The National Bureau of Statistics (NBS) announced yesterday that illegal and hidden activities, such as prostitution and drug trafficking, will now be included in the calculation of the country’s Gross Domestic Product (GDP).
Additionally, NBS has proposed 2019 as the new base year for GDP and 2024 as the new base year for inflation calculations. This was revealed during a sensitization workshop on GDP and Consumer Price Index (CPI) rebasing, organized in collaboration with the Nigerian Economic Summit Group (NESG).
The bureau explained that 2019 was chosen as the new GDP base year because economic activities were relatively stable that year, unlike in the following years, which were impacted by COVID-19 and policy changes.
The rebased GDP is expected to capture new sectors, including the digital economy, the activities of pension fund administrators, the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), activities of modular refineries, domestic households as employers of labor, as well as illegal and hidden activities.
Dr. Baba Madu, Head of National Accounts at NBS, elaborated on the inclusion of illegal and hidden activities in GDP computation, stating that this will be done in line with national best practices, specifically the 2008 System of National Accounts (SNA).
“If you are into, for instance, drugs, there are some countries, it is this drug that is driving their economy. It is illegal here because there is no legal backing. Also prostitution, they also earn income. Some even live bigger than those in the formal sector. The SNA does not say no to these, it is we. But the challenge is the legal backing and how do we get the data.
“And then, of course, the hidden economy. If I ask you, how much do you earn in a month, you will lower your income. Or if somebody is selling provision in a store, and before you know it he started selling India hemp. Those are the things we are seeing. There are challenges all over the world. But the beauty is that they are less than 3.0 to 3.5% of the GDP.”
Highlighting the importance of the GDP and CPI rebasing exercise, Statistician General, Prince Adeyemi Adeniran, said: “The rebasing is a vital exercise that ensures our economic indicators are current and accurate reflections of the economic realities on the ground. As economies evolve, new industries emerge, and consumption patterns shift, it becomes imperative to update our statistical measures to capture these changes. Rebasing our GDP and CPI allows us to align with these transformations, providing a more precise and relevant picture of Nigeria’s economic landscape. This process is foundational to informed policymaking, strategic planning, and effective governance; hence, it is one exercise that NBS is conducting with significant importance and professionalism.
Highlighting the benefits of GDP rebasing, Chief Executive Officer, NESG, Dr. Tayo Aduloju, in his welcome address, said: “Accurate data enhances credibility. Our debt-to-GDP ratio, a critical indicator of fiscal health, dropped from 19% to 11% after the 2014 rebasing.
“This improved Nigeria’s creditworthiness, making us a more attractive destination for foreign direct investment. Investors are drawn to transparency and growth potential, and rebasing sends a clear message: we understand our economy, and we are open for business.
“Second, rebasing sharpens policymaking. It provides a detailed map of our economic terrain, enabling governments to identify high-growth sectors for scaling and low-growth sectors that require targeted interventions to drive impactful and balanced development. For example, after Ghana’s 2010 rebasing—which resulted in a 60% GDP increase—its policymakers could better plan for infrastructure and social investments, fueling sustained growth.”
