Nigeria’s population: Asset or liability
A recent 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 HomiKharas, 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 report, there will be 60 more Nigerians living in extreme poverty.
The report was based on surveys conducted in April this year, recent economic growth data from the International Monetary Fund (IMF), and computed poverty trajectories for 188 countries in the world. It concluded that the rise in Nigeria’s poverty is driven by three parameters – low economic growth, high inequality, and population growth. Nigeria’s population growth rate, currently at 2.6 percent according to the World Bank, has been growing above Nigeria’s economic growth rate except for one quarter in the last three years. This report is thus one of many recent issues that demonstrate the seriousness of the implications of Nigeria’s population dynamics for poverty, growth and jobs.
At the current growth rate, the United Nations Department of Economic and Social Affairs (UN DESA) estimates that Nigeria’s population will have grown to 410.6 million by 2050, making Nigeria the third most populous country in the world, after China and India. The median age of these 410.6 million people is projected to be 22.5.
In the past, many analysts and public officials have regarded Nigeria’s rising population, especially young population, combined with its vast natural resources, as a concrete basis for the attraction of investments. This view was based on the notion that a rising population will feed, wear clothes and require shelter, all fundamental bases for investments. Also, a large and youthful population, it is argued, will provide a labour force that can turn Nigeria into the world’s next manufacturing centre. Expanding the argument, it is assumed that, with a large population, Nigeria can follow the established sustained economic growth pattern in developed economies of the movement of surplus labour from low productivity sections of the economy into high productivity ones, raising incomes, providing jobs, and provide a platform for sustained economic growth.
However, that view is now being questioned. As Nigeria’s population continues to grow, the country is confronted with a combination of domestic and international developments that means that the growth of its population is now seen, more as a disaster waiting to happen, rather than a blessing. Technological changes, unpredictable and unsustainable economic policies, poor and weak education, out of school children, immigration dynamics and populist policies in the West are few of the dynamics that have the possibility of turning Nigeria’s population boom into an unmanageable doom.
How many are there?
According to the Nigeria Population Commission (NPC) and the National Bureau of Statistics (NBS), Nigeria’s population is currently approaching 200 million. The last census was conducted in 1991, following the promulgation of Decree 23 of 1989, which established the NPC. The results of the census, and that of the 2006 population and housing census that followed have never been widely accepted. Indeed, since the first Nigerian census in 1963, it is widely accepted that Nigeria has manipulated her population figures, and doubts have been cast on successive census. For instance, Yemi Kale, the Statistician General stated in a tweet that he doesn’t “think [the population figures] are correct” and has repeatedly called for a valid census to ascertain the correct population of the country.
Nigeria’s census data figures is not only underpinned by irregularity, since it has not met the United Nations 10 year benchmark, but also lack of trust, due to political reasons, data fragmentation, poor data management, and Nigeria’s very week data on birth, deaths, and migration – three key parameters responsible for the dynamics of population. Therefore any extrapolations made on the assumption that Nigeria’s population is currently 190 million are suspect, given that it starts from a potentially inaccurate base.
Notwithstanding, it is clear that Nigeria’s population is large, it is rising, growing rapidly, and that the majority of these people are young; driving up competition for scarce resources, and resulting in hunger, poor access to health care and education and high rate of unemployment and underemployment. This has been compounded by significant and serious economic shifts in the last two decades.
Technology, jobs, and immigration
Today, the economic shifts are strongly underlined by technology changes. More than ever before, these changes are having serious implications for the number, the nature, and the location of jobs. These technology shifts, underpinned by automation and digital platforms and similar innovations, are changing the face of work. They are peculiar because the shifts are faster, on a huge scale, and transnational. Nadya Zhexembayeva, a strategist and Founder of Chief Reinvention Officer, in her TEDx talk argued that “disruptive” inventions now happen every three and a half years, whereas it used to be over 30 years, just 20 years ago. While these shifts are providing basis for increasing productivity and income growth, they are also driving the polarisation of the current and future of work, according to a May 2017 briefing of McKinsey Global Institute (MGI) – Technology, Jobs, and the Future of Work. We are now seeing a huge gulf of highly and lowly skilled work, inequality and unemployment.
Indeed, in a developing and emerging economy like Nigeria with very low technology adoption, there are concrete examples that technology is displacing and changing the nature of work required. For instance, just in a matter of few years, the number of low skilled “recharge card” sellers that have been displaced by the emergence of the possibility to buy airtime on our phones from bank application platforms is huge. In Games Village, one of Nigeria’s largest enclosed estates, situated in Abuja, there used to be about 12 young men “fighting” for customers just two years ago. These days, you rarely see up to three, and they often sit idly.
52.7%
The percentage of Nigerians aged
15-34 years who are either unemployed
or under employed.
10.5m
The number of out school
children in Nigeria, Africa’s
largest oil exporter
1.47m
The number of applications
Nigerian universities receive
yearly out of which only about
400,000 are admitted.
Similarly, the emergence of Uber, and its competitors such as Taxify, international ride sharing service providers, are driving unprecedented changes in commercial rides in Nigeria’s urban areas. Consequently, traditional taxi drivers, usually of middle age, are giving way to upwardly mobile youths taking advantage of the technology changes that underpin ride-sharing services. From a customer perspective, Uber and competitors alike such as Taxify are removing the challenges associated with traditional taxi such as haggling, unpredictable behaviour, anonymity and security problems associated with it.
But technological changes do not happen in isolation. They are driving social, economic and cultural changes around the globe. As technological changes have made some jobs redundant while enabling outsourcing of others, there has been increasing discontent by working class people in developed countries, which has led to a marked cultural attitudinal change on immigration. The last decade has not only seen an increasingly hostile environment to immigration in Europe and the US, but this has coincided with rising unemployment and inequality in developing countries, which is in turn, driving up migration from these countries.
For instance, according to Frontex, the European Border and Coast Guard Agency, between January 2016 and December 2017, 56,120 Nigerians were detected attempting to illegally enter Europe. Many do not even reach Europe, and either die attempting to cross the Sahara, end up enslaved in Libya, or die crossing the Mediterranean. In addition to the Nigerians leaving illegally, increasing numbers of middle class professionals are migrating to Canada, the UK, and other countries where their skills are needed. According to the Canadian Government, the number of Nigerians admitted into Canada through its Express Entry program in 2016 was 1036, more than ten times the number in 2015.
If technological changes and attitudinal changes in developed countries are imposed on Nigeria, soft, weak, and poor economic policies have certainly contributed to deliver disastrous job figures. According to the latest NBS unemployment report, 40% of all Nigerians, or 34 million people, were either unemployed or underemployed in the third quarter of 2017, demonstrating Nigeria’s inability to create jobs for its citizens. Worse, as bad as the figures look, our estimation is that the underemployment is double the current figures, when the number of redundant public sector employees is taken into consideration. For instance, whereas it is common to see 20 – 30 immigration officials at our Lagos and Abuja airports, all involved in checking passports, you typically find about 5 in bigger entry points in developed economies.
Unemployment and underemployment is just one of the challenges that Nigerian youths face. Violent crimes ranging from kidnapping to robbery and terrorism have been on the rise in recent years. According to the NBS, the total number of reported crimes increased by 7% between 2016 and 2017. Although there is no data available for the years before 2016, it is likely that the situation has worsened from earlier years given the economic deterioration since the data was published. As increasing numbers of young people look towards a bleak future with no light at the end of the tunnel many are choosing to escape Nigeria either physically or mentally. According to estimates by the Nigerian Senate, over three million bottles of cough syrup with codeine are consumed every day in just two states, Kano and Jigawa , while some ignoring the high possibility of kidnap, rape, slavery, and even death, to cross the Sahara and the Mediterranean for a chance at a better life in Europe.
Demography is not destiny: Lessons from China
In the future, therefore, population growth may not provide the platform for sustained economic growth as it did in the past. In theory, a young and large population should be an asset for Nigeria. Global manufacturing has tended to move from richer, more developed countries, which have high labour costs to poorer countries with lower labour costs and large labour forces. Therefore, given its low wages and large population, Nigeria should be able to attract a sizeable portion of global manufacturing from other more developed countries where wages are rising. Put another way, as countries develop, average wages rise, but capital becomes cheap. The movement of that capital towards cheap labour often leads to increases in growth, then incomes, then cheap capital in previously cheap labour countries.
But this is not given. Policies matter. Demography is not destiny. Let us look at the Chinese example. In modern history, China has always had the largest population in the world, and yet, for much of the 19th and 20th Century, it lagged behind the West, and even its Asian neighbours, Japan and South Korea. Over the thirty-year period between 1960 and 1990, China’s GDP per capita grew at an annualized rate of about 4.3% from about $90 to $318 despite having a population of over 1.1 billion by 1990. In fact, despite China’s superior population size, it was slightly poorer than Nigeria, which had a GDP per capita of $322 in 1990. Additionally, Nigeria’s annualized GDP per capita growth rate, at 4.2%, was very similar to China’s. In effect, the Chinese and Nigerian economies performed very similarly over the 30-year period from 1960 to 1990 and both countries were in a nearly identical position by the end of that period. Clearly, China’s large population was not enough to magically make it a prosperous nation.
Figure 1: China’s GDP per capita diverged from Nigeria’s starting in 1990 leading to a large gulf in wealth between the two countries.
Source: World Bank
However, by 2016, China’s GDP per capita had grown to about $8000 while Nigeria’s was only a little over $2000 – about a quarter of China’s (see Figure 1). How did the gap between two countries that were at par only 26 years ago become so large? The secret behind China’s spectacular economic growth over the last quarter century is in certain economic reforms that China took beginning in the late 1970s. After the death of Mao Zedong who had ruined China’s economy with disastrous policies and his tyrannical rule, Deng Xiaoping came to power in 1978 and soon after, he began to liberalize and modernize the Chinese economy.
Among the important reforms that Deng Xiaoping undertook were de-collectivizing the agricultural sector, allowing private production by farmers; establishing Special Economic Zones (SEZs) such as Shenzhen where new free-market policies could be tested; allowing foreign investment; privatizing some state owned companies and removing price controls on some products. In addition to liberalizing the Chinese economy, Deng Xiaoping also reformed the Chinese educational system – increasing the focus on science and technology research and sending pupils to study abroad to develop skills that China did not have.
Furthermore, these economic and education reforms and policies were underpinned by spectacular infrastructural development. According to the National Bureau of Statistics of China, railway mileage increased by about 39,000 km between 1978 and 2010 while highway mileage more than tripled over the same period. Additionally, electricity consumption increased from 281 kWh per capita in 1980 to 3927 in 2014. More recently, in 2001, China has joined the World Trade Organization (WTO) in order to increase its exports and enable it to fully take part in the global economy.
China’s extraordinary growth from a sleeping dragon to the second biggest economy in the world holds lessons for Nigeria – a large population is only an asset if proper investments are made, and the right policies are implemented. In contrast to China since 1978, Nigeria has failed to invest in the right areas. In comparison to China’s electric power consumption per capita growth of 1298% between 1980 and 2014, Nigeria’s consumption only grew by 111%. From Figure 2, the divergence in real income per capita that occurred after 1990 is no surprise – China invested in increasing its productive capacity while Nigeria did not. Instead, Nigeria has mostly squandered its oil wealth on expanding the civil service and on paying debts, which did not build the infrastructure they were purportedly incurred for. The situation has not improved in recent years – Nigeria’s capital expenditure in 2016 was only N173 billion or only 3.9% of the total expenditure of N4.4 trillion.
Figure 2: Gross capital formation (the net increase in physical assets) as a percentage of GDP in Nigeria and China from 1981 to 2015.
Source: World Bank
Nigeria’s record on human capital development is just as bad as its record on physical capital development. According to the NBS’s 2016 Social Statistics Report, in 2014 the number of children in primary school fell to 23.1 million from 24.19 million in 2013. We find this incredible, that in a country with a growing population of primary-school aged children, the number of children in primary school is dropping. Just as alarming is that, according UNICEF, there may be as many as 10.5 million children out of school in Nigeria.
The story is similar in the secondary and tertiary stages of education in Nigeria. The Social Statistics Report shows that in 2015 there were only 1.475 million applications into a Nigerian university, a tiny fraction of the youth population in the country. Even worse, only 401,996 or 27.2% of these people gained admission into university. In a country with a population of 180 million and a median age of 18.3 years, admitting only about 400,000 students into university in a year shows a criminal underinvestment in human capital. Worse, many argue that the quality of education, skills and learning acquired in these institutions is at best suspect, and at worst, non comparable to institutions in African countries such as South Africa and Egypt. According to the World Bank, Nigeria’s tertiary school enrolment in 2011 was 10% of the eligible population. In Brazil, China, and India enrolment was 43%, 25% and 22% respectively.
If Nigeria fails to reverse its current spending trends and redirect its spending towards the requisite areas – education, infrastructure and health – it will fail to take advantage of its expected population boom. The Nigerian economy will be unable to provide enough jobs for the rapidly growing numbers of young people, which could lead to an increase in criminal activities and the number of people seeking to migrate – both legally and illegally – out of Nigeria.
The population bomb
Nigeria’s population growth (quantity), without corresponding growth in productivity and income (quality), will continue to drive up competition for existing natural and fiscal resources. While there is a direct relationship between population and food, clothing, and housing challenges, there is an inverse relationship between rising incomes and those challenges. As incomes are squeezed, competition for available resources rises.
Many of the conflicts we see today, though not caused, are underpinned by the competition for resources. In the context, unemployment is an indication that Nigeria’s young population is losing out. Following recession in 2016, and subsequent slow recovery, 52.7 percent of Nigerians aged 15 to 34 were either unemployed or underemployed. Looking at just those aged 15 to 24, the numbers are even worse with up to 67.3% either unemployed or underemployed. 50% of people with post-secondary qualifications in the labour force are either unemployed or underemployed (although this data is for the total labour force, not just the youth).
The result is an army of out-of-school, out-of-work young men and women with no marketable skills and few prospects for improving their situations. This “army”, with hopelessness as their weapon, are responding with migration, both legally and illegally, robbery, advance fee fraud (419), and kidnapping; by abusing drugs such as codeine and Tramadol; or by engaging in militant activities in order to demand a larger share of government revenues. These outcomes are predictable in the context of “economics of conflict” that have been studied by economists such as Paul Collier of Oxford University, United Kingdom, and Karl Warneryd of Stockholm School of Economics, Sweden.
Is manufacturing still a viable path to growth?
Given current global economic and technology shifts, Nigeria’s necessary investments in education and infrastructure, does not necessarily confer on it the pattern of economic growth experienced in China. China grew at an annualized rate of 13.6% between 1991 and 2016 by becoming the world’s manufacturing centre. Although it has recently begun moving into more high-tech industries, the foundation of China’s economic growth was low-cost manufacturing for developed economies. However, as a result of technological advancements in robotics, additive manufacturing, and artificial intelligence, this path to growth might be closed soon.
These technologies will make it easier and cheaper for developed countries to move manufacturing back to their own countries since machines and software programmes will take the place of human beings in the production process. With less reliance on human labour in manufacturing, having lower labour costs and a larger labour force will become less of an advantage for developing countries such as Nigeria. Even jobs outside manufacturing are vulnerable to technological change.
However, despite the threat presented by these new technologies, Nigeria’s path to development will still include investing in education. After all, many of these technologies are in early stages of development and there is a small chance that they may end up not fulfilling the early potential they have shown. More likely though, these technologies will revolutionize manufacturing not by completely removing human beings from the production process but by complementing them. In such a world, highly educated people will work alongside these machines and the only way Nigeria can compete is if its workforce is highly educated. Furthermore, even if all manufacturing and even some service sector jobs become completely automated, a creative and highly skilled workforce will be needed to design further improvements to these technologies, and perhaps create new industries of the future.
Just as Uber has made it harder for traditional taxi drivers to make a living, those who are able to operate a smartphone have seen new earnings opportunities opened up to them. To readers of BusinessDay, operating a smartphone might seem like a simple task, but for the 10.5 million out of school children who have never learned to read, it is an impossible task, which locks them out of participating in many simple activities. To enable Nigerians to benefit from the economic opportunities that technology opens up, all Nigerian students will need to be taught basic literacy and numeracy skills. For Nigerians to be able to create these technologies, the number of Nigerians in higher education needs to be increased and the quality of education they receive needs to be improved.
Towards a bright 2050
In 1990, Nigeria and China had almost equal GDP per capitas. Now, there is a gulf between the two countries, which is widening every year. But the rapid progress that China has made in barely over a quarter of a century shows that Nigeria can have a bright tomorrow if it makes the right choices today. There are 32 years between 2018 and 2050, a similar period to that during which China transformed its economy and the lives of its people. If Nigeria invests in educating and providing health services for its people, and building the infrastructure that they need to power their homes and factories or to transport themselves or their goods within and outside the country, then the Nigeria of 2050 will be a rising economic power and a land of opportunities for its citizens. However, if it continues to spend the same way it has done in the past – with most spending going towards the bloated civil service, the political class, and their cronies – then it will squander the potential of its people, and turn what should have been a blessing into a curse.
- Ogho Okiti is the former Chief Economist of Businessday, holds a PhD in economics and has served at the Uk Office of National Statistics and the office of the Chief economic Adviser to the President of Nigeria.
Ogho Okiti