The World Bank has warned that Nigeria could account for as much as 25 percent of the world’s extremely poor population if the country maintains the current pace of population growth and employment levels over the next decade.
Africa’s largest economy is recovering gradually from the 2016 recession, with growth projected to pick up from 1.9 percent in 2018 to 2 percent in 2019 and 2.1 percent in 2020-21, the bank’s latest Nigeria Economic Update (NEU) shows.
According to the report titled Jumpstarting Inclusive Growth: Unlocking the Productive Potential of Nigeria’s People and Resource Endowments, the growth outlook is vulnerable to external and domestic risks, such as geopolitical and trade tensions that may affect inflows of private investment.
With population growth – estimated at 2.6 percent – outpacing economic growth in a context of weak job creation, the Bank revealed that per capita incomes are falling. An estimated 100 million Nigerians presently live on less than $1.90 a day.
Nigeria’s vulnerability to oil prices has also hindered sustained productivity gains. Over time, labour has repeatedly moved from agriculture to services when oil prices were high, then shifted back when oil prices were low, thereby limiting the economic transformation needed to produce more and better-paid jobs.
All things being equal, the number of Nigerians living in extreme poverty could increase by more than 30 million by 2030. This highlights the need for increased focus on job creation amid the economic recovery, the report says.
Although the 2016 recession propelled a rise in unemployment in Nigeria, the World Bank further revealed that some states had recently begun creating enough jobs to keep pace with their growing labour force.
“In 2018, Nigeria created about 450,000 new (net) jobs, partially offsetting the loss of 700,000 jobs in the previous year. However, Nigeria’s labour force is growing rapidly,” it says.
Some five million Nigerians entered the labour market in 2018, resulting in an increase in unemployed people by 4.9 million in the last year. But the positive news, according to the report, is emerging from a subset of states that are now creating more jobs than the entrants to the labour market.
“In 2017, none of the 36 states in Nigeria and its Federal Capital Territory created enough jobs to absorb new labour market entrants. The situation improved in 2018, with four states – Lagos, Rivers, Enugu, and Ondo – generating more jobs than labour-market entrants,” the report stated.
Meanwhile, in the year following the recession between 2017 and 2018, 10 states saw an increase in the number of jobs created, even though they were not enough to absorb the new generation entering the labour force.
The World Bank report also acknowledged recent government efforts to boost job creation such as improvements in regulations to start and operate a business. Nigeria improved its ranking in the Doing Business index from 169th in the world in 2017 to 131st in 2019.
Other efforts include the recent launch of the Central Portal for Government Services to increase transparency and support the development of the digital economy, signing of the Africa Continental Free Trade Area agreement (AfCFTA) in July and setting up measures to enhance social protection systems.
Amid growing public demand for greater economic opportunities, the bank says Nigeria has the opportunity to advance reforms to mitigate the risks to economic growth and promote faster, more inclusive, and sustainable growth that improves living standards and reduces poverty.
“Reforms would help achieve faster, more inclusive, and sustained growth with jobs,” said Shubham Chaudhuri, the World Bank Country Director for Nigeria.
Some of the bank’s recommended strategies to boost the productivity and resilience of the economy are improving the efficiency of spending in education; monitoring the impact of conflict to protect the poor and vulnerable, and leveraging digital technologies for economic diversification and job creation for young workers.