Dr. Yemi Kale, the Statistician General of the Federation, in this interview, explains what goes into the production of the GDP report to gauge the performance of the economy every three months. Excerpts:
The report came out a bit late. What happened?
The report could have come out a bit earlier but that doesn’t detract from the fact that we employed international best practices, international standards for industrial classification. The procedure doesn’t change in terms of computing the numbers. We had to put more hands into it.
A summary of the numbers would show that the recovery was as a result of the rise in oil production, agriculture maintaining its performance and manufacturing retaining its positive growth because, in the last five quarters, that has been negative. We know that, directly and indirectly, the oil sector contributes about 50% to 60% of the GDP and so improvement in the oil sector would have an overall impact on the performance of the economy; and that is why industry turned positive for the first time in about nine quarters even though services remain negative.
If you look at the non-oil, there was just a marginal growth (0.45%). What were the factors responsible for that?
Non-oil is largely agriculture and then the services sector or activities. And services activities are tied, largely, to consumer spending, the purchasing power like trade, air and road transport, telecommunications, etc. Mind you, inflation is going down but it is still high, double digits, and that constrains how consumption expenditure goes and that is why the services sector would always be the last sector to recover under this kind of situation and the service sector is a huge part of the non-oil sector; so that remains challenging.
The authorities have responded cautiously to the situation. What are the sentiments from their end?
It’s done everywhere in the world, I believe, and it’s more of a courtesy to give the authorities before it is published; to give them a sense of what is happening and an opportunity to respond and they usually get it a few hours before it is published or a day before it is published officially.
But at the National Bureau of Statistics, NBS, our job stops at presenting the numbers as they are. We don’t get feedback regarding what their sentiments are. We just give out the numbers and explain what the numbers mean.
Manufacturing dropped from 1.36% to 0.64%. How do you differentiate between manufacturing on the one hand and industry on the other hand?
Industry is a combination of mining as well as manufacturing. The recovery in industry, as a whole, has to do more with the fact that crude oil and gas production recovered very strongly. Last quarter, it was -15% and the same period last year it was -23%; so to go from that negative to 1.6% is a huge jump, particularly for an economic activity that is number four in terms of share of the GDP. Manufacturing grew slower in the second quarter from 1.6% to 0.64% but that is a situation where what is produced is consumed by households, but if the households budgets have been squeezed, it would also impact on what manufacturing companies are able to sell. And if you look at many of the manufacturing companies that produced, you will see that output for many of them went down even though their gross earnings went up because prices were pushed up significantly. Cement, for instance, prices rose by about 40% and several other manufacturing firms pushed up prices because they are still trying to pass on some of the losses they made in 2016 to consumers. So the increase in price caused earnings to grow. And in real GDP, we take out the impact of the increase in prices. So, I think manufacturing grew slower.
How do you calculate GDP on a quarterly basis? What sort of documents and the volume of same do you go through? How many hours do you spend putting these numbers together?
Our national accounts team is divided into 46 – 46 different activities with different teams looking at each of those 46 activities.
In our frame we have over 900,000 establishments from which we draw a sample of over 300,000. That means we have over 300,000 records going into this and you have to crunch these numbers. It takes quite a while. You have to be careful that errors are not made. That is when you get the raw data.
After that, you have to deflate. Now, each economic activity has a different procedure for deflating – which is taking out the impact of pricing; so it’s really very esoteric and it’s something that our staff had to be trained on and the system of national accounting is extremely technical; the international standards for industrial classification is extremely technical, it’s not pure accounting and it’s a lot of work that goes into it and a lot of care has to be taken while doing the computation. Like I said, we follow international standards.
In terms of gathering data, is it not something you get from government?
NBS is the only government agency involved in getting this work done. Our work is not discussed with government agencies though some government agencies give us data. For example, we try to get the data for banks from the CBN just to make our work easier rather than going to all the banks. Apart from that, I don’t think there’s any involvement whatsoever from government in what we do. We have the courtesy of giving key members of the government economic team the result, just to give them a sense of what is happening and, again, if they have to take questions from the media. That’s basically the only involvement of government.
- *This interview was first published on Channels Television.