Pension Sector Gains Spotlight in Nigeria’s Rebased GDP

The rebasing of Nigeria’s Gross Domestic Product (GDP) has brought renewed attention to the pension sector, with experts predicting increased scrutiny and participation following the sector’s inclusion in the GDP computation.

Speaking at the Sensitisation Workshop on GDP and Consumer Price Index (CPI) Rebasing, organised by the Nigerian Economic Summit Group and the National Bureau of Statistics (NBS) in Lagos, stakeholders highlighted the broader implications of the move.

In his presentation, Moses Waniko, Technical Assistant on Data Analytics at NBS, detailed the expanded scope of the rebased GDP. “New areas, including the digital economy, pension funds, the National Health Insurance Scheme, the Nigerian Social Insurance Trust Fund, modular refineries, and domestic households as employers of labour, have now been incorporated into GDP compilation,” he stated. Quarrying, other mining activities, and even illegal and hidden activities are also being measured for the first time.

The inclusion of pension fund administrators (PFAs) was met with widespread approval. Ayokunle Olubunmi, Head of Financial Institution Ratings at Agusto & Co, noted that the omission of the sector in previous GDP calculations was an anomaly.

“Since the commencement of the new Pension Act in 2004, the pension industry has grown significantly, with assets under management exceeding ₦21 trillion. The industry has played a crucial role in the investment space, particularly in the bonds market. Yet, its activities were excluded from the GDP. This rebasing provides a clearer picture of the financial sector and highlights the pivotal role of pensions in the economy,” Olubunmi explained.

He added that the inclusion would not only enhance understanding of the sector among financial experts but also draw interest from the general public. “Many Nigerians remain unaware of the workings of their retirement savings accounts or the activities of PFAs. With this development, we anticipate greater scrutiny and engagement, empowering individuals to better understand the management of their retirement funds,” he said.

Dr. Olufemi Abass, an associate professor at Lagos State University, echoed these sentiments. “The inclusion of pensions in the rebased GDP reflects the contributory nature of today’s pension system, which involves significant investment elements. This is a welcome development that acknowledges the sector’s importance in the nation’s economy,” he remarked.

The rebasing process, which last took place in 2014, revealed a striking 90 per cent increase in GDP, rising from ₦42.4 trillion to ₦80.22 trillion. The surge was largely attributed to the incorporation of previously underrepresented sectors, including information and communication, real estate, healthcare, and professional services.

With this latest exercise, the financial sector is expected to see a similar expansion, bringing greater transparency and fostering growth in areas previously overlooked. As Nigeria seeks to recalibrate its economic metrics, stakeholders hope that the rebasing will provide a more comprehensive view of the nation’s economic landscape, spurring informed policy-making and deeper public engagement.