Business
Concerns as Nigerians’ per capita income drops by over 200 per cent in 10 years
Nigeria’s dream of achieving a $1trn economy in ten years is under threat, with plummeting per capita income showing a dramatic decline in productivity that requires serious policy shift to reverse.
There are growing fears that the situation may worsen under President Bola Tinubu, whose early reforms are fueling inflation, crippling the local currency, causing unemployment and throwing millions into poverty with no end in sight.
The value of the naira has seen a sharp decline in the last decade, with the official exchange rate moving from around N150 per U.S. dollar in 2013 to over N1,700 per dollar today.
This devaluation has led to higher import costs, pushing up prices on essential goods and reducing purchasing power. Coupled with double-digit inflation, which stood at 32.7 percent in September, the average Nigerian household has seen its real income shrink substantially.
According to the most recent report by the World Bank on Nigeria, about 129 million of the citizens are living in poverty for a population of an estimated 238 million people.
Experts are in agreement that Nigeria’s productivity dilemma is rooted in a combination of governance failures, inadequate infrastructure, and widespread insecurity. They say without substantial reforms in these areas, Nigeria’s potential for economic growth will remain stifled, leaving its large population to bear the brunt of poverty and underemployment.
According to the October 2024 World Economic Outlook of the International Monetary Fund (IMF), Nigeria’s per capita income has fallen drastically from $3,223 in 2014 to a mere $877.07, as the country faces an uphill battle in translating its demographic strength into sustainable economic growth.
This dramatic decline raises significant concerns about the structural health of Africa’s largest economy, suggesting an urgent need for reforms in policy, human capital development, and infrastructure.
According to SB Morgen, a Lagos-based data and intelligence gathering firm, “Nigeria’s GDP per capita has fallen to its lowest level since 2004 when placed against its smaller neighbours.
”But while Africa’s most populous nation has seen its average income earned per person nosedive in the last 10 years, per capita incomes of West African peers like Ghana, Cote d’Ivoire and even Benin Republic have been modest.”
SBM Intel further stated: “Nigeria is the only country in the sample whose income per head has dropped since 2014 and the only one whose income per head has risen in double digits since the year 2000,”.
“Given that the same global headwinds affecting Nigeria affect all of these ECOWAS countries along the Gulf of Guinea, this is ample evidence of poor policy-making in Nigeria over the last decade.”
A recent report by the National Bureau of Statistics (NBS) reveals that 84 percent of Nigeria’s working population was self-employed in early 2024, reflecting a 3.3 percent drop from the 87.3 percent recorded in the previous quarter.
The NBS further revealed that in Q1 2024, “while the headline unemployment figures may appear positive, the double-digit underemployment rate is a cause for concern. It suggests that a significant portion of the workforce is engaged in low-paying, part-time, or informal jobs that don’t fully utilize their skills or offer job security.”
Also in a recent report, the Nigerian Economic Summit Group (NESG), observed that essential infrastructure in the country only accounts for 35 percent of GDP, far below the World Bank’s benchmark of 70 percent. This infrastructure gap limits the productivity of key sectors and hampers overall economic growth, despite significant capital investments in recent years it stated.
Little wonder in 2023, only a handful of economic sectors, such as mining, financial services, and water and waste management, achieved double-digit growth rates, with manufacturing experiencing a negligible growth of just 1.45 percent.
Lead Consultant at the ECOWAS Commission, Kalu Aja, noted that while 100 farmers in the Netherlands can produce sufficient food for export using advanced technology, 10 million Nigerian farmers, working primarily with hand tools and reliant on unpredictable rainfall, struggle to meet domestic food demand.
Aja argued that Nigeria’s leaders should prioritize investments in agricultural infrastructure—such as tractors for farming —over luxury expenditures for politicians, as a means to generate sustainable wealth.
Commenting on his X handle, Ajah said: “More labour in Nigeria, yet poorer Why? The labour in Nigeria is not productive. 100 farmers in the Netherlands generate more food for export than 10 million farmers in Nigeria Why? The 100 Dutch farmers use tractors, greenhouses and drip tech, they grow tomato all year round, with no pests, bandits, diseases or disasters, then they export and farmers get wealthy.
“The 10 million Nigerian farmers use hoes and rainfall, crop yields are low, plants die due to pests, bandits kill, floods happen. The farmers have no excess for export, they don’t get as wealthy. Maths then helps the Dutch, with more wealth from agriculture, their export earnings go further in their smaller family, so generational wealth is created.
“Maths hurts the Nigerians, with less wealth for a larger population, then population becomes a burden, generational transfer of extreme poverty occurs. Nigerians must grow productivity.
“Imagine if instead of buying an SUV for each House Member, Nigeria instead bought a tractor for their constituency. That’s how wealth is created, tractors not SUVs,.“
Making a comparison between Nigeria and Singapore, two countries which commenced their development journey at the same time, former Minister for Education, Dr. Oby Ezekwesili, through her X handle highlighted the vast disparity in governance quality between the two nations.
While Singapore’s GDP per capita is nearly 40 times that of Nigeria, Ezekwesili believes that this gap is largely due to Singapore’s effective governance, which has successfully harnessed its resources to achieve prosperity. “Poor governance,” she laments, “has delivered a terrible scorecard to Nigerians, leaving the poorer segments of the population to suffer the brunt of these consequences.”
Nigeria’s labor productivity, as measured by GDP per hour worked, is also disturbingly low. According to the International Labour Organization, Nigeria’s productivity of $7 per hour is well below that of peers such as Gabon ($26), Botswana ($21), and Egypt ($20).
The Chief Executive Officer, Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, in his intervention noted manufacturing sector is one of the most vulnerable sectors amidst current economic reforms and the inherent shocks.
According to the economist, even though the reforms were necessary to pull the economy from the brink, the impact on the sector has been profound.
Yusuf noted that the sector was severely impacted by two major factors. While the first is the sharp depreciation in the exchange rate, which aggravated production and operating costs, the second is the increase in energy cost, which resulted in escalation of logistics and production costs. Other factors, he added, include weak purchasing power of consumers and high cost of funds.
“These factors were regrettably outcomes of the current reforms,” he said, adding that many large manufacturing firms posted losses in their most recent financial results while some opted to shut down and leave the country. The second quarter GDP report showed that the petroleum refining and textile sectors were still in recession while the motor vehicle assembly sector contracted.”
He added, “Reversing the declines in manufacturing would require the fixing of the macroeconomic headwinds especially stabilising the naira exchange rate, addressing the structural impediments, moderation of energy cost, reduction or possible elimination of import duties on critical industrial raw materials.
“Other desirable measures include the deepening of development finance intervention to ensure the provision of single digit and long-term credit facilities to manufacturers. There should also be better commitment to the implementation executive orders for patronage of made in Nigeria products.”