Prospects for Economic Growth in Nigeria: A Demographic Perspective Nigeria: The Next Generation First Meeting of the Task Force Abuja, Nigeria December 4-5, 2009
Structure of the presentation Salient facts describing Nigeria’s economy and population The demographic dividend: theory and evidence Is there a demographic dividend in Nigeria’s future?
Salient facts describing Nigeria’s economy and population
Nigeria’s economy has stagnated: No growth in income per capita Source: World Development Indicators, 2008
Indonesia and Pakistan have seen economic growth Source: World Development Indicators, 2008
Nigeria’s economy compared with world regions Source: World Development Indicators, 2008
Comparing economic growth rates average annual growth rate of GDP/capita (PPP), 1980 - 2006 Source: World Development Indicators, 2008
Nigeria’s population has grown rapidly Source: UN, World Population Prospects, 2008
Nigeria’s fertility rate has started to fall Source: UN, World Population Prospects, 2008
The infant mortality rate has fallen, but not steadily Source: UN, World Population Prospects, 2008
Life expectancy has risen, but not steadily Source: UN, World Population Prospects, 2008
Crude birth and death rates are falling Source: UN, World Population Prospects, 2008
Population growth has been rapid Source: UN, World Population Prospects, 2008
The ratio of working-age to non-working-age people has been pretty steady Source: UN, World Population Prospects, 2008
Changing age structure, 1950-2010: A 3-dimensional view Source: UN, World Population Prospects 2008
Education level varies by population group Educational attainment remains quite low: 37% of the population has no formal schooling 47% is illiterate Over 50% of Muslims and traditionalists have no formal schooling. 50% of Christians have secondary or higher education. Rural residents and those in the North have lower educational attainment.
Employment Unemployment is well above 20%, except for those over age 35. Unemployment doesn’t vary much by rural/urban residence. It is highest among those with a secondary education (48%). This group seems likely to be underemployed. Women’s labor force participation lags far behind men’s.
Marriage, first birth, and contraception Age at first marriage and first birth are higher in the South in urban areas among those with higher levels of education, and among Christians Those who only use traditional or folkloric contraceptive methods have much higher fertility. There is significant unmet need for contraception.
Fertility varies by population group Fertility rates are higher: in the North in rural areas among those with less education among the poor, and among Muslims and traditionalists
What we’ve seen so far Economics: Demographics: Low level of income High inequality Little or no economic growth Demographics: Rapid population growth High fertility Large population of young people
The demographic dividend: Theory and evidence
Average annual growth rate of GDP per capita, 1975-2005 Source: World Bank, World Development Indicators 2008
Changing age structure, 1960-2005 Source: UN, World Population Prospects
The Demographic Transition Population growth rate Birth rate Death rate time
Population age structure is a robust and powerful predictor of economic growth Demographics Income One third (about 2 percentage points) of the growth of income per capita in East Asia during 1965-90 is attributable to the independent influence of changes in age structure.
Reaping the demographic dividend is not automatic, and may not be permanent Demography is not destiny – it just creates potential for economic growth and poverty reduction and also, for social, political, and economic instability March of the Silver-Haired Generation
Complementary policies Need to catalyze demographic transition Need to accelerate demographic transition – esp. fertility decline Need compatible policies in other areas education health labor market trade governance macroeconomic management Need good relationships with other countries
Is there a demographic dividend in Nigeria’s future?
Nigeria’s population is set to soar Source: UN, World Population Prospects, 2008
The fertility rate is expected to continue falling Source: UN, World Population Prospects, 2008
The infant mortality rate is projected to continue falling Source: UN, World Population Prospects, 2008
Life expectancy will continue to rise Source: UN, World Population Prospects, 2008
Crude birth and death rates will continue to fall Source: UN, World Population Prospects, 2008
Population growth rate will decline substantially Source: UN, World Population Prospects, 2008
The ratio of working-age to non-working-age people is set to increase dramatically Source: UN, World Population Prospects, 2008
Growth of the working-age to non-working-age ratio, 1960-2050 (under 3 UN fertility scenarios) Source: UN, World Population Prospects 2008
The bottom line: demographic change can lead to economic growth
Comparing the growth rates of the working-age and non-working-age population Source: UN, World Population Prospects, 2008
Changing age structure, 1960-2050: Nigeria compared with Indonesia and Pakistan Source: UN, World Population Prospects 2008
Changing age structure, 1960-2050: Nigeria compared with East Asia Source: UN, World Population Prospects 2008
The size of the 60+ population will increase dramatically Source: UN, World Population Prospects, 2008
Reaping the demographic dividend: cautionary points regarding Nigeria Not all of the general points about the factors needed to realize the demographic dividend necessarily apply to Nigeria. In particular: Trade policy is important, but it may be more important to focus on diversification of the economy away from dependence on oil exports. Minimum wage laws and unions may affect only a small portion of Nigeria’s labor market.
But, will Nigeria collect this dividend? Take-home messages Demography matters. Demography matters a lot. There is potentially a sizeable demographic dividend in Nigeria’s future. But, will Nigeria collect this dividend?