Nigeria - lies, damned lies, and statistics; my 2019 resolution to lie less

Twitter: @nevinomics Instagram: @a.s.nevin

At my age (tip: my age is a secret but I graduated High School in 1977!), I don't really make New Year's Resolutions, because what difference would it make anyway with so little time left.

But this year, I promised to lie less. And I don't mean lying to myself about my weight or that my forehand has a lot of topsin - I am pretty sure these lies will continue.

What I mean is stop repeating the statistical lies about Nigeria and its economy. Here are some of the statistics we hear every day about Nigeria (and I repeat every day!):

• GDP is (in USD terms) $375.745 billion
• Unemployment is 23.1%
• Remittances are $22 billion
• Exports are $44.5 billion

What are the sources of these statistics. Well, in order the sources are the WB, NBS, WB, WITS.

So this makes it sound so official that it must be true. And people like me create powerpoint slides and give speeches and media interviews where we repeat these statistics so they essentially become de facto truisms. After all, if IMF is putting out these numbers and groups like PwC are repeating the numbers, and journalists are spreading the numbers, they must be true (or close enough).

But I have come to the conclusion that in fact these numbers are likely to be significantly different from the economic reality of Nigeria.

Why does this matter? Because if we don't understand what is happening in Nigeria, we will not be able to manage our affairs properly ... put bluntly, by lying to ourselves about what is going on, we do a disservice to Nigeria because we can't make the right decisions nor policies. And by lying to outsiders, we hurt our credibility and further damage Nigeria's poor reputation.

So here is my resolution for 2019: I am going to stop standing up and repeating statistics I can't confirm ... and the top statistic I will stop repeating is that Nigeria's population is 199m (according to UN in real time) when I don't know it is true

https://www.worldometers.info/world-population/nigeria-population/

So why do we think the economy is in reality significantly different than the official statistics?

• Informal economy - much of the economic activity in Nigeria is not in the formal economy; people pay cash, taxes are not paid (at least not to the government ... certainly many structures arise where users pay fees for services without the government). Of course, when we hear that a subsistence farmer lives on less than $1 a day, this is absurd. The farmer is growing her own food, which has value not captured in the GDP statistics.
• Informal trade - long before the colonial era, there were well-established trade routes across West Africa that did not recognise the current arbitrary borders. Trade along these routes is still large, yet is not known. Afrexim Bank, in fact, is starting to recognise this and trying to figure out what is the real intra-African trade (as part of preparing for AfCFTA)
• Informal remittances - the official remittance number is $22Bn, according to WB. But we have a Diaspora of some 15m (actually do we know this?), and many (most?) of these send money to Nigeria through informal channels. In fact, I myself use the Aboki system to send Naira to GBP, and no money goes across the border. I am not sure if I am doing anything wrong here but the Aboki system is simply better than official channels. And every time someone from the Diaspora comes to Nigeria with 3 mobiles for their nieces, this is an informal remittance. AfDB estimates that informal remittances might be 50% of formal remittances in Africa. But given the immense power and wealth of our Diaspora, this number might be higher for Nigeria. But who knows?
• Real Estate - one sector I particularly want to highlight is Real Estate. PwC Nigeria has said for 2 years that the Real Estate sector is the most critical for Nigeria because (i) 2/3 of assets are real estate; (ii) we need 17m homes; and (iii) Real Estate drives employment and will help alleviate poverty and youth unemployment. That said, on the official statistics, Real Estate is dismal. It accounted for 6.41% of total real GDP in 2018. The sector's growth contracted by -4.74% in 2018 compared to the contraction of -4.27% in 2017. But again, I am not sure this is accurate - despite challenges of the Land Use Act and title transfer, Nigerians are finding ways to build dwellings in ways that have not necessarily completed all the formalities - this is not to say illegal, but to fulfill a need, they are willing to take some risk because of problems with our formal procedures. So the official statistics are not accurate.
• Population - finally, the most controversial official figure (lie?) of all. How many Nigerians are there? I have had many conversations with Nigerians about this and some think there are more than 200m ... some less. But the important point is we don't know. And we don't seem to be doing anything serious to find out an accurate number. Of course, we all understand why some people do not want this issue addressed - the current obfuscation is a benefit to these people. But it is not in Nigeria's long-term interests to not to know how many people there are, for all sorts of reasons, including (i) delivery of medical care and education; (ii) economic planning (infrastructure, real estate for example); and (iii) credibility with the rest of the world.

So where do we all go with this? For PwC Nigeria, in 2019, we want to go deeper into these issues and try to get a more accurate view. Some of the answers may surprise us.

But for the country as a whole, one issue that needs to be thought through is how we bring the informal sector into the formal sector. The government is obviously eager to do this, because you can tax the formal sector. But here's the thing: we can't force (I don't think) or indeed should not force the informal sector to come into the formal sector. We need to create structures that make people come into the formal structures voluntarily. And that is not simple. Take the Aboki system, I use it because it is simply much better - faster, cheaper and probably safer! I would be very happy to use the formal system when it is better ... and this is the challenge for Nigeria: create structures that bring the informal sector into the formal sector ...

Lots more to say during the course of 2019!

God Bless Nigeria.