Counting the Uncountable: Nigeria’s Plans to Add Immoral Labour to GDP

As Nigeria prepares to rebase its GDP, the country is exploring the inclusion of illegal activities such as drug trafficking, prostitution, and smuggling in its economic calculations. This controversial yet increasingly common practice aims to provide a more accurate picture of the economy by accounting for the full scale of its informal and illicit activities.

GDP rebasing—recalculating the size of the economy using updated data and methods—has significant implications. For Nigeria, a country with a vast informal sector and a complex economic structure, this process could redefine its position in Africa and beyond. By integrating illicit activities into its GDP, Nigeria could better capture the economic activity often overlooked in traditional calculations.

This isn’t a novel concept. Since 2014, the UK has accounted for illicit activities, including drug production, importation, and consumption, alongside prostitution, in its economic data. Italy, Spain, and the Netherlands have done the same, often spurred by European Union requirements to standardize GDP reporting across member states. These countries have shown that even in the murkiest corners of the economy, money flows—and where there is money, there is GDP.

A Shady Market’s Bright Value

The British Office for National Statistics (ONS) employs a strikingly clinical approach. Drug cultivation is classified as “production,” consumption as “expenditure,” and sales as “income.” This integration aligns illegal activities with the conventional framework of GDP measurement: the sum of what is produced, spent, and earned in a nation’s economy. It is an exercise in economic neutrality, treating all transactions—licit or illicit—as valuable data points.

For Nigeria, this shift could provide a more realistic picture of its sprawling informal sector, where much of the nation’s wealth circulates beyond the reach of regulators and tax authorities. The National Bureau of Statistics (NBS) has yet to outline a specific methodology, but lessons abound. Italy relies on law enforcement and public health data to model drug markets, while Spain uses surveys to estimate the scale of prostitution. Even Canada, before legalizing cannabis in 2018, modeled its illicit drug trade based on usage surveys and price estimates.

Counting the Cost of Exclusion

The stakes are high. Nigeria’s GDP is a vital tool for measuring economic health, guiding fiscal policy, and negotiating international loans. Yet it is widely acknowledged that the current figures omit substantial economic activity. Including illicit markets could boost reported GDP, making Nigeria more competitive among its peers in Africa and beyond.

This was Italy’s experience in 2014 when the inclusion of drugs and prostitution increased GDP by approximately 1%. For Spain, it added over €9 billion to its economy. However, these adjustments are not merely about enhancing the optics. The European Union’s System of National Accounts mandates that GDP reflects all economic activity, legal or otherwise, to ensure cross-country comparability.

For Nigeria, aligning with such practices could bolster its credibility with international investors, lending institutions, and development agencies. It would also provide insight into the scale of activities that operate outside the formal economy, enabling better-targeted policies to combat illicit trade.

Data in the Shadows

The practicalities, however, are daunting. Reliable data on illegal activities is notoriously difficult to obtain. Producers and consumers of drugs and other illicit goods are unlikely to respond candidly to surveys. Nigeria will need to rely on indirect measures, such as police reports, health statistics, and market studies. The UK, for instance, uses data on arrests, drug seizures, and consumption patterns to estimate the size of its black markets.

Yet, even in countries with more robust statistical infrastructures, these figures are, at best, educated guesses. For Nigeria, with its vast informal sector and limited statistical capacity, the challenges are magnified. The effort will require coordination among agencies, from the National Drug Law Enforcement Agency (NDLEA) to the Central Bank, alongside international support for technical expertise.

A Moral and Political Quandary

Beyond the logistical hurdles lies a more profound question: should illegal activities be treated as legitimate contributors to economic growth? Including them in GDP calculations does not legitimize these activities, statisticians argue, but the optics are uncomfortable. For many Nigerians, acknowledging the economic value of drug trafficking or prostitution may feel like an admission of failure to address the root causes of these trades.

Some governments have sought to mitigate the unease. Sweden and Austria frame their inclusion of illegal activities as a way to measure, and ultimately combat, their economic impact. Nigeria may need to adopt a similar narrative, emphasizing that this is a statistical exercise, not an endorsement.

Nigeria’s Moment of Reckoning

As Nigeria embarks on this initiative, it joins a growing club of nations that recognize the economic significance of activities that operate in the shadows. The potential rewards are clear: a more comprehensive GDP, improved international credibility, and a sharper understanding of the dynamics of its informal economy.

But the journey will require a delicate balance of technical precision, public diplomacy, and political will. Whether Nigeria can shine a light on the darkest corners of its economy remains to be seen. One thing is certain: in the world of national accounting, even the illicit has its price.