The economy: Rebased or transformed?

Of course there are those who would argue that rebasing and transformation are not mutually exclusive. Some would even say rebasing (which accurately and commendably reflected changes in the Nigerian economy in the last two decades) is a function of a transformation. Maybe. But certainly rebasing and transforming an economy are not the same. The […]

Of course there are those who would argue that rebasing and transformation are not mutually exclusive. Some would even say rebasing (which accurately and commendably reflected changes in the Nigerian economy in the last two decades) is a function of a transformation. Maybe. But certainly rebasing and transforming an economy are not the same. The former is in quantitative terms while the latter is in quantitative terms. The United Nations defines rebasing as the “process of replacing present price structure (base year) to compile volume measures of GDP with a new or more recent base year.” Quantitative Nominal GDP at current prices does have its usefulness though. In quantitative terms, we are now the biggest centre of goods and services in the continent. The Godliness is in the details for Nigerian economy. According to Yemi Kale, the DG of the National Bureau of Statistics, on paper (i.e. in nominal terms,) the size of the economy expanded by more than three-quarters to some estimated 80 trillion naira ($488 billion) for 2013 compared to some $262.6 billion. Conversely the devil is in the details for South Africa which has been beaten to a second position in economic activities at some World Bank’s 2012 estimated GDP of $384.3 billion. To this extent, the new Rebased figure for Nigeria legitimizes Nigeria’s Super Eagles serial defeat of Bafana Bafana in the round ball tournament. But the real economy is certainly not football tournament. Nigeria undoubtedly leads in nominal GDP no less as it is the current champion of the African Cup of Nations for football. But in real quantitative terms, SA’s economy is stronger. Its GDP is driven more by value adding manufacturing activities compared to Nigeria’s economy. According to United Nations industrial Development Organization, UNIDO manufacturing industry in Sub-Saharan Africa (SSA) lags behind other developing regions in almost all measures of economic development, namely income per head, industrialization and agricultural productivity. The distribution of manufacturing activity in SSA, measured by the dollar value of manufacturing value added (MVA), is highly skewed. Only ten out of 45 countries have an MVA of one billion dollars or more, while just one country, South Africa, accounts for 27.3 percent of the subcontinent’s total MVA. In Nigeria, manufacturing accounts for less than 4 per cent of the GDP. Nigeria’s new numbers came interestingly from marginal services such as movie; the music industry and the telecommunication sector, which all combined to push Nigeria’s economy over that of South Africa. Even at that, the local content of these services is debatable. In fact South Africa’s economy drives Nigeria’s newly captured activities such as telecoms and music and movie industry ( given that we must still watch better Nollywood films if only we pass through SA’s DSTV. All these mean that under
these new nominal figures, South Africa is still ahead of Nigeria in qualitative terms. Indeed Nigeria still parades lower per capita GDP of just 1000 dollars far less than South Africa at $6,800.  Rebasing therefore does not mean Nigerians are better off than South Africans. Indeed we are worse than South Africa in prosperity. Two-thirds of Nigerians still live below poverty line. Electricity is still a luxury while lives are daily unavoidably wasted to poor health and transport facilities.  The list of activities captured under the rebasing must have increased to 46 from 33 previously to include “telecommunications and information services, publishing, motion picture, sound recording and music production and broadcasting, arts, entertainment and recreation, financial institutions and insurance as well as real estate”. However the rebasing must also indicate many manufacturing activities that have disappeared in the last two decades. Which then now raises the issue of transformation that President Jonathan promises. This administration will be better assessed in terms of promised transformation agenda dealing with power supply, agriculture and beneficiation in the extractive industries such as oil and gas. With wholesale importation of tooth picks to petroleum products, textiles to furniture, it’s certainly not yet a transformed Nigerian economy.