A riddle for Sub-Saharan African countries which enjoyed impressive growth in the last decade but failed to bridge income gaps with the developed world has just one lesson for growth and population-challenged Nigeria – a high population growth with low productivity makes prosperity unlikely.
Strong GDP growth over an extended period of time has not resulted in meaningful real convergence in most of Sub-Saharan Africa says Washington-based Institute of International Finance (IIF), blaming the region’s high population growth.
“Additionally, total factor productivity growth remains low and is declining across the region,” said IIF, in a report investigating why fast growth has not raised per-capita income levels in poorer countries relative to richer ones.
Meanwhile, Nigeria, one of the world’s fastest-growing populations, is neither among SSA’s best-performing economies nor among its global peers.
Since 2015 Nigeria’s economy has averaged less than 2 percent growth compared to regional peer’s average slightly above 5 percent and lower-middle-income countries’ average of 3 percent, according to World Bank data.
This is ignoring Nigeria’s pre-commodity bust average growth of 7.2 percent (2000-2014) because it was a sloppy oil market in 2016 that sent Nigeria into a recession- one it is slowly recovering from- and led to an unwanted ‘World Poverty Capital’ crowning as the economy couldn’t keep pace with population expansion.
Notably, unemployment in the period reached its record-high in Nigeria with slightly nearly 1 in 4 Nigerians capable and willing to work but unable to find a job. Youth unemployment is even higher at around 30 percent, according to the National Bureau of Statistics (NBS).
In the next ten years, the World Bank says a business-as-usual approach would lead to a dramatic increase in poverty in Nigeria (already affecting about 100 million people) so that 1 in 4 of the poorest people globally is Nigerian.
World Bank’s breakdown of Nigeria’s projected 250 million people shows that almost 150 million Nigerians would be in their productive age bracket (15-64 yrs) by 2030 when the gloomy prediction might materialize.
This clearly highlights a productivity issue in the country that could keep income levels low with Nigeria still playing catch up even when it becomes the world’s third most populous country by 2050.
Already, Nigeria’s economic productivity is low compared to peers and the rest of the world, and this has weighed on the country’s growth and pared income per head.
Aggregate labour productivity for Nigeria has fallen from as high as 26 percent of the average US worker in the 1970s to around 10 percent in 2017, according to World Bank estimates.
While this is above the SSA average (lower than 10 percent), the gap between Nigeria and SSA is narrowing (owing to Nigeria’s decline).
Meanwhile, Non-SSA developing countries which had similar productivity with Nigeria in the early 1960s are now towards heading 30 percent (as of 2017) with advanced economies seeing a sharp increase to around 80 percent of the average US worker.
The efficiency of converting input to output in Nigeria is declining, causing labour to be less productive. However, the trend can be reversed by increased investment that enhances labour capabilities (e.g. health and education), says the World Bank.
Ultimately, productivity, its changes and its relative changes to other country’s productivity will continue to shape international trade and competitiveness, economic growth, national economic inequalities. The prosperity of nations and Nigeria will continue to be shaped by how much output we can derive from given inputs. This function continues to depend on knowledge, skills, how healthy the people are, hard and soft infrastructure etc.
The implications from data, its uses and technology will be immense for Nigeria where growth has been driven largely by the service sector.
Around the world, data and the technology built on and around them are changing the face of business, improving decision making, and driving productivity across businesses and social connections.
With the pace of new technology adoption and innovation becoming shorter, the pace of development is following suit.
In India’s non-conventional structural transformation skipping manufacturing straight to a service-led economy (Like Nigeria is currently undergoing), technologies such as information and communications technology (ICT) helped create tradable jobs that are exported to the US and other developed economies with benefits of foreign exchange inflows to India.
While there might be concerns about structural unemployment given that not a large part of the population will be skilled enough to enjoy the high-quality job opportunities in ICT, Nigeria can brace itself to exploit the opportunities inherent and make big strides as India has.
At the upcoming BusinessDay’s Nigerian Economic Outlook Conference set to hold on Tuesday, January 28, 2020, at the Africa + Asia + America Room, Eko Hotels & Suites, VI Lagos, business experts, economists, policymakers and stakeholders across various sectors of the economy will meet to deliberate on “The Nigeria’s prosperity Ahead 2030: population, data, productivity.”
At the conference, experts like Ogho Okiti, BusinessDay’s Managing Director and renowned economist and Andrew S. Nevin, Chief Economist at PwC will chart a path for the realisation of Nigeria’s potentials, identifying levers through which Nigeria’s economic prosperity will be determined in the coming decade.
Panellists at the events will (in no particular order) include the following: Val Ozigbo, President/ CEO of Transnational Corporation of Nigeria; Abimbola Salu-Hundeyin, Chairman, National Population Commission; Samuel Ogbu, CEO, Old Mutual West Africa; Nonso Obiliki, Chief Economist at BusinessDay; Egie Akpata – Director, Union Capital Markets Ltd; Fola Fagbule – Senior Vice President, Africa Finance Corporation; Mohammad Sani Abubakar – Chief of Staff, Kaduna State Government; Olu Akanmu – Executive Director, FCMB Plc; Patrick Nwakogo, CEO at Dale Carnegie Nigeria, and Ebehijie Momoh, Senior Vice President, Mastercard, among others.
SEGUN ADAMS
