For many decades, statisticians and economists have used Gross Domestic Product (GDP) as the basic tool for measuring economic progress.
GDP aggregates the value of all economic activities in a country.
It is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.
For instance, the GDP figures released by the National Bureau of Statistics (NBS) for the second quarter of 2017 showed that Nigeria moved out of economic recession.
However, some statisticians have advised the Federal Government to review the GDP since developed countries no longer rely solely on it as a measure for economic progress.
Emeritus Professor of Statistics, Timothy Bamiduro, said the Federal Government should rebase GDP and use another methodology that would reflect economic reality.
“They should rebase the calculation. What I mean is that they should review the methodology; people move with times because human living is dynamic.
“The methodology they have been using for years is no relevant to measure economic reality in the recent times.
“They are no longer reflecting the true situation of things,’’ he said.
The don said that the nation should not only be interested in releasing the GDP but should ensure that the calculation reflected reality.
“If the base is wrong, the figure will be wrong as well,” he said.
According to him, development of a nation is no longer on oil and gas but on data.
“The development of a nation is on data obtained to guide development plans, to guide monitoring and implementation of the plans but we no longer invest in statistics again.
“The government should regard statistics as a big contribution to national development.’’
Similarly, a statistician, Dr Olusanya Olubusoye, urged the Federal Government to incorporate Human Development Index (HDI) in measuring economic progress.
Olubusoye, a lecturer at the Department of Statistics, University of Ibadan said that Nigeria had over relied on GDP.
“There are other measures that have been developed to measure economic progress. Human Development Index (HDI) is one of them.
“Several countries, including Australia, have on their own come up with measures that are unique to them.
“They have collections of indicators which they have devised to measure their progress over time.’’
According to him, GDP is an aggregate measure of economic activities in a country.
“Gone are the days, when countries rely solely on GDP as a measure of economic progress.
“For instance, if a country only engages in the production of alcohol, GDP can continue to increase so it is all about economic activities.
“At the global level, several initiatives and adjustments to GDP have been developed.
“For instance, the UN Development Programme (UNDP) developed the HDI to benchmark countries based on combined measurements of GDP per capital, health and education,’’ he said.
The statistician said that several countries had also taken initiatives to measure development and progress in a new and comprehensive way.
He urged the Federal Government to emulate Australia by developing its own mechanism for measuring the country’s economic growth, development and progress.
“Measure of Australia’s Progress (MAP) is a project that identified the most important things for national progress and produced indicators that captured the spirit and aspirations for societal progress.’’
He also urged the Federal Government to ensure that the issues measured would be relevant to the country’s progress and would also determine whether standard of living in Nigeria was improving.
“In the economic domain – we can even break it further – we look at standard of living. There are indicators for measuring standard of living i.e whether the quality of life is improving.
“Unemployment issues are not just about unemployment. We need to know how many jobs are created, not just the unemployment rate.
“Government should be more concerned about how many jobs are created on monthly basis, then, we can super impose that on the number of jobless people.
“When you know the number of jobless people and you know the number of jobs being created, then we will know whether we are gradually engaging idle hands.’’
He further urged the Federal Government to also incorporate the volume of productivity and international trade as part of indicators for measuring economic progress.
Meanwhile, NBS says GDP is still valid to measure economic progress of a nation.
Dr Isiaka Olarewaju, Director in charge of Real Sector Statistics and Household Statistics, said that GDP was still one of the factors to determine economic progress.
“GDP is one of the factors to determine the performance of the economy; there may be other factors, Human Development Index is there.
“There may be other means but that does not rule out the importance of GDP in determination of the economy of a nation.
“So, if other people are saying the methodology is wrong, we are not the one saying so.
“We are just to produce result based on fact that we have used; it is not us, NBS that is saying that Nigeria’s economy is out of recession. It is the data that is saying so,’’ the official said.
The data released by NBS showed that the country’s GDP grew by 0.55 per cent (year-on-year) in real terms in the second quarter of the year.
It noted that the recovery was driven, principally, by the performance of four main sectors: oil, agriculture, manufacturing and trade.
The bureau said the figure indicated that the economy was out of recession after five consecutive quarters of contraction since the first quarter of 2016.
According to Olarewaju, it is the data that is saying so, going from minus two (-2) to a value greater than zero means Nigeria is out of recession.
Olarewaju said that Nigeria’s economy used to grow around 5.0, 6.0 to 7.0 per cent per annum but that it suddenly went to minus two.
He said that the country was gradually moving out of that minus two to the path of going to where it was before.
“It is the interpretation of the statistics that leads us to say we are out of recession.’’
Olarewaju, however, said that the bureau would soon release the report of the Human Development Index survey.
“We are carrying out a survey now for the purpose of computation of Human Development Index for 2015 and the result will be out in three months.
“We normally conduct the survey, using two approaches – instantaneous estimation and documented estimation.
“The data you collect at household level is instantaneous estimation because you base your estimate on the time you collect the data.
“So, if I am asking any question at household level, the limit I can go backward cannot be more than one month, otherwise people will not understand what had happened.
“But when you are collecting economic data from established organisation that keeps record, you can ask for information at any time.
“So, the Human Development Index we are collecting now is going to be computed based on documented information from 2015 and 2016.’’
Nevertheless, experts noted that any methodology used to measure economic progress should reflect the standard of living of Nigerians.
They noted that the government should develop a holistic framework to measure social, economic, environmental and governance to determine whether life in Nigeria is getting better or not.