GDP base year, while 2024 will serve as the base year for inflation computation.
Explaining the choice of 2019, the bureau highlighted that the year was characterized by relative economic stability compared to subsequent years disrupted by the COVID-19 pandemic and policy changes.
The rebased GDP is expected to reflect emerging sectors such as the digital economy, pension fund administration, activities of the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), and modular refineries.
Meanwhile, it will include domestic households employing labor and coverage of illegal and hidden economic activities.
The recalibration aligns with global best practices, aiming to provide a comprehensive and accurate representation of Nigeria’s economic performance.
Dr. Baba Madu, Head of National Accounts at the National Bureau of Statistics (NBS), has shed light on the inclusion of illegal and hidden activities in calculating Nigeria’s GDP.
He explained that the approach aligns with the 2008 System of National Accounts (SNA), an internationally accepted standard for measuring economic activity.
He said, “Activities like drug trade or prostitution, though illegal here, are key drivers of some countries’ economies. While these are not legally sanctioned in Nigeria, they generate significant income—sometimes even more than the formal sector.”
According to Madu, the SNA doesn’t exclude such activities; the challenge lies in legal recognition and data collection. For instance, hidden economies arise when individuals underreport income or engage in unregistered trade, like selling contraband alongside legal goods. He noted that globally, these issues exist, but in the country’s case, they account for less than 3.5% of GDP.
Statistician General Prince Adeyemi Adeniran emphasized the significance of the ongoing GDP and Consumer Price Index (CPI) rebasing exercise, noting its role in keeping Nigeria’s economic data relevant.
He said, “The rebasing is a vital exercise that ensures our economic indicators are current and accurate reflections of the economic realities on the ground. As economies evolve, new industries emerge, and consumption patterns shift, it becomes imperative to update our statistical measures to capture these changes.”
According to him, rebasing ensures Nigeria’s economic indicators reflect current realities.
He noted that economies evolve with new industries and shifting consumption patterns, adding that updating Nigeria’s statistical measures is crucial.
He said the process provides a clearer picture of Nigeria’s economy, supporting better policymaking, strategic planning, and governance. NBS is committed to executing this exercise with professionalism.
Dr. Tayo Aduloju, CEO of the Nigeria Economic Summit Group (NESG), highlighted the tangible benefits of GDP rebasing. In his remarks, he explained how accurate data boosts national credibility.
“After the 2014 rebasing, Nigeria’s debt-to-GDP ratio fell from 19% to 11%, improving our fiscal health and enhancing creditworthiness. This transparency made Nigeria more attractive to foreign investors, who value clarity and growth potential.”
He added that rebasing sharpens policymaking by offering a clearer economic overview.