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Prospects for
Economic Growth in Nigeria:A Demographic Perspective
Nigeria: The Next Generation
First Meeting of the Task Force
Abuja, Nigeria
December 4-5, 2009
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Structure of the presentation
Salient facts describing Nigerias economy
and population
The demographic dividend: theory andevidence
Is there a demographic dividend in
Nigerias future?
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Salient facts describing
Nigerias economy and population
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Nigerias 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
GDPperc
apita
PPP, constant 2005 intl $ Exchange-rate, constant 2000 US $
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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
GDPpercapita,PPP(constant2005int'l$)
Nigeria
Indonesia
Pakistan
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Nigerias economy
compared with world regions
Source: World Development Indicators, 2008
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1980 1990 2000 2006
GDPpercapita,PPP(consta
nt2005int'l$)
Nigeria
East Asia & Pacific
Sub-Saharan Africa
World
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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
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Nigerias population has grown rapidly
Source: UN, World Population Prospects, 2008
0
50
100
150
200
250
300
1960 1970 1980 1990 2000 2010
Population
(millions)
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Nigerias fertility rate has started to fall
Source: UN, World Population Prospects, 2008
2
3
4
5
6
7
1960 1970 1980 1990 2000 2010
Childrenperw
oman
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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
De
athsper1,000livebirths
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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
Lifeexpectancyatbirth,years
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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
Per1,000pop
ulation
Crude birth rate Crude death rate
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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
Populationgrowthrate(%)
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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
Ra
tioofworking-a
geto
non-w
orking-agepop
ulation
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Changing age structure, 1950-2010:A 3-dimensional view
Source: UN, World Population Prospects 2008
0
510
15
20
25
30
P
opulation
(
millions)
0-4
10
-14
20
-24
30
-34
40
-44
50
-54
60
-64
70
-74
80
-84
90
-94
100+
1950
1960
1970
1980
1990
2000
2010
Age group
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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 haveno formal schooling.
50% of Christians have secondary or highereducation.
Rural residents and those in the North havelower educational attainment.
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Employment
Unemployment is well above 20%, except forthose over age 35.
Unemployment doesnt vary much by
rural/urban residence. It is highest among those with a secondary
education (48%). This group seems likely to be underemployed.
Womens labor force participation lags farbehind mens.
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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 folkloriccontraceptive methods have much higher
fertility. There is significant unmet need for
contraception.
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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
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What weve 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
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The demographic dividend:
Theory and evidence
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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
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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
Ratioofworking-ageto
non-working-agepopulation
East Asia & Pacific Sub-Saharan Africa
-
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Populationgrowth rate
timeDeath rate
Birth rate
The Demographic Transition
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Population age structure is a robust and
powerful predictor of economic growth
Demographic
s
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
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Reaping the demographic dividend is not
automatic, and may not be permanent
Demography is not destiny it just createspotential
for economic growth and poverty reduction and also, for social, political, and economic instability
March of the Silver-Haired Generation
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Complementary policies
Need to catalyze demographic transition
Need to accelerate demographic transitionesp. fertility decline
Need compatible policies in other areas education health
labor market
trade
governance macroeconomic management
Need good relationships with other countries
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Is there a demographic dividend in
Nigerias future?
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Nigerias 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
Population
(millions)
-
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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
Childrenperwoman
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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
athsper1,000l
ivebirths
-
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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
Life
expectancy
atb
irth,years
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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
Per1,000population
Crude birth rate Crude death rate
-
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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
Populationgrowt
hrate(%)
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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
Ratioofworking-a
geto
non-working-agepopulation
-
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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
Ratioofworking
-ageto
no
n-working-agep
opulation
Low Medium High
-
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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
GDPpercapita(PPP)
Past performance With demographic dividend With no dividend
-
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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
-
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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
Ratioofworking-ageto
n
on-working-age
population
Nigeria Indonesia Pakistan
-
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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
Ratioofworkin
g-ageto
n
on-working-age
population
East Asia Nigeria low Nigeria medium Nigeria high
-
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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
Populatio
n
(millions
)
15-24 60+
-
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Reaping the demographic dividend:
cautionary points regarding Nigeria Not all of the general points about the factors
needed to realize the demographic dividendnecessarily apply to Nigeria.
In particular: Trade policy is important, but it may be more
important to focus on diversification of the economyaway from dependence on oil exports.
Minimum wage laws and unions may affect only a
small portion of Nigerias labor market.
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Take-home messages
Demography matters.
Demography matters a lot.
There is potentially a sizeable demographicdividend in Nigerias future.
But, will Nigeria collect this dividend?