NBS to Include Illicit Drugs Trade, Others in GDP Metrics
The National Bureau of Statistics (NBS) has unveiled plans to incorporate proceeds from illicit activities, including drug trafficking, prostitution, and other illegal ventures, into the calculation of the country’s Gross Domestic Product, GDP.
The announcement was made on Thursday, January 9, during a sensitization workshop on GDP and Consumer Price Index, CPI, rebasing. The event was organized in partnership with the Nigerian Economic Summit Group in Lagos.
Baba Madu, the head of national accounts at the NBS, stated that the move aligns with international best practices in economic reporting.
“Illegal activities will be in line with national best practices, specifically the System of National Accounts, SNA, 2008,” Madu said.
He elaborated further, noting that, in some countries, illegal trade significantly contributes to their economies.
Madu added, “It is illegal here because there is no legal backing. Similarly, prostitution generates income. Some individuals in this sector even live better than those in the formal economy. The SNA does not reject these activities, it is we who impose the restrictions.”
He acknowledged the difficulty of accurately estimating the proceeds from such activities, which he said typically represent about 3.0 to 3.5 percent of the GDP.
“But the challenge is the legal backing and how we gather the data. And then, of course, there is the hidden economy. If I ask you how much you earn in a month, you will likely underreport your income,” he explained.
He highlighted instances such as businesses transitioning from legal activities to illegal ones, like selling provisions and later switching to selling cannabis, as issues complicating data collection. “These challenges exist worldwide. The good news is that these activities constitute less than 3.0 to 3.5 per cent of the GDP.”
In his opening remarks, Adeyemi Adeniran, the statistician-general of the federation and CEO of the NBS, emphasized the significance of the GDP and CPI rebasing exercise.
“The rebasing is a vital exercise that ensures our economic indicators are up-to-date and accurately reflect the economic realities on the ground,” Adeniran said.
He highlighted how rebasing allows for the inclusion of emerging industries and shifting consumption patterns, enabling a more accurate depiction of the country’s economic framework.
In addition to illicit activities, other sectors to be included in the rebased GDP are the National Health Insurance Scheme, the Nigerian Social Insurance Trust Fund, modular refineries, and domestic households acting as employers of labour.
