National accounts are key macroeconomic statistics that help understand how an economy functions. They support economic planning, analysis, and international comparisons by detailing transactions among economic agents and with the rest of the world. These accounts follow the System of National Accounts (SNA), an internationally agreed framework that provides standardised concepts, definitions, and rules to ensure consistency and comparability across countries. National Accounts have key components, such as Production Account, Consumption Account, Expenditure Account, External transaction and Household Account.  The most widely used concept in the Production Account is the Gross Domestic Product (GDP). It is the starting point of the national accounts compilation before proceeding to other variables.

The Namibia Statistics Agency (NSA) is embarking on a significant journey of rebasing the national accounts, with the last rebasing having been done in 2019 for the 2015 base year. This process is crucial and holds immense importance for various reasons. A fundamental revision of the national accounts is essential to ensuring macroeconomic data remains reliable, comprehensive, and aligned with the country’s evolving economic landscape.  As the structure of an economy evolves and more data become available, revisions are needed in the compilation of national accounts procedures to realign the national accounts with economic reality. Firstly, routine revisions will be done which includes all changes in national accounts estimates for a particular period from the first to the final estimates. These revisions are primarily based on the availability of new data sources to ensure full comparability of volume and price changes with the previous year across all indicators. Secondary, benchmark revisions are revisions of data sources or methods used for the estimation of national accounts indicators. These can affect GDP and can cause discontinuity in time series. It is recommended that, as standard practice, benchmark revisions be carried out every five years and lastly Methodological revisions (or major occasional revisions) are normally due to changes in principles of national accounting. These updates are especially urgent considering current international, African, sub-Saharan, and national commitments. Accurate and comparable data are essential for analysing socio-economic trends, as they provide clear numerical insights into all aspects of life and the state of the economy. Without reliable data, well-informed decisions that drive social and economic development cannot be made effectively. Rebasing the national accounts equips the government with better tools to address key challenges such as economic growth, poverty eradication, and unemployment. 

Having gone through this, you may have numerous questions about rebasing or re-benchmarking. However, there’s no need to worry—sit back, relax, and take a sip from your cup as we go through a few key questions and answers below.

What is the rebasing?

Is the process of replacing an old base year with a new base year which allows for improvements in measuring economic activities (hidden economic activities), correcting past errors, and refining estimates. A base year serves as a fixed period for national accounts, maintaining consistency in concepts, data sources, classifications, methods, and constant price references. It is a normal statistical procedure undertaken by the national statistical offices, (eg, NSA) of countries to ensure that national accounts statistics present the most accurate reflection of the economy as possible.

Why should the base year be changed?

There are quite numerous factors that can justify the base year of National accounts to be changed: 

Over time, a country’s economic structure evolves due to the emergence of new industries (e.g. green hydrogen project, Snow Lake Energy and Coronex,), the introduction or disappearance of products, and shifts in industry activities. Rapid advancements in information and communication technologies have transformed economies.

Structural changes in consumption, production, and marketing habits affect national accounts estimation. As businesses evolve, adapting to new consumer demands and market conditions, national accounts must be updated to reflect these shifts accurately.

Structural change in relative prices due to the disappearance or appearance of products. The principle of relative prices loses its value if the periodicity of revision of the list of products followed is very prolonged.

Evolution of international benchmarks (adoption of the 2025 SNA, and adoption of new classification of activities (ISIC rev.4) and Classification of products (CPC). These documents fundamentally change certain concepts, methods of calculation and often the field of coverage. A change in the base year is necessary to comply with the new standards.

The availability of new data sources, such as large-scale data collection efforts like the Population and Housing Census (PHC), other secondary and administrative data sources, Census of Agriculture (CA), and Household Budget Surveys, provides an opportunity to update outdated information and improve data accuracy.

The growing informal sectors requires the change of the base year to into account the evolving dynamic.

Rebasing/re-benchmarking allows for the correction of past errors in the previous database, ensuring more accurate economic assessments. After rebasing we can not change methods, concepts and new data additions until the next rebase. Therefore, updating the base year provides an opportunity to address technical inaccuracies.

Key benefits of rebasing 

The key benefit of the rebasing exercise is that its results enable policymakers and analysts obtain a more accurate set of economic statistics that is a better reflection of current realities for evidence-based decision-making. It also reveals a more accurate estimate of the size and structure of the economy by incorporating new economic activities which were not previously captured in the computational framework. Rebasing will enable government to have a better understanding of the structure of the economy, an indication of industries growth drivers, industries where policies and resources should be channelled to grow the economy, create jobs, improve infrastructure and reduce poverty.

International and best practices recommendations suggest rebasing national accounts every five years, and not exceeding ten years. This aligns with the periodicity of major surveys, ensuring updated data availability. However, many African countries struggle to meet this standard due to financial constraints, technical and human resource demands, and data unavailability.

Why is rebasing important 

Rebasing the Gross Domestic Product (GDP) does not directly address inequality or eliminate poverty, as the benefits of higher GDP may still be concentrated among a few. Instead, it ensures that GDP estimates provide the most accurate and up-to-date reflection of the economy. A clearer and more precise economic picture is essential for policymakers, investors, and consumers, enabling them to make well-informed decisions. For instance, policymakers can identify inequality as a barrier to inclusive growth and develop targeted policies to ensure a more equitable distribution of economic gains. In this way, the impact of GDP rebasing can ultimately benefit the broader population by guiding more effective economic strategies.

Conclusion 

The GDP rebasing exercise is vital for the economy, making it essential to involve all the Namibians ranging from data users, data providers, and stakeholders from the very beginning. Their participation ensures comprehensive coverage of various Namibia economic activities and supports the expansion of survey frameworks. 

Additionally, early involvement helps stakeholders understand potential methodological changes in the National Accounts, ensuring that all economic activities are thoroughly captured and nothing is overlooked. 

To fully cover all these activities, the country needs to invest substantial funds into this project. While it may seem like a minor undertaking, it is a significant initiative that the country requires. After rebasing, the GDP might change, thereby altering the size of the economy.

*Makaisapi Tjiumbirua is a national economist at the Namibia Statistics Agency.