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Published On: Sun, Apr 20th, 2014

Rebased GDP, World Bank and Nigeria’s realities

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World Bank logoBy John Ainofenkhai

First it was the World Bank Country Director, Marie-Francoise Marie-Nelly who claimed that 100 Million Nigerians were living in destitution. Then the Bank President, Dr. Jim Yong Kim while speaking at the Council on Foreign Relations (CFR) in Washington early this month, rated Nigeria among the world’s extremely poor countries.

Dr. Kim’s grouping of Nigeria in the same poverty bracket with the likes of India, China, Bangladesh, DR Congo, Indonesia, Pakistan, Tanzania, Ethiopia and Kenya, was hotly disputed by Nigeria’s Finance Minister, Dr. Ngozi Okonjo-Iweala. This is in spite of the fact that the country stands to benefit from the Bank’s policy aimed at ameliorating the economic hardship in those middle-income countries — including a $100 billion increase in lending. For a country that has worked hard in the past few years to reposition its economic growth indices — and making appreciable success of it –the World Bank’s exaggeration of the nation’s poverty level was rankling. It rankled mainly because of the premise on which the classification was done– premises that are grossly inaccurate and easily disprovable.

Since 1990 when the nation’s gross domestic product (GDP) was last recalculated, strides have been made in various sectors of the economy, so much that relying on the previous benchmark was like constructing policies with obsolete statistics. In recent years, especially since the coming of President Goodluck Jonathan, a new drive has been given to expanding the economy and reducing the level of poverty in the country. Never before had the drive- to reposition the country economically, restore the productive sectors and pull the majority of the population out of deep poverty- been given the impetus it has received in the past four years.

The administration’s efforts at reforming the agricultural sector has vastly increased production and created many job opportunities, especially for the poor. Also, a sizeable percentage of the Subsidy Reinvestment Programme (SURE-P) is allocated exclusively to protecting the poor through different types of social safety nets. The manufacturing sector has received as much attention as the entertainment whose growth the President has done so much to stimulate. In 2011 alone, President Jonathan made a grant of N3 billion to the Nigerian film industry otherwise known as Nollywood. It was part of activities to mark the 20th anniversary of Nollywood, and he said part the money will be used for infrastructure development in the industry. It is therefore not a big surprise that it has become a factore in our overall GDP calculation, with potentials to grow even bigger in the coming years.

When added to its deliberate efforts to stimulate exponential growth in several other sectors, especially the power, telecommunications and industrial sectors, the size of the Nigerian population that has exited the poverty doldrums in recent time will be better appreciated. The President was right therefore to have stated weeks back that the economy was on a sure path to recovery.

The decision by the National Bureau of Statistics (NBS) early this week to rebase Nigeria’s GDP to better reflect the country’s changing economic configuration over the years, has ultimately validated the government’s claims to being the continent’s biggest economy. While the recalculation of the GDP to its present size of $510 billion has boosted the size of the economy by over 60 percent, it has also pushed the country to the 26th largest economy in the world.

The question that naturally comes from the rebasing exercise is: how does it affect the well-being of the ordinary man? This is a valid question considering that many have celebrated the rebasing exercise as a ‘turnaround’ which, in real terms, it is not. The most significant outcome is at best, the prospect that new parameters will emerge on which planning and policy formulation will be based. Not only does the rebasing now factor in fast-rising sectors like telecommunications, the Internet and the burgeoning film industry, it adds a new fillip to President Jonathan’s target of focusing the country to become one of the world’s top twenty economies by 2020.

Nigeria may still be significantly underdeveloped in terms of basic infrastructure but they are being addressed with the new impetus by President Jonathan. Indeed, Nigeria was recently honoured for meeting the Millennium Development Goal (MDG) of reducing people living in absolute hunger by half, well ahead of the 2015 target set by the United Nations. His administration’s recent privatisation of the power sector is a giant leap in the quest to create the right infrastructure base and enabling environment for the country to take the reins of their economic destinies in their own hands.

Being Africa’s number one economy, expectations are that Nigeria’s attraction of foreign investments which have received global attention will greatly improve. Nigeria which accounts for about $5bn of the foreign direct investment into Africa in 2013 alone obviously stands as the focal point of the MINTs, an emerging economic power house in the coming years which include other countries like Mexico, Indonesia and Turkey.

Not only do the recent World Bank statements contradict its earlier position that poverty has fallen under this administration, as attested to by its Vice President for Africa, Makhtar Diop, during a visit last May, the Chief Economic adviser to President Goodluck Jonathan, Nwanze Okidegbe said the figures being peddled of the country poverty level are contentious and a misrepresentation of the country’s realities. He reasoned for instance that if, according to the World Bank, to live in extreme poverty is to live on less than $1.25 per day, including the cost of accommodation, clothing, feeding, and other incidentals, it cannot therefore sustain its position on Nigeria considering that $1.25 per day translates into a mere N200 per day (or N6,000 per month) which an overwhelming percentage of the population take for granted.

The administration’s new policy direction which enhances production and service delivery, has now received the perfect complement in the GDP rebasing exercise. If the administration sustains its efforts at addressing the productive sector with its multiplier effects on economic self-development, Nigeria will surely and steadily assume its position among the world’s economic giants within the next decade. Surely, the GDP rebasing exercise is a game changer.

John Ainofenokhai is on linkedIn

 

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