BUSI­NESS New GDP: Nige­ri­ans say ‘no cause for cel­e­bra­tion’

Daily Trust - - NEWS - Min­is­ter of Fi­nance, Ngozi Okonjo-Iweala

The Na­tional Bureau of Sta­tis­tics on Sun­day re­leased Nigeria’s nom­i­nal GDP which showed a rise from N54.2 tril­lion in 2010 to N80.2 tril­lion in 2013, putting the coun­try ahead of South Africa. The de­vel­op­ment re­vealed the new struc­ture of the Nige­rian econ­omy and im­proved the re­li­a­bil­ity of eco­nomic data. While many econ­o­mists who spoke to Daily Trust de­scribed the new in­dex as good, some see it as just a mere ego in­fla­tion as the new pro­file does not re­flect the true po­si­tion of what the com­mon people are go­ing through in the econ­omy.

For Rep Ibrahim El-Sudi the new GDP is mys­te­ri­ous and a mere paper work.

He said the lat­est GDP fig­ures were only in­dica­tive of Nigeria’s ful­fill­ment of the World Bank and In­ter­na­tional Mon­i­tory Fund (IMF) re­quire­ments, which trans­late in the pro­nounce­ment, with­out cor­re­spond­ing im­prove­ment on the lives of Nige­ri­ans.

Rep El-Sudi stated this yes­ter­day in Abuja, stress­ing that it de­fied un­der­stand­ing for some to reel out fig­ures of eco­nomic im­prove­ment when Nige­ri­ans are prac­ti­cally suf­fer­ing in all the nooks and cran­nies of the coun­try.

El-Sudi, who is a mem­ber of the House com­mit­tee on power, also faulted the re­cent pri­vati­sa­tion of the power gen­er­at­ing com­pa­nies in the coun­try, say­ing the hasty way in which the pri­vati­sa­tion was un­der­taken would not au­gur well for the coun­try’s power in­dus­try.

The Pres­i­dent, La­gos Cham­ber of Com­merce and in­dus­try, Remi Bello, wel­comed the re­bas­ing of the Gross Do­mes­tic Prod­uct (GDP) say­ing that the de­vel­op­ment re­vealed the new struc­ture of the Nige­rian econ­omy and im­proved the re­li­a­bil­ity of eco­nomic data.

Bello, how­ever said there is need for cau­tion in cel­e­brat­ing these pos­i­tives fig­ures, be­cause of the weak rev­enue base of govern­ment. The lower ra­tio should not be al­lowed to en­cour­age in­creas­ing deficit spend­ing or in­creased bor­row­ing.

The LCCI boss said they are also con­cerned that while the na­tion’s cur­rent global rank­ing on ba­sis of GDP is 26th, the rank­ing in Global Com­pet­i­tive­ness In­dex is 120 out of 148 coun­tries pro­filed, and the rank­ing in Hu­man De­vel­op­ment In­dex is 153 out of 210 coun­tries.

This un­der­pins the need to ad­dress the is­sues of in­vest­ment cli­mate as well as is­sues of wel­fare of the cit­i­zens. Only then will the coun­try’s per­for­mance in GDP be ap­pre­ci­ated by the busi­ness com­mu­nity and the gen­er­al­ity of the cit­i­zenry.

Bis­mark Ri­wane, CEO of Fi­nan­cial De­riv­a­tive Limited, said the pur­pose of re­bas­ing is to have data in­tegrity and ac­cu­racy which makes it a bet­ter com­pan­ion.

“What is im­por­tant is that your econ­omy has 2.5 per cent of the world pop­u­la­tion but you are pro­duc­ing 0.81 per cent of the world out­put, your po­ten­tial GDP is grow­ing at 11 per cent while your rear GDP is grow­ing at 7 per cent. One thing needs to be clear, GDP is an out­put mea­sure not rev­enue mea­sure, what we have mea­sured is an out­put in a year and brought it back to the value of re­bas­ing, re­bas­ing is what we should do for five years but we don’t do it for 20 years, ba­si­cally what we are do­ing now is catch-up.”

An econ­o­mist, Henry Boyo, de­scribed the re­bas­ing as a de­vel­op­ment that is “good for the ego”, in­sist­ing that the stan­dard of liv­ing of an aver­age Nige­rian is lower than that of a South African.

How­ever, Boyo ex­plained that nom­i­nal in­di­ca­tions that Nigeria’s econ­omy was greater than that of South Africa in terms of out­put would amount to noth­ing if Nige­ri­ans can­not boast of a bet­ter life.

“I do not cel­e­brate any in­crease in that in­dex. As long as you can­not com­pare the per­for­mance of your econ­omy and as far as crit­i­cal in­dices of your econ­omy do not re­flect that of suc­cess­ful economies else­where, you are a fail­ure.

“In­fla­tion rate is never more than 1.5 or 2.0 per cent in suc­cess­ful economies. When it goes above 2.0 per cent you are in cri­sis. Un­em­ploy­ment never reaches the height of 23 per cent or more.

“An op­ti­cal com­par­i­son of the so­cial wel­fare, level of in­vest­ments, level of in­fra­struc­ture that is cur­rently in South Africa, will make you ques­tion the va­lid­ity of the claim that we are ‘bet­ter off than south Africa’.

“Yes we may be big­ger, like a gi­ant, but we cer­tainly are not very ef­fec­tive in the util­i­sa­tion and man­age­ment of the re­sources that are at our dis­posal,” Boyo said.

“There is no rea­son to have $4 bil­lion in re­serve and you have four months im­ports’ cover. And at a pe­riod we had these in­dices in 1996, we had an ex­change rate of N80 to $1.

“And about two years ago we had $60 bil­lion re­serve and be­tween 16 and 20 months im­ports’ cover. When you have an ex­tended im­port cover, you are not sup­posed to have an ex­change rate of about N160 to $1, dou­ble of what we had in 1996. It is not com­men­su­rate.

“It is a re­sult of a de­lib­er­ate ma­nip­u­la­tion of the ex­change rate of the naira.

“It is in­ap­pro­pri­ate to have an ex­change rate of N160 when we have an ex­tended im­port cover. It means that the more that you earn the poorer you be­come,” the econ­o­mist said.

He also blamed the poor stan­dard of liv­ing in Nigeria on the struc­ture of the econ­omy, say­ing that “even if GDP triples with the same struc­ture in place, there will not be real im­pact.

Also, Daniel Ashiekaa, an econ­o­mist said the GDP re­flects the size and di­ver­sity of the econ­omy. “It’s like putting a price tag on our econ­omy, i.e. say­ing this is how much our econ­omy is worth and these are the sec­tors that have given us that worth. You will agree that as of 1990, sec­tors like tele­coms, ICT, fi­nan­cial ser­vices (there were fewer banks and not as buoy­ant as to­day), Nol­ly­wood, etc were ei­ther not there or not as valu­able as to­day.”

On the macro level (i.e. for Nigeria as a coun­try), he said, the new po­si­tion of the coun­try has im­pact on our credit rat­ing, in­ter­na­tional com­pet­i­tive­ness, at­trac­tion to for­eign in­vestors and more favourable bor­row­ing terms.

On the mi­cro level (i.e. at the level of the in­di­vid­ual), Ashiekaa noted that the ben­e­fits are more far fetched or long term. “It does not im­me­di­ately in­crease money in your bank or give you light. Mean­ing, though the Nige­rian econ­omy has been gain­ing trac­tion (as re­flected in the higher GDP,) more work needs to be done by the govern­ment to ad­dress the struc­tural im­bal­ances in the econ­omy be­fore the ben­e­fits of a higher GDP can trickle down to the com­mon man.”

“One area is in­fra­struc­ture (your gen­er­a­tor for ex­am­ple) which is a key driver of eco­nomic growth. We need to ad­dress the en­ergy sec­tor (power, oil and gas), so­cial in­fra­struc­ture (schools, hos­pi­tals, etc), roads, etc - all the things we com­plain about ev­ery­day. If we don’t do these, the growth in GDP will only be sta­tis­ti­cal!

“Good news though is that with all of what we com­plain about, Nigeria (on a macro level) has been record­ing an an­nual growth rate of over 7%.

“I per­son­ally

think

our no­to­ri­ous power short­ages present a mas­sive commercial op­por­tu­nity and I pre­dict that the power sec­tor growth will be more ex­po­nen­tial than tele­coms,” he said

Also, com­men­ta­tors like Obademi Franklin said the fig­ure does not add up, adding that the level of poverty in the coun­try is too high. “The World Bank still said we are very poor. So, been the first in Africa and we are not im­pact­ing on or­di­nary Nige­rian like me is noth­ing to cel­e­brate. I am a grad­u­ate of Ur­ban and Re­gional Plan­ning and I did my youth ser­vice in 2010 but up till now no rea­son­able work. I am only sur­viv­ing on the petty job I am do­ing.”

Franklin said un­til govern­ment is able to deal with un­em­ploy­ment and gen­er­ate jobs for the people, “we are not yet the largest econ­omy. Putting it on paper and cel­e­brat­ing it will not help will us, let us be prac­ti­cal about it.”

Ichemba Wil­liam in re­ac­tion said the re­sult of the GDP is not a sur­prise. He ex­plained that the prob­lem of this coun­try is mis­man­age­ment of fund and lead­er­ship.

“If we do what we are sup­posed to do well, we can still come up even in the world GDP rat­ing. It is a wel­come de­vel­op­ment,” he said.

Mrs. Grace Ade­bola, a trader, said she was shocked to “hear this morn­ing all over the news that Nigeria is now num­ber one in Africa.”

Ac­cord­ing to her, “with the tough sit­u­a­tion of things in the coun­try: mar­ket is not mov­ing, no money and we are the largest? May be for the big people in the govern­ment.”

She said govern­ment should find so­lu­tion to the prob­lem of the com­mon man and help build small busi­ness own­ers, adding that that will help the coun­try to de­velop fast.

God­win Obi­ase­men said, “be­ing the largest does not change any­thing be­cause we are still bat­tling with ba­sic in­fra­struc­tures prob­lem, no power sup­ply, wa­ter, good roads, schools and most ne­ces­si­ties.”

He said: “It is just their own for­mu­la­tion and as it does not trans­late to the well be­ing of in­di­vid­u­als in the coun­try. The govern­ment needs to em­bark on pro­grammes that will af­fect people’s lives, then, we will have and live pos­i­tive eco­nomic growth.”

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