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Nigeria: From Growth to Opportunity
Nigeria’s youth is a challenge and an opportunity
On April 7, Nigeria became the largest economy in sub-Saharan Africa—or at least, its numbers were updated. For more than two decades, the country’s economic statistics had not been rebased. Taking into account the contribution of runaway growth in telecoms, media and technology showed that Nigeria had, in fact, been growing far faster than the official figures showed.
But amongst all of the hubris amongst policymakers and excitement amongst the investment community, the 89 per cent “jump” which pushed Nigeria’s gross domestic product above that of South Africa, has little to no immediate impact on its citizens, and particularly its young people.
Depending on which estimate you believe, the country's median age is between 14 and 17 years—a huge cohort of people poised to enter the workforce. With the prevailing economic structures, they face an uphill battle to break into a labour market where opportunities are scarce. Youth unemployment is estimated at close to 50 percent—although some estimates put that as high as 80 per cent—and although Nigeria's explosive economic growth has created great wealth, it has also largely concentrated money and power within a small percentage of the population.
While it is so glibly said that Nigeria's greatest resource is its youth, it is clear that its youth is also its among its greatest challenges. Making sure that a huge, growing and aspirational population has equal access to economic opportunities, healthcare and political agency is the defining challenge of the country's current generation of leaders.
Nigeria's wealth is very often expressed in absolute terms - the scale of the economy is in focus as the country rebases its GDP, making it the largest in sub-Saharan Africa. Home to the continent's richest man, Aliko Dangote, Nigeria's population of dollar millionaires is growing faster than almost anywhere else in the world. But at the same time, 61 per cent of the country's population lives below the $1.25 per day poverty line. There is massive inequality between social groups, between generations and between regions. Around 30 per cent of Lagos residents live below the poverty line. In rural parts of the north, that figure rises to more than 75 per cent.
The gulf in wealth and opportunity is a major contributor to the political and social instability that has flared again in the last decade.
“I don’t think any society is perfectly equal, but when you have huge inequality due to structural distortions and official failures, both in the market as well as in government, then it’s not sustainable for anyone.” - Muhammad Ali Pate
As Bishop Matthew Hassan Kukuah, head of the Catholic Diocese of Sokoto, says, the conflicts in the north of the country, which has been in a state of emergency since May 2013, are “99 per cent economic. The religious dimension, he says, is a smokescreen: the real conflict is due to the financial inequality, but also the “inequality of opportunity” that afflicts the country. Violence, he says, “is a symptom, not a disease.”
Fixing the gap will take considerably more than GDP growth. For several generations, Nigeria's economic focus has been on sectors that generate wealth and growth, but which are not labour intensive. Oil and gas, financial services and telecoms have all added to the country's economic indicators - the unaccounted contribution of the latter is partly responsible for the sudden jump in GDP - but they have not created anything like the number of jobs needed to meet the requirements of the expanding population.
Starting out on your own is difficult too. As a place for entrepreneurship, Nigeria is often challenging. The World Bank ranks it as 147th in the world in its annual ease of doing business survey; costs are high due to poor infrastructure and dependence on imported goods. Bank loans come with double-digit interest rates and implausibly high collateral requirements, while venture capital is nascent at best.
Wealth has indeed been created in Nigeria, and at an extraordinary rate. However, that wealth has been concentrated at the top end. A report by New World Wealth in 2013 found that Nigeria’s 15,700 millionaires and billionaires had combined wealth of $82 billion—36 per cent of the country’s total wealth. The majority of those individuals—61 per cent—live in Lagos, with the rest mostly in the oil and gas hub of Port Harcourt and the capital, Abuja. The wealth of the country’s five official billionaires—Aliko Dangote, Mike Adenuga, Folorunsho Alakija, Abdul Rabiu and Jim Ovia—grew by a staggering 812 per cent between 2007 and 2013. These five people now have $30 billion in assets—nearly 11 per cent of the entire country’s wealth.
The much-vaunted rise of the Nigerian middle class has, some analysts suggest, been overplayed. The use of the new millionaires and their overt consumption as a proxy for the overall development of the economy could be misguided, and the notion that wealth is automatically spread into society fails to acknowledge the structural issues in the economy that have led to the current distribution.
“That is a convenient narrative if you are on the wealthier side,” says Muhammad Ali Pate, a former health minister and member of the Nigerian president’s economic management team. “To say that if a society is wealthy then inevitably it will just take time [before everyone sees the benefits] is a very... short term outlook. In the long run, society has to grow in a way that the social fabric remains intact... I don’t think any society is perfectly equal. But at the same time, when you have huge inequality due to structural distortions and official failures, both in the market as well as in government, then it’s not sustainable for anyone.”
Nigerian youth need jobs and skills, health and education. As a medical doctor, Pate is quick to take the example of child health as an indicator of how government interventions and neglect by the public and private sector can have far-reaching impacts. Poor healthcare and nutrition in children has ramifications for their individual development, he says.
“The damage will not be seen for 20 years down the road. If people are stealing public resources today, they are detracting from physical capital that can be created, but also inadvertently detracting from the pool of human capital that is of the future. When you and I retire, that pool of capital is the neurosurgeons, the cardiologists, engineers, pilots, that are going to have to deal with us. But the damage will have been done decades earlier. I think it takes leadership to realise that there is a future that will have to be created.”
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