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Presentation to the Task Force by its co-chair, David Bloom. The presentation sets out salient facts describing Nigeria’s economy and population; explains the theory of the demographic dividend; and asks whether there is a demographic dividend in Nigeria’s future.
Citation preview
Prospects for Economic Growth in Nigeria:
A Demographic Perspective
Nigeria: The Next GenerationFirst Meeting of the Task Force
Abuja, Nigeria
December 4-5, 2009
Structure of the presentation
• Salient facts describing Nigeria’s economy and population
• The demographic dividend: theory and evidence
• Is there a demographic dividend in Nigeria’s future?
Salient facts describingNigeria’s economy and population
Nigeria’s economy has stagnated:No growth in income per capita
Source: World Development Indicators, 2008
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1980 1990 2000 2006
GD
P p
er c
apit
a
PPP, constant 2005 intl $ Exchange-rate, constant 2000 US $
Indonesia and Pakistan have seen economic growth
Source: World Development Indicators, 2008
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1980 1990 2000 2006
GD
P p
er
ca
pit
a,
PP
P (
co
ns
tan
t 2
00
5 i
nt'
l $
)
Nigeria
Indonesia
Pakistan
Nigeria’s economy compared with world regions
Source: World Development Indicators, 2008
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1980 1990 2000 2006
GD
P p
er
cap
ita
, P
PP
(c
on
sta
nt
20
05 i
nt'
l $)
Nigeria
East Asia & Pacific
Sub-Saharan Africa
World
Comparing economic growth rates
Source: World Development Indicators, 2008
Nigeria 0.0%Indonesia 3.6%Pakistan 2.5%East Asia & Pacific 6.6%Sub-Saharan Africa 0.0%World 1.6%
average annual growth rate of GDP/capita (PPP), 1980 - 2006
Nigeria’s population has grown rapidly
Source: UN, World Population Prospects, 2008
0
50
100
150
200
250
300
1960 1970 1980 1990 2000 2010
Po
pu
lati
on
(m
illi
on
s)
Nigeria’s fertility rate has started to fall
Source: UN, World Population Prospects, 2008
2
3
4
5
6
7
1960 1970 1980 1990 2000 2010
Ch
ild
ren
per
wo
man
The infant mortality rate has fallen, but not steadily
Source: UN, World Population Prospects, 2008
0
50
100
150
200
1960 1970 1980 1990 2000 2010
Dea
ths
per
1,0
00 li
ve b
irth
s
Life expectancy has risen, but not steadily
Source: UN, World Population Prospects, 2008
35
40
45
50
55
60
65
1960 1970 1980 1990 2000 2010
Lif
e ex
pec
tan
cy a
t b
irth
, ye
ars
Crude birth and death rates are falling
Source: UN, World Population Prospects, 2008
0
10
20
30
40
50
1960 1970 1980 1990 2000 2010
Per
1,0
00 p
op
ula
tio
n
Crude birth rate Crude death rate
Population growth has been rapid
Source: UN, World Population Prospects, 2008
1.0
1.5
2.0
2.5
3.0
3.5
1960 1970 1980 1990 2000 2010
Po
pu
lati
on
gro
wth
rat
e (%
)
The ratio of working-age to non-working-age people has been pretty
steady
Source: UN, World Population Prospects, 2008
1.0
1.5
2.0
2.5
1960 1970 1980 1990 2000 2010
Rat
io o
f w
ork
ing
-ag
e to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
Changing age structure, 1950-2010:A 3-dimensional view
Source: UN, World Population Prospects 2008
0
5
10
15
20
25
30
Po
pu
lati
on
(m
illi
on
s)
0 - 4
10 -
1420
- 24
30 -
3440
- 44
50 -
5460
- 64
70 -
7480
- 84
90 -
9410
0+
1950
1960
1970
1980
1990
2000
2010
Age group
Education level varies by population group
• Educational attainment remains quite low:– 37% of the population has no formal schooling– 47% is illiterate
• Over 50% of Muslims and traditionalists have no formal schooling.
• 50% of Christians have secondary or higher education.
• Rural residents and those in the North have lower educational attainment.
Employment• Unemployment is well above 20%,
except for those over age 35.• Unemployment doesn’t vary much by
rural/urban residence.• It is highest among those with a
secondary education (48%).– This group seems likely to be
underemployed.
• Women’s labor force participation lags far behind men’s.
Marriage, first birth, and contraception
• Age at first marriage and first birth are higher– in the South– in urban areas– among those with higher levels of education,
and– among Christians
• Those who only use traditional or folkloric contraceptive methods have much higher fertility.
• There is significant unmet need for contraception.
Fertility varies by population group
Fertility rates are higher:• in the North• in rural areas• among those with less education• among the poor, and• among Muslims and traditionalists
What we’ve seen so far
• Economics: – Low level of income– High inequality– Little or no economic growth
• Demographics:– Rapid population growth– High fertility– Large population of young people
The demographic dividend:Theory and evidence
Average annual growth rate of GDP per capita, 1975-2005
Source: World Bank, World Development Indicators 2008
-1%
0%
1%
2%
3%
4%
5%
6%
7%
East Asia & Pacific Sub-Saharan Africa
East Asian "miracle"
Sub-Saharan African debacle
Changing age structure, 1960-2005
Source: UN, World Population Prospects
1.00
1.25
1.50
1.75
2.00
2.25
2.50
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Rat
io o
f w
ork
ing
-ag
e to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
East Asia & Pacific Sub-Saharan Africa
Population growth rate
time
Death rate
Birth rate
The Demographic Transition
Population age structure is a robust and powerful predictor of economic
growth
Demographics
One third (about 2 percentage points) of the growth of income per capita in East Asia during 1965-90 is attributable to the independent influence of changes in age structure.
Income
Reaping the demographic dividend is not automatic, and may not be
permanent
• Demography is not destiny – it just creates potential– for economic growth and poverty reduction– and also, for social, political, and economic
instability
• March of the Silver-Haired Generation
Complementary policies
• Need to catalyze demographic transition • Need to accelerate demographic transition
– esp. fertility decline• Need compatible policies in other areas
– education– health– labor market– trade– governance– macroeconomic management
• Need good relationships with other countries
Is there a demographic dividend in Nigeria’s future?
Nigeria’s population is set to soar
Source: UN, World Population Prospects, 2008
0
50
100
150
200
250
300
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Po
pu
lati
on
(m
illi
on
s)
The fertility rate is expected to continue falling
Source: UN, World Population Prospects, 2008
2
3
4
5
6
7
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Ch
ild
ren
pe
r w
om
an
The infant mortality rate is projected to continue falling
Source: UN, World Population Prospects, 2008
0
50
100
150
200
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
De
ath
s p
er
1,0
00
liv
e b
irth
s
Life expectancy will continue to rise
Source: UN, World Population Prospects, 2008
35
40
45
50
55
60
65
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Lif
e e
xp
ec
tan
cy
at
bir
th,
ye
ars
Crude birth and death rates will continue to fall
Source: UN, World Population Prospects, 2008
0
10
20
30
40
50
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Pe
r 1
,00
0 p
op
ula
tio
n
Crude birth rate Crude death rate
Population growth rate will decline substantially
Source: UN, World Population Prospects, 2008
1.0
1.5
2.0
2.5
3.0
3.5
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Po
pu
lati
on
gro
wth
rat
e (%
)
The ratio of working-age to non-working-age people is set to increase dramatically
Source: UN, World Population Prospects, 2008
1.0
1.5
2.0
2.5
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Ra
tio
of
wo
rkin
g-a
ge
to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
Growth of the working-age to non-working-age ratio, 1960-2050 (under 3 UN fertility
scenarios)
Source: UN, World Population Prospects 2008
1.0
1.5
2.0
2.5
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Ra
tio
of
wo
rkin
g-a
ge
to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
Low Medium High
The bottom line: demographic change can lead to
economic growth
0
500
1,000
1,500
2,000
2,500
3,000
1980 1990 2000 2010 2020 2030 2040 2050
GD
P p
er c
apit
a (P
PP
)
Past performance With demographic dividend With no dividend
Comparing the growth rates of the working-age and non-working-age population
Source: UN, World Population Prospects, 2008
Dependent Working-age Dependent Working-agepopulation population population population
Nigeria 2.6% 2.7% 0.7% 2.0%Indonesia 0.9% 2.3% 0.8% 0.4%Pakistan 2.5% 3.0% 1.0% 1.8%East Asia 0.5% 1.9% 0.9% -0.1%Sub-Saharan Africa 2.6% 2.8% 1.1% 2.3%World 1.1% 1.9% 0.8% 0.7%
1970 - 2010 2010 - 2050
Annual average growth rate
Changing age structure, 1960-2050:Nigeria compared with Indonesia and Pakistan
Source: UN, World Population Prospects 2008
1.0
1.5
2.0
2.5
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Rat
io o
f w
ork
ing
-ag
e to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
Nigeria Indonesia Pakistan
Changing age structure, 1960-2050:Nigeria compared with East Asia
Source: UN, World Population Prospects 2008
1.0
1.5
2.0
2.5
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Ra
tio
of
wo
rkin
g-a
ge
to
no
n-w
ork
ing
-ag
e p
op
ula
tio
n
East Asia Nigeria low Nigeria medium Nigeria high
The size of the 60+ population will increase dramatically
Source: UN, World Population Prospects, 2008
0
10
20
30
40
50
60
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Po
pu
lati
on
(m
illi
on
s)
15-24 60+
Reaping the demographic dividend:cautionary points regarding Nigeria
• Not all of the general points about the factors needed to realize the demographic dividend necessarily apply to Nigeria.
• In particular:– Trade policy is important, but it may be more
important to focus on diversification of the economy away from dependence on oil exports.
– Minimum wage laws and unions may affect only a small portion of Nigeria’s labor market.
Take-home messages
• Demography matters. • Demography matters a lot.• There is potentially a sizeable
demographic dividend in Nigeria’s future.
But, will Nigeria collect this dividend?