By Emmanuel Elebeke

The Nigerian Bureau of Statistics, NBS, says it is undertaking a back casting exercise to re-compute the recently completed rebasing of the nation’s Gross Domestic Product, GDP.

In a statement, the Bureau said the GDP estimate revisiting exercise for years prior to the new base year (2010) is aimed at ensuring a complete understanding of the country’s economic history and structural transformation especially over the last two decades.

The exercise, when completed, the Bureau said, would facilitate not only a direct comparison by sector/economic activity, but will also enable policymakers and researchers understand more fully the effect of sectoral policy over the years.

In order to ensure that the estimates can be compared for both pre and post rebasing periods however, NBS said it is undertaking the exercise cautiously, pending the conclusion of the exercise.

However, it noted that the comparison between previous estimates of the sectoral and real GDP should be interpreted cautiously until the new exercise is concluded.

It will be recalled that the rebasing and re-benchmarking exercise of Nigeria’s National Account Estimates (including the Gross Domestic Product, GDP series) was concluded by the National Bureau of Statistics in July 2014, which ranked Nigeria as the biggest economy in Africa over South Africa.

The statistical exercise resulted in a revision of nominal and real GDP estimates as well as growth rates of GDP for the period 2010 to 2014, as the base year (i.e the reference year for computation) was adjusted from 1990 to 2010.

The selection of a base year, according to NBS was determined by the availability of data as well as the stability of the general economy during that year.

Before the current rebasing project, Nigeria had not rebased since 1990, whereas, the UN Statistical Commission recommends the exercise be carried out every five years.

In addition, NBS said new guidelines released by relevant international statistical bodies necessitated that it should also update its computational frameworks as at when due.

According to the Bureau, the revisions involved significant methodological adjustments, better data collection techniques, inclusion of new economic activities and a re-classification of some activities in the computation framework in compliance with international best practice.

Also, it said the revisions would involve expanding business register for selecting survey samples as well as expanded data sources, all of which helped to improve the previous estimates of economic growth and enhance their relevance in reflecting changes in the economy over time.

“Changes in an economy occur for a variety of reasons: new products and services, technological innovations, changes in consumption patterns, structural changes in the pattern of production and in openness of the economy etc. These changes imply that there are changes in the relative prices of commodities, consumption and production patterns, as well as the overall price structure of the economy, necessitating the periodic update of GDP estimates, as the base (reference) year becomes increasingly obsolete,” said NBS.

The Bureau however, pointed out that one of the notable observations of the rebasing exercise is the fact that it has resulted in lower estimates of both sectoral and real GDP growth rates, when compared to previous estimates and cautioned that ‘comparability’ of the rebased (2010-2014) estimates of GDP growth rates with previous estimates, or even estimates of the preceding years must be done with caution, in view of the considerable methodological adjustments that have been undertaken.

It argued that a wrong comparison between the previous and current methodology could result into a situation where the output of such firms would no longer be attributed to agricultural output, which could possibly lead to lower growth rates in the sector.