As Nigeria gets richer, more
Nigerians live in poverty. That’s the paradox of growth in
Africa’s biggest oil producer, its most populous nation 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 based on production patterns in
2010, the first time it’s overhauled the data in two decades.
That may boost the size of the economy by as much as 60 percent
to between $384 billion and $424 billion, according to London-based Renaissance Capital Ltd., putting 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, shows 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 even 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, sub-Saharan Africa economist at
JPMorgan Chase & Co. in London, said in an e-mail.
Oil Dependency
These tensions underscore the shortcomings of the region’s
economic powerhouse, whose growth potential has spurred
investment from Cincinnati-based Procter & Gamble Co. (PG) to MTN
Group Ltd. (MTN), Africa’s biggest mobile-phone operator. While
Nigeria’s economy has expanded 6 percent a year since 2006,
according to the World Bank, the nation’s power supply is less
than a 10th of South Africa’s.
Nigeria’s benchmark stock index has dropped 12 percent
since the beginning of the year, after surging 47 percent in
2013. The currency fell 0.1 percent to 164.82 per dollar at 2:06
p.m. in Lagos, the commercial capital, extending this year’s
losses to 2.7 percent.
Oil production is concentrated in the south, with revenue
accounting for about 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 ($44 billion) in 2014.
Joblessness among young Nigerians may undermine economic
progress in a nation where 23.9 percent of the working
population is unemployed, according to data from the Central
Intelligence Agency’s World Factbook. It estimates that 62
percent of the nation’s 177 million people are below the age of
25.
Jobseekers Stampede
“The large number of underemployed youth is a serious
threat to the economic and political stability of the country.
The median age in Nigeria is 14, and the population continues to
grow at a rate close to 3 percent” a year, John Litwack, the
World Bank’s lead economist for Nigeria, said by e-mail.
On March 15, 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, sub-Saharan Africa economist at Bank of America Merrill Lynch in
London.
The government says its Federal Initiative for the North
East will revive schools, health services and farming, in a
region where poverty and lack of opportunity have bred a sense
of alienation. Islamist militant group Boko Haram has sought to
exploit that sentiment in order to destabilize the government,
conducting a deadly campaign of bomb and gun attacks since 2009.
‘Persistent Inequality’
“Unequal distribution of this oil wealth has contributed
to a persistent inequality problem,” Anubi said in an e-mailed
response to questions. Poverty poses “a risk to the stability
of that region.”
One reason why tens of millions of Nigerians still live in
poverty is that growth has been concentrated on sectors that are
less labor-intensive, such as oil, telecommunications, and
banking. Development of agriculture, the biggest employer in the
economy, has been largely ignored by the government until
recently, said Funmi Akinluyi, investment director at Silk
Invest, a frontier markets specialist based in London.
“Growth in Nigeria has not been inclusive in decades,”
she said in an e-mail. “Once agriculture gets the traction it
needs we will have a stronger and a more diverse economy.”
Business Ranking
Paul Nwabuikwu, spokesman for Finance Minister Ngozi Okonjo-Iweala, said in a Feb. 26 statement that there have been
“visible achievements in roads, rail, power privatization,
agriculture and job creation programs.”
While the boost to GDP may improve the investment outlook
for Nigeria, social progress is slow. Nigeria is, along with
Afghanistan and Pakistan, one of only three countries in the
world where polio is still endemic, according to the
International Federation of Red Cross and Red Crescent
Societies.
The U.S. and U.K., 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 ranked Nigeria at 147, only marginally
better than Iraq and Sudan. By contrast, South Africa was at 41
and Ghana 67.
Corruption Index
Nigeria was listed at 144th out of 177 countries on
Transparency International’s Corruption Perception Index last
year.
Nigeria’s leap up the wealth league table may intensify
scrutiny of President Goodluck Jonathan’s administration.
“The greater economic visibility should place more
pressure on the Federal Government to undertake economic
reforms, infrastructure, job creation, necessary to sustain the
current trajectory of GDP growth,” Adewale Okunrinboye, an
analyst at Lagos-based ARM Asset Management, which manages the
equivalent of about $2.7 billion in assets, said in an e-mailed
response to questions.
To contact the reporter on this story:
Daniel Magnowski in Abuja at
dmagnowski@bloomberg.net
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