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Published On: Sun, Apr 13th, 2014

Nigeria: Much ado about being Africa’s biggest economy

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By Tque Majolagbe

Over the years, successive governments in Nigeria have bamboozled us with great terminologies such as GDP, per capita income and other macroeconomic indices which they have always used as a ‘good’ scorecard for their stewardship.Not minding the obvious abject poverty and hunger, the lack of power to do as little as lighting a bulb; the spin doctors of the government still utilize these economic jargons as a justification for their time in office.

The recent pronouncement by the World Bank of Nigeria’s economic fortune as judged by the rebased GDP figure has been met with a lot of excitement especially or perhaps exclusively amongst those in government quarters; and of course the fact that Nigeria is now the biggest economy in Africa, and number 26th in the world has popped more bottle caps.I have entered into various discussions of the relevance of the recent pronouncement and most people seem to be at best cynical while a few still feel sympathetic to the government.

The cynicism is not unexpected, given the frustration that is rife in our society these days. Is it not enough that the government fails to provide electricity for domestic and business use, also fails to make gasoline available for purchase, yet it becomes inappropriate or sometimes illegal for someone to buy the commodity into Geri cans. It is as though the government is trying to force us into darkness. But that is the subject of another discussion for another day. For now we will try to X-ray what the GDP rebasing is all about and its relevance to our daily life.According to Investopedia (financial encyclopedia) GDP is defined as the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

It is expected that as the GDP grows the economy grows and so is the standard of living because another calculation based on the GDP is what is called the per capita GDP which is the GDP divided by the population of the country. This however is based on the assumption that the wealth of the country is evenly distributed, but we all know the situation with wealth distribution in Nigeria.

While the GDP tends to give an impression of growth, it doesn’t clearly tell the whole story. Just looking at the GDP alone tells a part, but other indices are also part of the financial report. The per capita income for instance is a fair idea of the resources available to the citizens because it divides the GDP by the total population of the country. Therefore even though Nigeria has overtaken South Africa in nominal GDP, with a population of 150 million and South Africa with population of 51 million, one can imagine that the per capita GDP of south Africa is about three times that of Nigeria.

Besides all these the component of the GDP shows that summing up the GPD can definitely not be a good representative of what is happening to the economy. A closer look may reveal a number of things. For instance, from the above calculation “G” which represents government spending is a very contentious issue in this country. Year in year out, government continues to pass huge budgets without a complementary improvement, be it in infrastructure or otherwise. Adding that figure to GDP is definitely going to be a confounder.

A sector by sector look at the GDP also shows a lot going on or not going on with the economy. For instance, the manufacturing sector of the economy contributed 6.81 percent to the new GDP data equivalent to N5.47 trillion ($34.8 billion) out of the total 2013 GDP rebased estimate of N80.22 trillion ($510 billion).In spite of the various strivings by government to boost the manufacturing sector it stills underperforms compared to other countries. World Bank data shows contribution of manufacturing sector to the GDP in Austria is 19 percent, while that of Thailand remains 34 percent. For South Africa, it is 12 percent, while it is 13 percent for Iran.

Crude petroleum and natural gas which comes under the mining and quarrying sector contributed 14.4 percent or N11.55 trillion ($73.56 billion) to the total 2013 rebased GDP. Considering the fact that this sector contributes about 75% of our present earning, it therefore shows untapped potentials due to failure to develop the sector which has largely existed as rent seeking.

I believe that governance is a social responsibility and the works of the government cannot be measured by how much figures is brandished but how the lives of the people are affected. Other figures that may be of interest are: poverty line in the country, food availability, rate of inflation, infant and maternal mortality. The number of people with access to health care. A number of people are without access to electricity or access to potable water. The government needs to embrace these figures and work by it. Nigerians cannot be moved anymore by the cosmetic figures that have little bearing on the lives of the people and usually comes just before some global institutions are trying to lure us into one financial policy or another. The government can no longer pull wool over our eyes. The reality of the economy continues to stare at us and evoke the necessary responses, actions and reactions from us that will actually deliver us from this quandary. Nigerians are truly in pain.

Dr.Tque Majolagbe is reachable on www.ENDS.ng

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