Lying With Statistics â€“ Nigeria As The 'Third Fastest Growing Economy'
In a very influential book, How to Lie with Statistics (1954), the American writer, Darrell Huff, discusses the funny business of lying with figures, telling us how intentional or unintentional errors could lead to inaccurate conclusions. The book, which was meant to be an introduction to statistics for the general reader, quickly became one of the most widely read statistics books in history- despite the fact that the author was not a statistician. I suspect that the popularity of the book had largely to do with the fact that using graphs and figures to prove one's point could make one look really clever, and knowing that you are using such uncanny methods to bamboozle the gullible, probably will give an extra illicit sensation.
This brings me to the latest report that the International Monetary Fund (IMF) has ranked Nigeria the 'third fastest growing economy in the world after China and India'. IMF claimed that the country's economy grew 'from 6.9 per cent in 2009 to 7.4 per cent this year'. Minister of Finance, Dr Olusegun Aganga, was reported as saying that the rating by IMF at a time when the economies of the developed world were contracting was a good development and attributed the supposed growth to new policies initiated by the Federal Government.
There are several observations about this supposedly new status as 'the third fastest growing economy in the world'.
One, most statistical projections are based on certain assumptions - once the assumptions are changed, the conclusions also change. For instance the IMF has based its ranking on the assumption of a GDP growth rate of 7.4 per cent as supplied by the Nigerian government . Not many people will agree with this growth rate. For instance the website, www.theodora.com http://www.theodora.com/ , based on figures from the CIA World Fact Book and other sources, estimated that the (GDP) real growth rate for the country was 6.4 per cent in 2007, 5.3 percent in 2008 and 3.8 per cent in 2009. In a country notorious for its poor statistical records and for brandishing figures on a whim (notice how different Nigerians and even researchers brandish different figures regarding our population), most statistical figures given are suspect - and often rightly so. And when these figures come from a government source, on the eve of an election year, when the government is roundly criticised for its handling of the economy, they become even more suspect.
Two, assuming that the growth rate of 7.4 percent given to the IMF by the Central Bank of Nigeria is correct - and that is a big assumption - it actually says very little about the management of the economy. Economic growth - the quantity of goods and services produced in a country- in our oil-dependent economy is often driven by an increase in oil exports and high global prices. It should be emphasised that economic growth is not the same thing as economic development, which is a sustainable boost in the standard of living of the people of a country, including an increase in their per capita income. It may therefore be disingenuous to make a political capital out of this supposed economic growth by suggesting that things are getting better.
Three, since the supposed 7.4 per cent growth rate will imply, in our type-of economy, an improvement in revenues from oil, the government is actually put on the spot to explain to Nigerians what has happened to the extra earnings especially against the backdrop of recent reports on the depletion of the $7bn excess crude account, the country's rising debt profile and the whopping 15 per cent drop in the country's foreign reserve in just one year. Figures issued by the Central Bank of Nigeria on October 7, 2010, showed that the country's foreign reserves fell to $34.57bn as at October 5, 2010, compared to $40.75bn at the same time a year ago. One of the crucial questions that beggar answer is: how has the supposed growth in the economy impacted on job creation, the education sector, pervasive feeling of insecurity and the poverty line? Growth figures are meaningless to ordinary Nigerians if they cannot feel some changes in the quality of their life. And please do not tell them that the benefits will percolate to them in the 'long run' because as the British economist John Maynard Keynes would put it, in the long run we are all dead.
Four, there is a strong suspicion that the current rash of 'positive' news on the economy are contrived to blunt the regime's perceived vulnerability on the economy. It should be recalled that the news of Nigeria's ranking as the 'third fastest growing economy in the world' came at about the same time that Sanusi Lamido Sanusi, Governor of Central Bank, was also named the African Banker of the Year by the global business magazine, Emerging Markets , and the rating agency Standard & Poor (S&P) assigned Rivers State a 'B' international rating, 'owing to its strong cash holdings, low debt and a healthy operating balance'. Forgotten is that many of the bank chiefs that Sanusi criminalised had also received similar international awards. In fact, Sanusi's predecessor in office, Professor Chukwuma Soludo, now blamed by the government for being partly responsible for the economic woes of the country after he wrote an article expressing concerns over the direction of the economy, was also named African Banker of the Year during his tenure. We should also not forget that the rating agencies, Standard & Poor and Fitch, had once told us (after Sanusi's bank 'reforms' unearthed some rots in the system) that the glowing ratings they gave our banks and economy were simply based on figures supplied to them.
Five, while it will be unfair to attribute all the problems in the economy to the current government, there are real concerns that the government should address, and politicians should eschew playing politics with. Eminent Nigerians including Dr Ngozi Iweala and Professor Pat Utomi have for instance expressed grave concerns over the country's increasing debt profile at a time of rising oil receipts. Recently another request by the presidency to borrow additional 4.4 billion dollars was sent to the National Assembly. It should be recalled that in November 2005, the country won Paris Club approval for a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments - a total package worth $30 billion of Nigeria's total $37 billion external debt. Many people will recall the international campaign for debt relief and debt cancellation of the late 1990s and early 2000s. It will therefore be uncharitable to regard any criticism of the handling of the economy as being anti-Jonathan. And if contriving a ranking by the IMF as the 'third fastest growing economy' is one of the strategies to blunt these criticisms, then it is a disservice to the country.