Gregory Kronsten writes for Business a.m.

Gregory Kronsten, experienced investment banker with deep finance and economics knowledge of Africa, and until December, 2021, chief economist and head, macroeconomics and fixed income research at FBNQuest Capital, writes for Business a.m. from London, UK. He debuts in this edition.

Gregory Kronsten, a Consultant on Africa finance and economics, has 40 years’ regional experience in investment banking, stockbroking, macro analysis and publishing. He was chief economist at FBNQuest Capital until December, 2021

ECONOMIC STATIS TICS ARE sought after by households, investors, politicians and the media for the light they throw on daily life and economies. We are all familiar with the different signals they can give, such that, for example, one person can say that manufacturing is in good shape and another that the sector is in difficulties.

If we turn to the service provided by national statistical agencies, we find that steady improvements in the quality and quantity of their data reduce the scope for misleading analysis, whether ill-informed or malicious. Nigeria’s National Bureau of Statistics (NBS) has made huge strides over the past decade. Anybody who entered its offices in Abuja before 2011 cannot avoid reaching the same conclusion. Good leadership, training, IT skills and a higher budget (despite some dips) have helped.

Politicians have been known to criticise the findings of the NBS because they know that the bureau has greatly raised its credibility and that segments of the population take note of its reports. They would not previously have bothered. They clearly notice in Turkey, where the head of the counterpart agency was removed in January on the intervention of the head of state after less than 12 months in situ. It seems that the president did not like the inflation figures and that the leader of the institute told a local business newspaper he would not alter the data because they governed pay rises for millions of workers.

There is no limit to the room for improvement for all official bodies. In Nigeria an index for producer price inflation would be a welcome addition to sit alongside the series for CPI. Seasonally adjusted national accounts are overdue. Among other gaps, we note the absence of output data for widely used goods and services.

Some series are released by trade or industry bodies but the principal statistical body in Nigeria, reporting to the presidency, should be able to bring together monthly production (or sales) figures for sugar, cement, beer, petroleum products, mobile telephone connections, electricity, international airport arrivals (by number) and ATM withdrawals. It falls outside the remit of the NBS but we are not alone in calling for a new, and reliable population census. The last dates from 2006 and has a fair number of critics, some of whom maintain that today’s total is not far off the 140 million then reported. (We do understand the sensitivities of a census in a federal system.)

The gaps have various origins. The poor hard infrastructure, porous borders and size of the informal economy all undermine best practice in the collection of statistics. Funding is another explanation. The national accounts are in need of revision because the current base year of 2010 looks tired in the face of technological change. The share of agriculture still looks too high, and that of accommodation and food services too low. In contrast it was noticeable that Covid-19 impact monitoring, a useful NBS series in the pandemic that drilled down to its decent-size sample of households, was made possible with cash from the World Bank. We would say that external partner governments and agencies, faced with the challenge of disbursing funds before their financial end-year on the ‘use it or lose it’ principle, could do a lot worse than support state statistical bodies.

Credibility is essential. Investors and others have to believe that the data are broadly sound while always subject to periodic revision. In July 2020 the UK Office of National Statistics announced that it was to adjust the GDP growth rate over two decades because of changes to its measurement of output and prices in the telecoms industry. Its investigation concluded that prices for services in the sector had declined by 95 percent between 1997 and 2016 rather than the previous estimate of just over one half.

In contrast to this plausible revision of national data, we would highlight the question marks over the Chinese official national accounts. For our part, we have always wondered how the accounts are released so quickly after the period-end and yet very rarely revised. The releases come at least three to four weeks ahead of those out of G7 economies for the same period. (The US routinely produces three estimates of quarterly GDP.) Bank economists (at respected institutions) are wary of the Chinese data, suggesting a margin of error of up to two percentage points. They also struggle to reconcile the official series with private-sector surveys. Straying from weak credibility to none at all, we recall nostalgically the Cold War and the useless measure of net material product (NMP, the Soviet bloc’s answer to GDP).

Some readers will view statistics as a dry subject popular with nerds. We beg to differ. The better the data, the better the information pool for investors and voters: the worse the data, the greater disincentive for investors and the more fuel for numbing, point-scoring discussions with or without politicians present. The NBS has taken many steps in the right direction. We hope that it will continue on the same path and avoid the temptation of seeking publicity for its own sake. The journey would be faster if funding was substantially increased.

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