NBS To Incorporate Prostitution And Hidden Activities Into GDP Metrics

Learn how the National Bureau of Statistics (NBS) plans to include hidden and illegal activities in Nigeria’s GDP calculations, enhancing economic accuracy and transparency.

The National Bureau of Statistics (NBS) recently announced its decision to include illegal and informal activities, such as prostitution and drug trafficking, in the computation of Nigeria’s Gross Domestic Product (GDP).

The bureau also proposed 2019 as the new base year for GDP calculations and 2024 for inflation assessment, aiming for more accurate economic insights. These updates were revealed during a sensitization workshop on GDP and Consumer Price Index (CPI) rebasing, organized in partnership with the Nigerian Economic Summit Group (NESG).

According to NBS, the decision to adopt 2019 as the base year stems from the year’s relative economic stability compared to later years, which were disrupted by COVID-19 and policy changes. The updated GDP calculations will cover emerging sectors like the digital economy, modular refineries, pension fund administrators, the National Health Insurance Scheme (NHIS), and illegal or informal activities.

Dr. Baba Madu, Head of National Accounts at NBS, elaborated on the inclusion of illegal activities, explaining that it aligns with the System of National Accounts (SNA 2008), which many countries follow. “Some nations rely heavily on illegal activities like drug trading to drive their economies,” Madu noted. He added that while such activities lack legal recognition in Nigeria, they contribute to income generation. Challenges, however, remain in obtaining reliable data and dealing with the legal and cultural implications.

On hidden economic activities, Madu emphasized the difficulty of capturing accurate earnings from individuals or businesses operating informally. For instance, small shop owners who secretly trade illegal items or underreport their income pose measurement challenges. Nonetheless, these activities contribute a small fraction—less than 3.5%—to Nigeria’s GDP.

Importance of GDP and CPI Rebasing

Statistician-General Prince Adeyemi Adeniran stressed the significance of the rebasing exercise. He noted that as economies evolve, new industries emerge, and consumption patterns shift, statistical tools must reflect these changes. The rebasing ensures that economic indicators accurately depict Nigeria’s current realities, which is essential for informed policymaking, strategic planning, and governance.

Dr. Tayo Aduloju, Chief Executive Officer of NESG, also highlighted the benefits of GDP rebasing. He explained that accurate data boosts credibility and investor confidence. For example, Nigeria’s debt-to-GDP ratio dropped from 19% to 11% following the 2014 rebasing, enhancing the country’s creditworthiness and attractiveness to foreign investors. Aduloju further noted that rebasing enables governments to pinpoint high-growth sectors for expansion and low-growth areas for intervention, fostering balanced economic development.