A renowned Capital Market Professor at Nasarawa State University, Prof. Uche Uwaleke, has raised concerns over Nigeria’s ongoing GDP rebasing process, particularly the proposed inclusion of illegal activities such as smuggling, prostitution, and human trafficking in the computation.
Speaking during an interview with Arise News on Friday, he argued that such a move could legitimise these activities, setting a worrying precedent in economic reporting.
“For the first time, there is an attempt to include illegal activities in the computation of GDP,” Prof. Uwaleke said.
“I don’t think it would be a good decision for us to include those activities. No single country in Africa does this, and including them tends to legitimise these actions.”
He touched on the significance of GDP data, funding constraints, and concerns over the inclusion of illegal activities in GDP calculations.
On the importance of GDP rebasing, Prof. Uwaleke remarked, “It’s a good thing they are continuing with the engagement because it’s very important for the public to be aware of what they are doing. At the end of the day, whatever comes out should be generally accepted by the public.”
He emphasised the critical role GDP data plays in economic planning as he said, “We know that the GDP data is very important in economic planning. Every year, you find the government including those targets in the annual budget. Investors are conscious about what inflation figures are.”
Prof. Uwaleke identified funding as a major challenge, saying, “Why have we not done the rebasing? It’s because of the funding. It’s a very huge exercise, and funding has been the major challenge.”
Explaining the significance of GDP rebasing for the average Nigerian, he stated, “These numbers are very important to the ordinary Nigerian. With the rebasing, we expect the numbers to be larger this time, and if the GDP eventually comes out larger, it would mean that some of the metrics and ratios benchmarked to GDP would improve. For example, the debt-to-GDP ratio—we expect that to improve. Every metric that has GDP as the denominator will benefit.”
He added that, “There are people who view the size of the GDP favourably—investors, creditors, and others. The central bank also relies on inflation data to brainstorm policies. High interest rates impact the economy, and this is something that cannot be ignored.”
Prof. Uwaleke expressed strong reservations about the inclusion of illegal activities in GDP calculations saying, “My major concern with the GDP rebasing is the inclusion of illegal activities. For the first time, there is an attempt to include illegal activities such as smuggling, prostitution, kidnapping, and human trafficking in the computation of GDP. I don’t think it would be a good decision for us to include those activities.”
He further argued that, “There is no single country in Africa that includes illegal activities in the computation of GDP. When you include illegal activities, you tend to legitimise them.”*
While supporting other aspects of the rebasing process, he noted that, “The inclusion of the digital economy, modular refineries, pension fund activities, and national insurance are very good steps. But for illegal activities, I think we should not include them.”
On the reference price and inflation, Prof. Uwaleke said, “The GDP from 2019 made a lot of sense, but we had issues with 2020 onwards. The government is already targeting a 15% inflation rate this year, so by the time we finish rebasing, it’s important that whatever is put out reflects the current reality.”
He praised efforts to expand the Consumer Price Index (CPI) basket and modernise classifications saying, “I’m happy the basket is being expanded from 740 to 960 items for CPI computation. I’m also happy they now want to digitise the process and migrate from the initial 1999 divisional classifications to the 2018 version. Additionally, reducing the weight of food in the computation is a positive step, as this is where the pressure lies.”
Boluwatife Enome
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