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Issues In The News

Soludo Goofed: Press Statement on Nigeria’s unemployment and poverty figures and measurement

Office of the Chief Economic Adviser to the President

Press Statement on Nigeria’s unemployment and poverty figures and measurement

Date: February 4th, 2015

1. Following the recent widely publicized articles by Professor Chukwuma Soludo on his thoughts about the performance and management of the economy, it has become imperative to respond in order to clarify some of the statements and keep the records straight. Irrespective of people’s political persuasions, it is always better if public discourses are based on facts. The Office will comment on critical issues contained in the latest article published on Monday 2nd February 2015 that borders on the integrity of our data and the development of economic and social statistics in Nigeria, especially relating to unemployment and poverty statistics. Our knowledge of the facts makes it compelling for us to present them to the public as they are.

2.On unemployment and Job Creation, there is no doubt that Nigeria, like many other countries in Africa, faces unemployment and underemployment challenges, especially amongst the youths. However, to our knowledge, no other administration before now has based its policies and programmes on the peculiarities of Nigeria’s job market, as this administration has done.

3. A key part of the problem with Nigeria’s unemployment statistics is definitional. The problem is that Nigeria (or the NBS) measures unemployment differently from the rest of the world. This makes our unemployment data neither internationally comparable nor of much use for policy purposes. The common economic definition of unemployment is “the number of those in the labour force who are without jobs but are actively seeking one.” The internationally accepted [International Labour Organisation (ILO)] criteria for measuring unemployment are persons in the labour force who are out of work and / or work for less than an hour a week. The reason for the above criteria is to ensure unemployment statistics are comparable across countries.

4. In 2011, the unemployment rate was 23.9 percent, according to the National Bureau of Statistics (NBS). However, the NBS official measure of the unemployment rate is the percentage of the labour force that works less than 40 hours a week, as against the internationally accepted one hour a week. If we go by NBS measure, it means everyone in France is unemployed, considering they have a 36-hour work per week, and it is the case for many other European countries. The attention of the NBS has been drawn to this anomaly in approach. Currently, they are working with both local and international statistical experts to ensure that internationally accepted methodology is used in arriving at our unemployment figures.

5. Since 2012 the administration of President Goodluck Jonathan has sought not only to have the right measures of unemployment, but also to understand the dynamics of unemployment in the country. To put in place appropriate strategies, policies and programmes for job creation, we have to properly analyse the jobs market. Before this administration, there was no published data on how many jobs were being created in the economy based on internationally accepted methodology for tracking these jobs. We now have reliable data that about 1.4 million jobs are being created annually, and which sectors are creating them. These data are important in calibrating the right policies for job creation and are generated from field survey and data analysis. Such statistics cannot be picked from thin air in a matter of 10 minutes.

6. The second issue we would like to comment on relates to poverty measures. The problem with these measures is similar to that of unemployment. Commenting on the poverty figures, Professor Soludo said “what worries me is that this government is the first in our history to attempt to manipulate our national statistics”. In 2012, the NBS released the results of poverty measures survey conducted in 2010. The survey indicates that poverty rates in Nigeria increased between 2004 and 2010. Absolute poverty, which indicates the minimum requirements necessary to afford food, clothing, healthcare, and shelter increased from 54.7 percent in 2004 to 69.0 percent in 2010. This represents an increase of about 15 percent between 2004 and 2010. NBS projected that absolute poverty may have risen slightly to 71.9 percent in 2011. Note that the 2011 poverty figures are not based on any surveys, but simple projections. To set the record straight, the poverty assessment was for the period between 2004 and 2010, before the administration of President Goodluck Jonathan. This administration therefore has no incentive to manipulate the data.
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7. Our response therefore is based on the fact that every sensible economist will certainly wonder how can there be so much increase in poverty despite an average of 7 percent annual growth between 2004 and 2010. The data is inconsistent. It is very unlikely that the economy is expanding year on year while absolute poverty is increasing. Even in the midst of severest of all inequalities, at best, absolute poverty should not be expected to rise at that magnitude. To question a data is not the same thing as manipulation.

8. As Professor Soludo himself commented on the same poverty figures in a widely published article on 27 November 2012, and we take two quotes from the article: “From the NBS result, much of the Northern Nigeria is still in a poverty trap, although the rate of worsening poverty has slowed down. An interesting puzzle is the South, (especially the South East which previously had the lowest poverty rate)”. Commenting further, Professor Soludo wrote “Can this be true or a typo? The statistics are quite intriguing. To be honest, I have serious reservations about the NBS figures. As I argued in an earlier article, the flaws are so much that neither the arithmetic nor the economics makes sense. The NBS needs help to give Nigeria credible national income and statistics”. (Emphasis ours).

9. We agree with Professor Soludo that it does not make sense and defies economic logic. However, if it did not make sense to him in 2012, what has changed in 2015? Following several levels of assessment, it was clear from available evidence that the methodology used for 2004 survey was not consistently applied in 2010, making the two figures incomparable. We are glad the NBS is now working towards applying the right methodology.

10. In the meantime, the 2014 Nigerian Economic Report (NER) published by the World Bank provides the most up to date analysis of the poverty and living standards in the country. Their analysis was based on the General Household Survey (GHS) carried out in 2012 / 2013 by the NBS, hence covering the period during this administration. It provides evidence that Nigeria’s poverty rate is significantly lower than had been previously reported. From the survey, it is estimated that 33.1% of the population lived below the poverty threshold in 2013. Indeed, the poverty rate is much lower in the urban areas – 12.6% than in the rural areas – 44.9%.

11. Similarly, the Brookings Institution, an internationally recognised Think Tank, shares the same view. Just by reestimating the global poverty rates, using new sets of Purchasing Power Parity (PPP) prices for 2011, the results indicated that Nigeria’s poverty rate has dropped from the reported (which we do not believe) 68 percent to 42 percent, making it the largest poverty rate reduction among the countries reviewed in Africa. We recognise that these figures are indicative, but they show that the direction of poverty in Nigeria is declining.

12. In conclusion, it has become imperative to put out these facts in order to enrich the public discourse. NBS is reviewing its methodologies for computing the unemployment and poverty figures because they are convinced that our data should be consistent with internationally accepted standards. The NBS remains the central authority for generating and publishing national statistics. Every well-meaning Nigerian and friends of Nigeria should continue to support their efforts at improving on the integrity of our national statistics.
Signed

Dr. Nwanze Okidegbe

Chief Economic Adviser to the President

About TransformationWatch

TransformationWatch is an online news site founded by Henry Omoregie It is focused on keeping tabs on the Transformation Agenda set out by the Nigerian leadership in the Local, State and Federal Governments. My mission is to observe, analyze and report milestones or slowdowns in promised service delivery in all the facets of governance in Nigeria (2011 and beyond). Readership is open to all Nigerians and friends of Nigeria alike, regardless of Tribe, Religion or Political divide. We are all in this together

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