Nigeria needs its young people firing to boost economic growth

Nigeria must leverage on its young and large population to boost its economy but this will only be possible if there is productivity growth and good-paying jobs, Randell Kroszner, Professor of Economics, University of Chicago booth school of business said.

Kroszner, who was speaking at the ongoing Businessday CEOs Forum themed “A Breakthrough Approach to leadership and Innovation in the age of Disruption,” said although Nigeria’s economic recovery path could be challenging there is hope that with the right reforms that boost productivity especially among the young people, the economy can turn the corner.

Africa’s biggest economy contracted by 6.1 percent in the second quarter of 2020, the worst in over a decade, as lower oil prices and the COVID-19 pandemic- which has ravaged developed and developing economies- hammered the economy.

Economists predict that the economy is a quarter away from a recession, the second in five years.

The International Monetary Fund (IMF) has projected that the country will contract by -5.4 percent in 2020 while World Bank projected a contraction of -3.3 percent.

One of the ways Nigeria can boost long term growth is by capitalising on its young and large population.

Nigeria has a population of 200 million people out of which its youth population is over 33 million, one of the largest in the world.

But many of the youths are without jobs, according to NBS data which showed young Nigerians formed the bulk of Nigeria’s 22 million unemployed people as at the second quarter of 2020.

“Nigeria is very fortunate to have a young and large population, this is not the case in other countries and this can be extremely beneficial. But to let the population prosper, it is important to have productivity growth and good-paying jobs,” Kroszner said.

He noted that the key to achieving this will be ensuring that industries are as efficient and internationally competitive as possible.

“Competition that leads to productivity is important to help Nigeria export and thrive more,” Said Kroszner.

Kroszner also noted that the Central Bank of Nigeria must begin to look towards raising interest rates to tackle inflationary pressures.

Inflation rate accelerated to 14.23 percent in October, thie highest in nearly three years.

“In the short run, it is tempting for the CBN to try to keep interest rates low to try to boost short run growth but that translates into higher inflation and discourages savings and investment needed to boost productivity.

“The central bank must begin to raise the interest rate and they must signal to the international market that they are concerned about inflation. Rising inflation can get the economy into a difficult situation which might not be good for the people of Nigeria,” Kroszner said.

However, he noted that there is only so much the CBN can do, there is a need to put the right fiscal structure in place to support long term growth.

Krosner has also advocated for more reforms in the oil industry and removal of restriction on the entrepreneurial sector to foster productivity.