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“Nobody Eats GDP”: Promoting Inclusive Growth in Nigeria

    The statement highlights the importance of inclusivity and improved societal welfare alongside economic growth. Most times when an economy is experiencing growth in monetary terms we get carried away by all the nice figures and upward trending graphs. Yes, GDP growth is great, but for whom? Who truly benefits from economic expansion?

    In reality, although growth is increasing, extreme poverty remains a serious problem – especially in many countries in Africa. The overall level of extreme poverty across the world has been declining over the past few years. As at 2015, the number of people living in poverty worldwide was about 705.55 million and this has been declining at a steady rate since 1970. On the other hand, in Africa, although poverty has been falling (from 56% in 1960 to 43% in 2012), this reduction has been accompanied by a rapid increase in population growth. As a result, the living standard and welfare of a significant portion of the population more or less remains the same. This situation is a conundrum in the international development sphere that has led to the formation of the popular buzzword "inclusive growth". This ambiguous term has climbed up the priority ladder of the development agenda over the past few years. The United Nations Development Programme (UNDP) so aptly states that “when you ask five economists to define the concept, you will likely end up with six answers".

    Broadly defined, inclusive growth is growth that enables all members of a society to participate and benefit from the growth process; irrespective of their individual circumstance. Some of the key elements of inclusive growth include; generating productive employment, investing in education, improving infrastructure and facilitating access to basic amenities. Inclusive growth provides an alternative perspective on how we view economic growth as it shifts away from the conventional measure of growth solely based on GDP. 

    Nigeria has been recognised as Africa’s largest economy and one of the fastest growing globally. Regardless of economic growth in recent years, inclusive growth is still one of the major challenges it faces. Ever since the country gained independence in 1960, a number of economic programmes and projects have been implemented with the specific goal of reducing poverty, lowering inequality and improving overall welfare. There has been some progress. In 2000, 56% of Nigerians were living below the internationally defined poverty line whereas currently 82, 839, 154 people (around 42.5%) of the country’s population live in extreme poverty.

    Although there has been a slight alleviation of poverty over the past few years, there is still great room for improvement. While the proportion of people in extreme poverty has fallen in Nigeria, the absolute number of people in extreme poverty has gone up by 35m in just over two decades (See Figure 1). At the same time a small number of the elite class control an enormous amount of wealth. The discrepancy in wealth is so profound that it has been estimated that the annual income of the richest Nigerian man can lift at least 2 million people out of poverty for a year.


    Recently, the policy failures of the current administration have aggravated inequality levels. The Nigerian middle class is at risk of being eroded due to the unfavourable economic conditions present in the economy such as rising inflation, a weak Naira and the fall in global oil prices. The middle-class emerged as a result of the rapid growth in the private sector and economic growth in previous years. They constitute around 30% of the population with a majority living in urban areas. Evidence shows that the middle class is more likely to influence growth through participation in the labour market; however, they are also much more vulnerable to economic shocks and downturn. Thus, if these policies and conditions persist, in the coming years the middle class might diminish.

    Ideally, the Nigerian economy should constantly thrive based on the availability of human and natural resources. Between 2010 and 2015, Nigeria made around N51 trillion (Naira) just from oil export revenue. However, the current state of the economy does not depict that due to mismanagement of funds and unfavourable policies.

    Expanding growth is not enough. Governments have to make an active effort to ensure that the most vulnerable members of society can equally benefit from this growth. There are various pathways that can be followed to achieve this. However, in the case of Nigeria, the priority for promoting inclusive growth should be focused on economic diversification and improving the quality of economic and political institutions.

    The government needs to set conditions that advance the other sectors of the economy and diversify away from oil and agriculture towards more productive activities. Diversification would open up economic opportunities across different sectors, creating employment that could have a positive spill over effect to the rest of the economy. For example, this could create a more conducive labour market in order to enable citizens to engage in more value-added activities; this could be achieved through lower tax rates and lower regulations. By doing this they could facilitate economic development and most importantly inclusive growth in the long run.

    The other key aspect that needs to be dealt with in order to foster inclusivity is the presence of sound economic and political institutions. The role of quality institutions is undeniably important in determining the impact of the policies enacted. Overcoming corruption, rent-seeking and political issues such as neopatrimonialism is the first step towards achieving this. There is also a need to implement political reforms that change the way institutions function in order to foster transparency and accountability at all levels.

    Overall, it has been established that economic growth is a necessary but not sufficient condition for development. Although growth is essential for creating wealth and reducing poverty; its Achilles heel is that it can exclude a large number of the population from benefitting. Achieving and sustaining inclusive growth requires a deliberate and constant effort by the government to target vulnerable groups and ensure that they are not left out of the growth process.

    DISCLAIMER: The views set out in this blog are those of the individual author only and should not be taken to represent a corporate view of the Centre for Policy Studies

    Chisom Stephannie Adinde is a CPS 2018 Economic research intern. She graduated in 2017 with a degree in Economics and Politics (Hons.) and she is currently pursuing a masters in Emerging economies and International Development at King’s College London. Chisom is passionate about seeking solutions to eradicate poverty and inequality particularly in Africa. 

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    Ogochukwu Adinde - About 976 days ago

    Well done stephannie. May God increase your knowledge to help humanity. Keep it up Angel

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