By Divine Sam
The recent GDP growth in Nigeria, reported at 3.46% for Q3 2024, has not led to significant improvements in the well-being of the majority of citizens. Economists and financial experts highlight several factors that explain this disconnect between macroeconomic growth and the lived experience of Nigerians:
- Inequality and Distributive Issues: According to Prof. Segun Ajibola, there is a significant gap between macroeconomic indicators (like GDP growth) and the economic welfare of ordinary citizens. He pointed out that despite positive macro indices since the 1970s, many Nigerians remain poor due to a weak transmission mechanism that fails to ensure that economic growth benefits the broader population. The concentration of wealth and inequality in Nigeria exacerbates this issue, leaving the majority of the population disconnected from the growth in the economy.
- Sectoral Imbalances: Dr. Muda Yusuf from the Centre for the Promotion of Private Enterprise emphasized the dominance of the financial and service sectors in driving GDP growth. While these sectors saw substantial growth, particularly finance (up over 30%), the real sectors like agriculture, manufacturing, and construction saw only marginal growth, which limits the creation of sustainable jobs and economic diversification. This imbalance undermines the potential for long-term economic improvement that benefits the masses.
- Inflation and Currency Depreciation: Mr. Idakolo Gbolade expressed concerns that the GDP growth figure does not align with the ongoing inflationary pressures, particularly food inflation, which continues to rise sharply. The depreciation of the naira has worsened the purchasing power of Nigerians, making it harder for them to benefit from any economic growth. Moreover, the drop in unemployment figures does not reflect reality, as many Nigerians remain unemployed or underemployed, and the business environment remains challenging, leading to downsizing and relocation of multinationals.
These factors highlight a broader issue in Nigeria’s economic structure, where growth at the macro level does not necessarily translate into improved living standards for the general populace. Addressing these issues will require comprehensive policies that focus on reducing inequality, rebalancing sectoral growth, and mitigating inflationary pressures.