Nigeria’s shadow economy set to shrink by 2025
Nigeria is on course to reduce the size of its ‘shadow economy’—the production of and trade in legal goods and services that are deliberately andoften illegally concealed from public authorities—by 2025, according to a new study from ACCA (the Association of Chartered Certified Accountants).
Emerging from the shadows: the shadow economy to 2025 estimates that the shadow economy in Nigeria represented 48.37% of GDP in 2016 – which would have totalled an approximate NGN 49,678.12bn. This is forecast to fall to 46.11% of GDP by 2025.
The global average is expected to fall from 22.5% to 21.39% of GDP over the same period.
‘The prevalence of shadow economy activity creates considerable practical and ethical issues for both business and government,’ Tom Isibor, Market Head for Nigeria at ACCA, said.
‘The fall in the shadow economy’s overall share of Nigeria’s GDP is a verypositive sign that efforts to curb its impact have been implemented in recent years. But there‘s still a long way to go,’ say Ampomah.
‘Our research estimates that the current factors that will determine Nigeria’s shadow economy are: corruption control, GDP per capita and bureaucratic quality. There are steps that government, business and society can take to curtail the shadow economy, ensuring that all workers and businesses retain the rights associated with the legal trade of goods and services.’
Jane Ohadike, Regional Head of Policy for sub-Saharan Africa at ACCA, says,
‘The shadow economy presents an enormous challenge for society and a huge potential opportunity for the profession to play an active role across the entire value chain from measurement and monitoring through to helping shadow firms and individuals manage their financial affairs and possibly make the transition from informal to formal.
‘Effective management of the shadow economy requires action at all levels – government, cities, local communities and individuals.’