Issues surrounding the rebased gross domestic product (GDP) of Nigeria have continued to remain on the front burner, especially as the ordinary Nigerian is finding it difficult to grapple with how it translates into better living conditions and better life. NSE ANTHONY-UKO examines how it can positively impact the capital market.
The National Bureau of Statistics (NBS) last month announced the outcomes of the gross domestic product (GDP) rebasing exercise carried out by it, which led to Nigeria finally emerging the 26th largest economy in the world and Africa’s biggest economy going by the size of its nominal GDP but with income inequality still posing a major challenge.
By implication, the total monetary value of its GDP growth in 2013 was estimated at about N80.2 trillion (about $509.9 billion).
Given the importance of the rebasing exercise to the Nigerian economy, the Securities and Exchange Commission (SEC) recently organised its second quarter learning issues with the theme: the Rebased GDP and its impact on the Nigerian Capital Market.
The director-general, SEC, Ms Arunma Oteh, said the capital market plays a critical role in wealth creation and distribution, adding that the rebased outcome had exposed the challenge of unequal distribution of income.
She said the rebasing has started an important national conversation about the significance of national output and how it affects the ordinary citizen.
According to her, “I am delighted at the rebasing exercise and its outcome. This particular programme has become an important event for our institution because it highlights that the SEC, Nigeria, is a learning institution and that we continue to explore ways we can get familiar with the Nigerian economy and other issues that impact on the market we regulate, particularly given the sophistication on our market.
The GDP rebasing, Oteh said, is a very current and topical issue that has generated a lot of attention. Ordinary Nigerians who are neither economists nor statisticians have also weighed in with comments, stating their opinions about the exercise while we policy makers are still digesting the figures
“On the whole, I consider it a good thing that the rebasing exercise has started an important national conversation about the significance of national output and how it affects the ordinary citizen.
“The new figures have also revealed a structural shift in our economy that the old estimates missed. Services contribute a little over 50 per cent of GDP. Many of us have seen the telecoms and Nollywood revolution and today they are accounted for in the GDP. These new figures are also credible, thanks to the great work of the NBS,” she said.
Oteh said the capital market plays an important role in wealth creation and distribution and this rebasing exercise draws more attention to this role.
“Our market capitalisation to the GDP which is very low at 30 per cent has now declined further to 16 per cent after the exercise, compared in ratio to some of our peer countries like South Africa with market capitalisation to GDP being at 230 per cent, Malaysia 159 per cent, United States of America 118 per cent, China 75 per cent and India 69 per cent. So we have got our work cut out for us. Rebasing should wake us up to the urgent need to ensure that more companies list so that market recapitalisation can indeed better reflect our GDP,” she added.
The Statistician-General of the Federation, Mr Yemi Kale, in his presentation, said it is wrong for anybody to think the new GDP has changed the lives of Nigerians. He emphasised that it is difficult for growth to translate to meaningful development and progress, whether in terms of physical infrastructure or with social indicators.
According to him, “Rebasing the GDP is an exercise which brings the comparison of current GDP estimates to the closest picture of reality as possible. By measuring better the level of economic activity, GDP rebasing provides a more accurate picture of the economy which is crucial to informing policy makers on the current economic trends. This helps in the formulation of more- informed policies to address poverty, unemployment and human development challenges.”
“The rebasing could force government to initiate policies that would redistribute income in favour of the poor. If you do not do that, the poor themselves will redistribute income by engaging in criminal activities that would forcefully redistribute the income,” Kale said.
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