As Nigeria gets richer, more Nigerians live in poverty. That is the paradox of growth in Africa’s biggest oil producer, its most populous country and which, as of March 31, may be its top-ranked economy.
The National Bureau of Statistics is recalculating the value of gross domestic product (GDP) based on production patterns in 2010, the first time it has overhauled the data in two decades.
That may boost the size of the economy by as much as 60 percent to between $384 billion (R4.1 trillion) and $424bn, according to London- based Renaissance Capital, which would put Nigeria ahead of South Africa and close to Austria and Thailand in the World Bank’s global league table.
Yet the most recent poverty survey by the Nigerian statistics agency, published in 2012, showed that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004.
In the desert north, where Amnesty International estimates more than 600 people have been killed this year as the government struggles to quell a violent Islamist insurgency, poverty is more stark.
“Reducing poverty and inequality requires not just economic growth but also job creation and investment in improving the productive capacity of the economy and its people,” Giulia Pellegrini, a sub-Saharan Africa economist at JPMorgan Chase in London, said in a statement.
These tensions underscore the shortcomings of west Africa’s economic powerhouse, whose growth potential has spurred investment by firms ranging from US-based Procter & Gamble to MTN Group, Africa’s biggest cellular network operator. While Nigeria’s economy has expanded 6 percent a year since 2006, according to the World Bank, its power supply is less than a tenth of South Africa’s.
Nigeria’s benchmark stock index has dropped 11 percent since the beginning of the year, after surging 47 percent last year. The local currency has lost 2.5 percent against the dollar this year and was trading at 164.36 naira to the US unit yesterday morning.
Oil production is concentrated in the south, with revenue from the industry providing 80 percent of government funds and more than 95 percent of foreign income, according to the finance ministry. The government anticipates oil and gas income of 7.16 trillion naira (R461 billion) this year.
Joblessness among young Nigerians may undermine economic progress in a country where 23.9 percent of the working population is unemployed, according to data from the CIA’s World Factbook. The US intelligence agency estimates that 62 percent of Nigeria’s 177 million people are below the age of 25.
At the weekend, seven young jobseekers were killed in a stampede at an immigration service recruitment day in Abuja. Another eight people died in crowds at recruitment drives in three other cities.
The north is particularly vulnerable, with poverty rates estimated at about 80 percent, according to Oyin Anubi, a sub-Saharan Africa economist at Bank of America Merrill Lynch in London.
One reason why tens of millions of Nigerians still live in poverty is that growth has been concentrated on sectors that are less labour-intensive, such as oil, telecommunications, and banking.
Development of agriculture, the biggest employer in the economy, had been largely ignored by the government until recently, said Funmi Akinluyi, the investment director at Silk Invest, a frontier markets specialist based in London.
While the boost to GDP may improve the investment outlook for Nigeria, social progress is slow.
The US and UK, fearful of terrorism and kidnapping, warn their citizens to stay away from huge swathes of the country, while the World Bank’s most recent Ease of Doing Business survey in June last year ranked Nigeria at 147, only marginally better than Iraq and Sudan. South Africa was at 41 and Ghana 67.
“The greater economic visibility should place more pressure on the government to undertake economic reforms, infrastructure, job creation, necessary to sustain the current trajectory of GDP growth,” Adewale Okunrinboye at Lagos-based ARM Asset Management said. – Bloomberg