Friday, August 20, 2010

A Tyrannical Bureau of Statistics?

By Dr. Reuben Abati

Reliable statistical information is one of the most difficult things to come across in
Nigeria, a bane of the development process, for without proper data, planning
becomes difficult. This is so despite the existence of a National Bureau of Statistics
(NBS), a government agency that obviously takes itself seriously and which claims to
provide useful statistical data. Nonetheless, anyone who has had to make use of data
in Nigeria would readily note that a big problem has been the integrity of published
statistical data. Often, NBS data conflict with similar data provided by the World
Health Organization, the World Bank, The African Development Bank (AFDB), the
Economic Intelligence Unit (EIU) or local financial intelligence firms on growth
processes in Nigeria and sub-saharan Africa such that the average researcher is
thrown into confusion.

The simple test that I often apply when statisticians and economists quote abstract
figures as evidence of growth therefore, is to look at the environment and ask: is
there improved prosperity? Has the price of garri gone up or down? Is the
unemployment queue shorter or longer? Is the real sector growing or declining? Has
there been an improvement in the country’s trade balances? How reliable is the
statistics being quoted when measured against aggregate indices? I resolved long
ago that only Nigerian statisticians and economists understand the figures they
advertise, for when we are told that China has overtaken Japan as the second largest
economy in the world and that by 2030, it may be the biggest economy in the world,
the evidence is so real, even the Americans and the Japanese can see it. In Nigeria,
not even the population statistics we quote is universally accepted.

This subject engaged my attention afresh with the publication on Wednesday July
21, 2010 in the Punch newspaper at page 71 and on Friday, July 23 in The Guardian
at page 10, of an advertorial by the National Bureau of Statistics (NBS) titled
“References to Nigeria’s Official Statistics”. It is a curious piece laden with threats,
undue arrogance and such intimation of tyranny that is at variance with democratic
culture. The NBS in the advertorial objects to two stories published in BusinessDay
newspaper (16 -18 July) and ThisDay (July 14) titled respectively, “FG’s 7% growth
report questioned” and “7.2% GDP growth doubtful-Rewane.”

The BusinessDay story begins with the annual report by the National Bureau of
Statistics in which it is claimed that the Nigerian economy has grown by 7.2% in the
first quarter of 2010, with the caveat that experts disagree with this summation
because in their view, “it is illogical for the economy to have grown by such
magnitude when the components that drive the economy are looking downward.”

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The experts quoted subsequently are Bismarck Rewane, “renowned economist and
chief executive officer of Financial Derivatives Company (FDC), Okechukwu Unegbu,
“former President of the Chartered Institute of Bankers (CIBN),” and Thomson Okoli,
“a manufacturer of polythene products.” TheThisDay story quotes Bismarck Rewane
at length and refers to his Monthly Economy Report for July 2010” – apparently a
publication of the FDC.

For merely expressing a contrary opinion, questioning the integrity of its data, the
NBS took on these gentlemen. It makes assertions and issues threats which can be
closely questioned. The NBS advises the public to note that it is the “custodian of
Nigeria Official Statistics conferred by statute, The Statistics Act, 2007.” It then
adds: “The National Bureau of Statistics notes with dismay, the behaviour of some
senior citizens and corporate bodies in the challenge and miss use (sic) of Nigeria’s
Official Statistical Information released by the Bureau. All over the civilized world,
National Statistics Offices release key macro economic and social indicators
periodically for policy and informed debate.” But the NBS is merely contradicting
itself here, if it is actually interested in “debate” and “constructive engagement,
collaboration, and cooperation” (as in paragraph 4), it would not have bothered to
issue its abusive response, in which it further says it “wishes to chronicle the fact
that Nigeria is one country where there is a very high level of ignorance among
highly placed individuals who allow group or special interest to becloud their civility
in challenging and misusing Nigeria official statistics”. And here is the clincher, the
threat of prosecution: “Henceforth, NBS will invoke the relevant sections of the
enabling law of the Statistics Act 2007 which empowers the Bureau to prosecute
anyone who releases data that is at variance with the Official statistics produced by
NBS and who deliberately apply negative imputations and application of official
statistics released by NBS…” The advert further contains statistics on “sectoral
contribution and growth rate” for 2009 and 2010 first quarter.

That the NBS has to engage in this public somersault and display of intolerance is
shameful, its exertions are insensitive and utterly self-contradictory. It is instructive
that the NBS does not quote any specific section of The Statistics Act 2007 which
empowers it to prosecute anyone that disagrees with it, for it does not have such
powers. There are references to offences and penalties in the said Act, at Section 28
specifically but this deals only with release of unauthorized official statistics by
government employees or failure to allow the Bureau access to needed statistics in
the course of its work or the deliberate furnishing of false information to mislead it.

Section 25 deals with the responsibilities of “private Nigerian institutions” requiring

such institutions seeking to conduct statistical surveys “on a national scale going
beyond their market studies” to obtain the approval of the NBS. If such approval is
not sought, there is no penalty indicated. And there is nothing in the Act which
grants the NBS the kind of monopoly of wisdom which it claims in its advert under
review, nor any clause which forbids public discussions of its reports. What the
experts whose views riled the NBS have done is merely to express an opinion. We
note with dismay that the NBS leadership is probably not aware that the right to hold
and express an opinion is a Constitutional right, properly spelled out in Section 39 of
the 1999 Constitution. It is an elementary fact that no statute can be superior to the
Constitution.

To say that the NBS is lying with statistics in its latest report is “fair comment,” and
not a crime. Even decisions of court by learned Justices can be discussed by both
laymen and experts alike who have an opinion to express and that does not

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constitute an offence either. One does not need to be an economist or a statistician

to question the integrity of the statistics provided by the NBS in its report. The
claims about growth in the agriculture sector is strange, the celebration of growth in
merchandise trade, in the face of massive distortions in the real sector betrays
poverty of analysis. The absolute growth rates in the statistical table suggest that in
the first quarter of 2010, Nigeria’s GDP growth rate is higher than the sub-saharan
average, and even much higher than the global GDP growth rate for the same
period. It is noteworthy that the highest percentage growth rate is recorded in
Telecommunication and Post, the only sector of the economy that appears to be
growing consistently. What in real terms does that growth entail?

Claims of growth that are not borne out by empirical evidence amount to an exercise
not in research but voodoo. 7.2% in the first quarter of 2010, at a time when the
cost of living has risen, external debt increased, no growth has been recorded in
terms of infrastructure, exports are low except in the extractive industry, the country
is import-dependent, the people are groaning under the weight of excruciating
poverty, and little value has been added to their lives. Positive GDP growth rates are
meaningful only when they are sustainable, to the extent that they translate into real
growth in terms of reduction in poverty and improved quality of life. The emphasis
should be on quality, not abstract figures. In Nigeria, misleading statistical data is
obviously responsible for the confusion in the management of monetary and fiscal
policies and everything else; when statistical data is used to mask realities, the
statistical office raises doubts about its own methodology and concerns about the
likely politicization of its effort. This latter point has been borne out more graphically
with regard to population census in Nigeria which till tomorrow is doubted, even if
the “official custodians” claim the kind of righteousness that has been exhibited by
the Bureau of Statistics.

Beyond statistics, the subsisting challenge is for the “official custodians” of Nigeria
to direct more energy to the objective of good governance in order to reduce the
economic inequalities, translated into social tension and national insecurity, which
claims of economic growth are designed to deny. The National Bureau of Statistics,
instead of throwing tantrums in response to criticisms should learn to be tolerant;
“all over the civilized world”, such criticisms are taken as wake up calls for a re-
assessment of methodology rather than an excuse for the deployment of abuse and
threats. Ironically, this same NBS announced this week that it made a mistake with
the inflation rate for June 2010: 14.1% not the 10.3% it had previously announced-
a frightening revelation indeed

For comments, send an e-mail to the author at abati1990@yahoo.com

REFERENCES:

CPI -A more reflective Inflation Index.

http://www.proshareng.com/news/singlenews.php?id=11786

Shock as NBS revises inflation rate for June to 14.1%, puts July rate at 13%
WEDNESDAY, 18 AUGUST 2010 01:12 BLESSING ANARO
http://www.businessdayonline.com/index.php?option=com_content&view=article&id=13803:shock-as-nbs-revises-
inflation-rate-for-june-to-141-puts-july-rate-at-13-&catid=85:national&Itemid=340

Dr. Reuben ABATI on Friday’s 3

 Friday, August 20, 2010

In what appears as a shocker to followers of inflation trend in the past months, the
National Bureau for Statistics (NBS) on Tuesday admitted it made mistake in its June
figure, saying June rate was 14.1 percent as against 10.3 percent it announced.

It thus said inflation fell from 14.1 percent in June to 13 percent in July. Experts said
they were alarmed because the steep rise is coming ahead of the expected impact of
Russia’s ban on wheat exportation and the anticipated effect of the huge injections of
funds through the Federation Accounts Allocation Committee (FAAC), the Excess
Crude Account (ECA), among other sources. The NBS said the new statistics is based
on a reweighing, food now accounting for 50.7 percent of Consumer Price Index
(CPI).

This negates the Central Bank of Nigeria’s (CBN) target of single digit inflation for the
year.

It would be recalled that Bismarck Rewane, chief executive, Financial Derivatives,

had warned the NBS against issuing threat to other corporate bodies that disagree
with its statistics. NBS had threatened to invoke relevant sections of the enabling law
to sanction corporate bodies that disagree with it. Razia Khan, Standard Chartered
Bank’s London-based Head of Macro-Economics and Regional Head of Research,
Africa, said the new rate announced on Tuesday was shocking at first sight. “At first
sight, it is a shock rise in Nigeria’s inflation to 13 percent year-on-year – following a
more benign print previously”, she said.

Her shock stems from the contrast to prior evidence of favourable harvests and
downward pressure on food prices. But, according to the NBS, in the month of July a
lot of pressure appeared to have come through food, with food inflation rising to 14
percent year-on-year in July from 12 percent in June. Bismarck Rewane in spite of
the drop from 11 percent in May to 10.3 percent in June had warned that inflation
threat still persists because month-on-month food inflation rose in June.

Khan had also said the future appears bleak for the nation’s inflation rate. For her,
that the inflation shot up by almost 300 basic points is yet to reflect any of the
international pressures seen with wheat prices as a result of the ban on exportation
of wheat by Russia.

“With August and September traditionally seeing food prices coming off –
notwithstanding some pressure from an earlier Ramadan - we are not yet overly
concerned about the near term outlook for Nigerian inflation”, she said.

“Worse is the fact that imported food inflation makes up around 10 percent of the
Nigerian Consumer Price Index (CPI) basket, with wheat contributing something like
0.7 percent to the total CPI”, she emphasised.

Khan went further to say that, even with this explanation behind the July inflation
print, the risks posed to the price outlook by the amount of liquidity in the system
should not be ignored. “The sheer amount of liquidity that has been pumped into the
system, with spending ramped up dramatically in this year’s budget, and an
increased pace of disbursal from the excess crude account, eroding much of Nigeria’s
saved oil windfall is a concern”, she said.

She said the liquidity position might be favourable to today’s bond market, but may
turn to bad news tomorrow for inflation, if risks go unchecked.

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