Nigerians Struggle With Rising Poverty Amid GDP Growth – Economists Explain
NIGPOST Report
Nigerian citizens are becoming poorer despite the country’s Gross Domestic Product (GDP) growing by 3.46% in the third quarter of 2024.
Experts from various economic institutions shed light on this paradox, attributing it to systemic inequalities and economic imbalances.
Economic Growth Statistics
According to Adeyemi Adeniran Adedeji, Nigeria’s Statistician-General, the nation recorded a GDP growth of 3.49% in Q3 2024, a rise from 3.19% in Q2 2024.
The services sector emerged as the strongest contributor, growing by 5.19% and making up 53.58% of the overall GDP.
Key drivers of this growth included telecommunications, financial institutions, construction, transportation, and agriculture.
The oil sector contributed only 5.57% to the GDP, while the non-oil sector dominated with a 94.43% share.
Real economic activity for Q3 2024 amounted to ₦20.115 trillion, significantly higher than Q2’s ₦18.285 trillion.
Despite these figures, Nigerians face worsening living conditions due to high inflation rates.
In October 2024, headline inflation stood at 33.87%, while food inflation soared to 39.16%, eroding purchasing power.
Disconnect Between GDP Growth and Living Standards
Economists argue that Nigeria’s macroeconomic growth does not translate into improved welfare for the majority.
Professor Segun Ajibola, former President of the Chartered Institute of Bankers, attributed this to weak transmission mechanisms that fail to bridge macroeconomic performance with individual welfare.
“There is a disconnect between macroeconomic growth and the well-being of citizens,” Ajibola explained.
“Inequality and imbalances in resource distribution prevent the benefits of economic growth from reaching the masses.”
Ajibola called for reforms to address distributive injustices, emphasizing that the government must ensure macroeconomic gains directly impact the poor by curbing corruption and excessive consumption by the elite.
Sectoral Imbalances Highlighted
Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise (CPPE), identified structural imbalances in the economy.
He noted that while the financial sector grew by over 30%, sectors like agriculture and manufacturing showed minimal growth, with agriculture expanding by just 1.14% and manufacturing by 0.92%.
“This discrepancy is concerning. Real sector growth is crucial for creating sustainable jobs and diversifying the economy.
Policymakers must focus on rebalancing the economy to strengthen the real sector,” Yusuf remarked.
Rising Unemployment and Economic Realities
Idakolo Gbolade, CEO of SD & D Capital Management, criticized the GDP and unemployment data, stating they fail to reflect the harsh realities faced by Nigerians.
“The GDP growth is overshadowed by inflationary pressures and a depreciating naira.
The supposed decline in unemployment doesn’t align with the increasing number of underemployed and unemployed citizens,” Gbolade noted.
He also highlighted the challenges businesses face, with many downsizing or relocating due to an unfavorable business environment.
What Lies Ahead?
Economists agree that while GDP growth is a positive indicator, it cannot be celebrated in isolation.
Comprehensive policies are required to ensure that economic growth directly benefits the people.
Addressing inflation, improving income distribution, and strengthening the real sector are essential to reversing the current trend of increasing poverty amid economic expansion.
For more updates on Nigeria’s economic landscape, stay connected with NIGPOST.
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