Nigeria’s shadow economy to shrink in eight years-ACCA report
A new report by the Association of Chartered Certified Accountants (ACCA) has revealed that the largest economy in Africa is on course to reduce the size of its ‘shadow economy’, to 46.11 per cent of the Gross Domestic Product, GDP, by 2025 from 48.37 per cent in 2016.
The new study indicated that ‘shadow economy’ is the production of and trade in legal goods and services that are deliberately and often illegally concealed from public authorities. Hence, the goods are typically undeclared for tax.
The document, which was obtained by our correspondent, entitled ‘emerging from the shadows: the shadow economy to 2025’, estimates that the shadow in Nigeria represents 48.37 per cent of Gross Domestic Product (GDP) in 2016, which would have totaled an approximate N49, 678.12 billion.
It however, forecasted to fall to 46.11 per cent of GDP by 2025, while the global average is expected to fall to 21.39 per cent of global GDP from 22.5 per cent over the same period.
Commenting on this, Market Head for Nigeria at ACCA, Tom Isibor, said that the prevalence of shadow economy activity creates considerable practical and ethical issues for both business and government.
He stated that the fall in the shadow economy’s overall share of Nigeria’s GDP is a very positive sign that efforts to curb its impact have been implemented in recent years. But there‘s still a long way to go.
His words: “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”, he explained.
Also, the Regional Head of Policy for sub-Saharan Africa at ACCA, Jane Ohadike, said that 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”, he stated.
The global body for professional accountants says its offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world.
