PHCCIMA PRESIDENT GIVES INSIGHT WHY NIGERIA WAITED FOR 24 YRS TO REBASE HER GDP
The President of Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture, PHCCIMA, Engr. Emeka Unachukwu has explained the underlying reasons why Nigeria had to wait for 24 good years to rebase her Gross Domestic Product (GDP) after experiencing the last one in 1990.
Speaking as guest lecturer in a presentation titled: 'Rebasing Nigeria's GDP Growth – Impact, Opportunities and Challenges' at a business summit held in Nigeria's Abuja, Nigeria's capital city the PHCCIMA boss disclosed that serious strategic economic considerations were giving a thought by the Minister of Finance, Mrs Ngozi Okonjo Iweala and the economic team to arrive at that conclusion.
Unachukwu explained that the idea to rebase the Nigerian economy was shelved in the year 2000 in order to pursue debt relief from the Paris Club and multilateral lenders. He revealed that a revised GDP for the country would have pushed the economy into the category of the medium income economies, stressing that Nigeria's decision not to rebase until 2014 got the country a discounted offer to pay $12 billion within one year instead of $30 billion with interest and compound to be paid in 33 years.
Elaborating on the reason why we decided to rebase in 2014 he said policy planning and efficient programme design among others where accountable for the decision. He said the 2014 rebasing enabled the country to obtain a more accurate set of economic statistics that is a truer reflection of current realities, for evidence-based decision-making and accurate estimate of the size and structure of the economy.
According to him, it also enhanced tools for strategic planning, engineered a better understanding of the structure of the economy especially the sectoral growth drivers.
Continuing, Unachukwu explained that the decision to rebase was premised on monitoring and Evaluation of policy impact & implementation and Increased demand for accountability from citizens.
Defining the word rebasing, Unachukwu said it a process of replacing an old base year with a new and more recent base year, the base year according to him provides the reference point to which future values of the GDP are compared. “It is a Process of replacing present price structure (base year) to compile volume measures of GDP with a new or more recent base year” he was quoted as saying.
Dissecting the Nigerian rebased economy he said the rebased GDP value is now worth $510 Billion. This according to him means an Increase in economy size to 89%, and hss comfortably positioned the country as the world's 26th economy rising from its previous 36th position.
The rebasing he said also indicates a rise in the country's per capita GDP to $US2, 922 from previous $US1, 600 and makes the Nigeria economy 1.45 times larger than South Africa's economy, and also 32% of all of sub-Saharan Africa's economy and 21.4% of Africa's total economy.
The PHCCIMA helmsman noted that the debt to GDP ratio has fallen from 19% to 11%, fiscal deficit to GDP ratio will improve, staying far below the 3% threshold stipulated in the fiscal responsibility Act.
Unachukwu concluded by saying that the future of the country is bright, adding that Nigeria is open more than ever to do business. He said the rebasing of the country's Gross Domestic Product (GDP) translate to a boost in Nigeria's financial market ratings as Investors will increase their interest in the country.
“Over the medium to long term, interest rates will fall; exchange rate will be strengthened, while external reserves would improve as net resource inflows increase”, he said, adding that reduction in public debt to GDP will be an opportunity to increase public expenditure on critical infrastructure to support growth sectors with Improved stand in the international community as an emerging world economic power.
It will be recalled that the country last rebased in 1990, as at the year 2000 when the call for another rebasing was imminent the Minister of finance in the Obasanjo administration, Mrs Okonjo Iweala advised the country against rebasing. Her reason was that if we rebase now it will make us look like a rich country which ultimately will deny us of some of the fringe benefits as a developing country. She said the delay will provide us more time to restructure, get our acts together.
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