Concern over trickle down effect of Nigeria growth

15 December 2013 6:49 AM

230 0

Lagos (AFP) - Nigeria could soon become Africa's biggest economy but there is growing recognition that the landmark will be largely symbolic and do little to change lives in the continent's most populous nation.

On paper, the future looks bright for Nigeria: the International Monetary Fund has forecast 7.4 percent growth in gross domestic product (GDP) in 2014, up from an estimated 6.2 percent this year.

That comes despite the effects of a four-year Islamist insurgency in the north and rampant oil theft, which have dragged down the economy.

GDP growth in Africa's largest crude oil producer averaged 6.8 percent between 2005 and 2013, according to the Central Bank of Nigeria (CBN).

That compares to a little over five percent between 2005 and 2008-9 in Africa's largest economy, South Africa, which has struggled to go beyond 3.5 percent since.

Nigeria is currently in the process of re-basing its economy for the first time since 1990, adjusting GDP calculations to take into account changes in the economy, including new sectors and industries.

The results are expected in the coming weeks and are set to reinforce the view that the country of nearly 170 million is a huge potential market and investment destination.

But the healthy figures belie the reality that most Nigerians remain poor and live on less than two dollars a day, while the country lags behind in key development indicators such as health.

Finance Minister Ngozi Okonjo-Iweala recognised the challenge of closing the gap and ensuring that the benefits of growth are not captured by the elite but trickle down to all levels of society.

"We are growing but not creating enough jobs. That is a very big challenge," she told business leaders in Lagos this week.

"The rate of growth that we have is good but could be better. We need to grow faster.

"It is clear that the top five to 10 percent is capturing most of whatever growth there is and people at the bottom are being left behind."

The former World Bank managing director said an estimated 1.6 million jobs were created over the last 12 months but growth needed to be "at least nine to 10 percent" per year to bring down unemployment.

Pat Utomi, a professor of political economy at the Lagos Business School, said the emphasis now should be on improving living conditions for most Nigerians.

"We have a situation where the growth has not translated into a better quality of life for the vast majority of the people," he told AFP.

"People are poor in the midst of plenty because corrupt and inept leaders are in the helms of affairs.

"Unemployment, inequality and decaying infrastructure are pervasive. Basic necessities like good roads, hospitals, schools, electricity, potable water and decent houses are lacking."

Nigeria can overtake South Africa if its leaders put the economy on the "path of a sustainable growth", he added.

"If current growth momentum is sustained, I can see Nigeria ahead of South Africa in the next two or three years," he said, assessing that Nigeria had the workforce, market and resources to lead Africa.

"We can be there. It took South Korea just 40 years to attain what America achieved for its economy in 200 years and what Britain achieved in 150 years," he said.

Healthy growth figures mask a different reality, according to Chris Uyot, the acting general-secretary of the country's central workers union, the Nigeria Labour Congress.

"It's very difficult to see the impact of the figures being bandied about," he said.

"They are talking of robust economic growth, falling inflation, yet the living standard of the people are falling.

"Prices of goods and services are rising. There is unemployment everywhere."

Anti-graft activist Debo Adeniran meanwhile said corruption was "the bane of the economy" and needed to be tackled.

"We should stop paying lip-service to the war against corruption. Government must stop the large-scale stealing in the oil industry.

"Oil money has to be used for development before the people can feel the impact of economic growth".

Source: au.news.yahoo.com

To category page

Loading...