Despite Nigeria’s Gross Domestic Product (GDP) growing by 3.46% in the third quarter of 2024, many Nigerians continue to experience economic hardship. Economists have weighed in on the disconnect between the country’s rising GDP and the persistent poverty faced by citizens.
Prominent figures such as Prof. Segun Ajibola, former President of the Chartered Institute of Bankers, Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise, and Idakolo Gbolade, CEO of SD & D Capital Management, shared their insights in separate interviews with DAILY POST on Monday.
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Nigeria’s GDP Growth: An Overview
According to the Statistician-General of the Federation, Adeyemi Adeniran Adedeji, Nigeria’s economy expanded by 3.49% in Q3 2024, up from 3.19% in Q2 2024. The services sector contributed significantly to this growth, with a 5.19% increase and accounting for 53.58% of the total GDP. Key sectors driving growth included telecommunications, agriculture, transportation, and construction.
The oil sector’s contribution was limited, at 5.57%, while the non-oil sector dominated the economy, contributing 94.43% to GDP with a growth rate of 3.37%.
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GDP Growth Not Reflecting Citizens’ Reality
Despite the positive figures, many Nigerians feel no improvement in their living standards. High inflation, particularly food inflation, which soared to 39.16% in October, continues to erode the purchasing power of the population.
Structural Imbalances and Distributive Inequality
Prof. Ajibola noted that while macroeconomic indicators such as GDP growth are essential, they do not directly translate into improved welfare for the people. He pointed to the historical trend where, despite positive macroeconomic performance from the 1970s, inequality and inefficiencies in the distribution system have left the majority of Nigerians in poverty.
“The disconnect between macroeconomic indexes and the micro-welfare state of the citizenry explains why the benefits of economic growth often fail to trickle down to the masses,” he said. Ajibola emphasized the need for better mechanisms to ensure that economic gains reach all levels of society.
Sectoral Imbalances and Financial Sector Dominance
Dr. Muda Yusuf highlighted that while Nigeria’s Q3 GDP growth is a positive development, the dominance of the financial sector is concerning. The financial sector grew by over 30%, while the real sector, including agriculture and manufacturing, showed more modest growth. Yusuf called for a shift in focus towards more balanced sectoral development, emphasizing the importance of the real sector in creating sustainable jobs and diversifying the economy.
“The financial sector cannot continue to grow at such a pace while the real economy struggles. We need to rebalance the sectors to achieve more sustainable growth,” Yusuf said.
Unemployment and Economic Disconnect
Idakolo Gbolade pointed out that the official GDP and unemployment figures do not reflect the true economic situation in Nigeria. He argued that the continued depreciation of the naira and persistent inflation undermine any potential benefits of GDP growth. Moreover, the drop in unemployment rates is not aligned with the reality on the ground, where many Nigerians face underemployment or no employment at all.
“The rising GDP doesn’t change the fact that people are struggling with higher prices and lower wages. Unemployment remains high, and many businesses are downsizing or relocating,” Gbolade noted.
The Need for Structural Reforms
While Nigeria’s GDP growth is a positive sign on paper, experts argue that it does little to alleviate the widespread economic hardship. The key to improving the economic conditions of Nigerians lies in addressing structural imbalances, ensuring better wealth distribution, and strengthening the real sectors of the economy.
The government must refocus its efforts on creating inclusive economic policies that can bridge the gap between macroeconomic performance and citizens’ real-world experiences.
