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 asks whether there is a demographic dividend in Nigeria’s future.

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Prospects for Economic Growth in Nigeria – a demographic perspective

  1. 1. 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
  2. 2. Structure of the presentation <ul><li>Salient facts describing Nigeria’s economy and population </li></ul><ul><li>The demographic dividend: theory and evidence </li></ul><ul><li>Is there a demographic dividend in Nigeria’s future? </li></ul>
  3. 3. <ul><li>Salient facts describing </li></ul><ul><li>Nigeria’s economy and population </li></ul>
  4. 4. Nigeria’s economy has stagnated: No growth in income per capita Source: World Development Indicators, 2008
  5. 5. Indonesia and Pakistan have seen economic growth Source: World Development Indicators, 2008
  6. 6. Nigeria’s economy compared with world regions Source: World Development Indicators, 2008
  7. 7. Comparing economic growth rates Source: World Development Indicators, 2008 average annual growth rate of GDP/capita (PPP), 1980 - 2006
  8. 8. Nigeria’s population has grown rapidly Source: UN, World Population Prospects, 2008
  9. 9. Nigeria’s fertility rate has started to fall Source: UN, World Population Prospects, 2008
  10. 10. The infant mortality rate has fallen, but not steadily Source: UN, World Population Prospects, 2008
  11. 11. Life expectancy has risen, but not steadily Source: UN, World Population Prospects, 2008
  12. 12. Crude birth and death rates are falling Source: UN, World Population Prospects, 2008
  13. 13. Population growth has been rapid Source: UN, World Population Prospects, 2008
  14. 14. The ratio of working-age to non-working-age people has been pretty steady Source: UN, World Population Prospects, 2008
  15. 15. Changing age structure, 1950-2010: A 3-dimensional view Source: UN, World Population Prospects 2008
  16. 16. Education level varies by population group <ul><li>Educational attainment remains quite low: </li></ul><ul><ul><li>37% of the population has no formal schooling </li></ul></ul><ul><ul><li>47% is illiterate </li></ul></ul><ul><li>Over 50% of Muslims and traditionalists have no formal schooling. </li></ul><ul><li>50% of Christians have secondary or higher education. </li></ul><ul><li>Rural residents and those in the North have lower educational attainment. </li></ul>
  17. 17. Employment <ul><li>Unemployment is well above 20%, except for those over age 35. </li></ul><ul><li>Unemployment doesn’t vary much by rural/urban residence. </li></ul><ul><li>It is highest among those with a secondary education (48%). </li></ul><ul><ul><li>This group seems likely to be underemployed. </li></ul></ul><ul><li>Women’s labor force participation lags far behind men’s. </li></ul>
  18. 18. Marriage, first birth, and contraception <ul><li>Age at first marriage and first birth are higher </li></ul><ul><ul><li>in the South </li></ul></ul><ul><ul><li>in urban areas </li></ul></ul><ul><ul><li>among those with higher levels of education, and </li></ul></ul><ul><ul><li>among Christians </li></ul></ul><ul><li>Those who only use traditional or folkloric contraceptive methods have much higher fertility. </li></ul><ul><li>There is significant unmet need for contraception. </li></ul>
  19. 19. Fertility varies by population group <ul><li>Fertility rates are higher: </li></ul><ul><ul><li>in the North </li></ul></ul><ul><ul><li>in rural areas </li></ul></ul><ul><ul><li>among those with less education </li></ul></ul><ul><ul><li>among the poor, and </li></ul></ul><ul><ul><li>among Muslims and traditionalists </li></ul></ul>
  20. 20. What we’ve seen so far <ul><li>Economics: </li></ul><ul><ul><li>Low level of income </li></ul></ul><ul><ul><li>High inequality </li></ul></ul><ul><ul><li>Little or no economic growth </li></ul></ul><ul><li>Demographics: </li></ul><ul><ul><li>Rapid population growth </li></ul></ul><ul><ul><li>High fertility </li></ul></ul><ul><ul><li>Large population of young people </li></ul></ul>
  21. 21. <ul><li>The demographic dividend: </li></ul><ul><li>Theory and evidence </li></ul>
  22. 22. Average annual growth rate of GDP per capita, 1975-2005 Source: World Bank, World Development Indicators 2008
  23. 23. Changing age structure, 1960-2005 Source: UN, World Population Prospects
  24. 24. The Demographic Transition Population growth rate time Death rate Birth rate
  25. 25. Population age structure is a robust and powerful predictor of economic growth <ul><li>Demographics </li></ul>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
  26. 26. Reaping the demographic dividend is not automatic, and may not be permanent <ul><li>Demography is not destiny – it just creates potential </li></ul><ul><ul><li>for economic growth and poverty reduction </li></ul></ul><ul><ul><li>and also, for social, political, and economic instability </li></ul></ul><ul><li>March of the Silver-Haired Generation </li></ul>
  27. 27. Complementary policies <ul><li>Need to catalyze demographic transition </li></ul><ul><li>Need to accelerate demographic transition – esp. fertility decline </li></ul><ul><li>Need compatible policies in other areas </li></ul><ul><ul><li>education </li></ul></ul><ul><ul><li>health </li></ul></ul><ul><ul><li>labor market </li></ul></ul><ul><ul><li>trade </li></ul></ul><ul><ul><li>governance </li></ul></ul><ul><ul><li>macroeconomic management </li></ul></ul><ul><li>Need good relationships with other countries </li></ul>
  28. 28. <ul><li>Is there a demographic dividend in </li></ul><ul><li>Nigeria’s future? </li></ul>
  29. 29. Nigeria’s population is set to soar Source: UN, World Population Prospects, 2008
  30. 30. The fertility rate is expected to continue falling Source: UN, World Population Prospects, 2008
  31. 31. The infant mortality rate is projected to continue falling Source: UN, World Population Prospects, 2008
  32. 32. Life expectancy will continue to rise Source: UN, World Population Prospects, 2008
  33. 33. Crude birth and death rates will continue to fall Source: UN, World Population Prospects, 2008
  34. 34. Population growth rate will decline substantially Source: UN, World Population Prospects, 2008
  35. 35. The ratio of working-age to non-working-age people is set to increase dramatically Source: UN, World Population Prospects, 2008
  36. 36. Growth of the working-age to non-working-age ratio, 1960-2050 ( under 3 UN fertility scenarios) Source: UN, World Population Prospects 2008
  37. 37. The bottom line: demographic change can lead to economic growth
  38. 38. Comparing the growth rates of the working-age and non-working-age population Source: UN, World Population Prospects, 2008
  39. 39. Changing age structure, 1960-2050: Nigeria compared with Indonesia and Pakistan Source: UN, World Population Prospects 2008
  40. 40. Changing age structure, 1960-2050: Nigeria compared with East Asia Source: UN, World Population Prospects 2008
  41. 41. The size of the 60+ population will increase dramatically Source: UN, World Population Prospects, 2008
  42. 42. Reaping the demographic dividend: cautionary points regarding Nigeria <ul><li>Not all of the general points about the factors needed to realize the demographic dividend necessarily apply to Nigeria. </li></ul><ul><li>In particular: </li></ul><ul><ul><li>Trade policy is important, but it may be more important to focus on diversification of the economy away from dependence on oil exports. </li></ul></ul><ul><ul><li>Minimum wage laws and unions may affect only a small portion of Nigeria’s labor market. </li></ul></ul>
  43. 43. Take-home messages <ul><li>Demography matters. </li></ul><ul><li>Demography matters a lot. </li></ul><ul><li>There is potentially a sizeable demographic dividend in Nigeria’s future. </li></ul><ul><ul><li>But, will Nigeria collect this dividend? </li></ul></ul>

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