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Prospects for Economic Growth in Nigeria – a demographic perspective

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Presentation to the Task Force by its co-chair, David Bloom. The presentation sets out salient facts describing Nigeria’s economy and population; explains the theory of the demographic dividend; and ...

Presentation to the Task Force by its co-chair, David Bloom. The presentation sets out salient facts describing Nigeria’s economy and population; explains the theory of the demographic dividend; and asks whether there is a demographic dividend in Nigeria’s future.

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Prospects for Economic Growth in Nigeria – a demographic perspective Prospects for Economic Growth in Nigeria – a demographic perspective Presentation Transcript

  • 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 Source: World Development Indicators, 2008 average annual growth rate of GDP/capita (PPP), 1980 - 2006
  • 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:
      • 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 time Death rate Birth rate
  • Population age structure is a robust and powerful predictor of economic growth
    • Demographics
    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. Income
  • 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.
  • 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?