In June 2018, a Brookings report found that Nigeria has overtaken India to become the country with the largest population of people living in extreme poverty. The report, authored by Homi Kharas, Kristofer Hamel, and Martin Hofer, all associates of the World Data Lab (see Brookings.edu), claims that Nigeria has 87 million people in extreme poverty category and that this number is increasing by 6 people every minute. So, by the time you have finished reading this article, there will be 60 more Nigerians living in extreme poverty. The report, based on surveys conducted in April same year, recent economic growth data from the International Monetary Fund (IMF), and computed poverty trajectories for 188 countries in the world, concluded that the rise in Nigeria’s poverty is driven by three parameters – low economic growth, high inequality, and population growth.
Five months after, the National Bureau of Statistics (NBS) released the much-awaited report on Nigeria’s unemployment. The report showed that unemployment increased from 18.8% in Q3 2017 to 23.1% in Q3 2018. Which means that Nigeria’s unemployment is up by 5 percentage points just in a year. However, what should worry economists and the next President in the medium to long term is that the labour force expanded by about 15 million in three years between 2015 and 2018.
According to the figure released by the National Bureau of Statistics (NBS), the labour force increased from 75.9 million in Q3 2015 to 90.5 million in Q3 2018. This shows an increase of about 5 million annually, whereas it was about 2- 3 million annual increases just over 6 years ago. Put another way, the Nigerian economy needs to create about 5 million jobs annually just to maintain current levels of unemployment. These dramatic increases in the number of those entering the jobs market reflect rising general population and expanding youth population, and it is line with the study that population growth is driving up poverty.
In 2018 also, the 2015 Demographic Health Survey (DHS) by the United Nations Children Fund (UNICEF) and the Nigerian government, released few months ago show that the population of out of school children in Nigeria has risen from 10.5 million to 13.2 million. This means that Nigeria has the highest number of out of school children in the world, accounting for more than one in five out-of-school children and 45 percent of out-of-school children in West Africa. These statistics should worry any nation, but in an election year, it’s the last thing that wants to be discussed by our politicians.
Meanwhile, Nigeria’s Gross Domestic Product (GDP) figures for 2018 have been very weak. Real quarterly GDP growth for Q3 2018 stood at 1.81%, from 1.5% in Q2 2018. Starting from 2015, the annual growth of GDP has been weak compared to the decade before that, with growth rate for 2015, 2016, and 2017 at 2.79%, – 1.58% and 0.82% respectively. In the first three quarters of 2018, it’s been 1.95% for Q1, 1.5% for Q2 and 1.81% for Q3. It thus means that for three consecutive years, Nigeria is expected to record less than 2% GDP growth rate, but population growth rate estimated at 2.6% annually.
There is plenty evidence that Nigeria’s economic policy framework and its development has failed to dent the serious challenges of unemployment and poverty. In the last few years, governance has been reduced to the “fight against corruption”. But you cannot fight corruption in the absence of growth, and growth depends on serious and effective economic policies. Indeed, growth, investments, jobs, and prosperity depends on seriously thought through economic policies that address the dearth of both domestic and foreign investments and skills.
But while these problems may appear very daunting, the process towards solving these huge economic problems of poverty and unemployment begins with wholesale changes to the way businesses operate and invest. These can only be achieved when we carry out reforms across many sections of the economy in order to drive investments and jobs. Reforms here simply refers to changes to existing economic, legal, and policy framework for the purpose of improving economic efficiency, reducing distortion for the purpose of driving up investments, and increasing the ability to create jobs or general improvements in economic outcomes.
As in many other countries, Nigeria does carry out reforms. However, our reform efforts tend to be weak and half-baked, late, inconsistently implemented, and few and far in between. Successful reform economies have mastered not only how to conduct reforms, but provided robust mechanism for doing so.
Therefore, in Nigeria, despite wide acceptance that the current policy structures – political, legal, business – are not providing the desired outcomes, we consistently fail to even start the debate on the necessary reforms for investments and jobs. From 2019, we can proceed either by resign to fate and hope to wake up to the stark reality that without necessary reforms, growth will continue to slow, and unemployment continues to rise or realise that policies are powerful, and pursue ones that are thorough, have depth, and provide incentives that link solving the problems to associated rewards.