ABUJA, Nigeria — While Nigeria’s recent economic progress should be celebrated as a piece of good news to emerge from the troubled region, it is impossible to discuss the country’s growth without discussing its still-extensive levels of poverty, especially when the structure of this recent economic development may actually support inequality.
In April, Nigeria’s economy was re-evaluated and became the largest in all of Africa with a gross domestic product (GDP) of $510 billion. This jump represents an 89 percent increase since the last calculation of the country’s GDP.
Although this progress has undoubtedly produced positive consequences for the people of Nigeria, the economic boom did not occur across all sectors of society, and is producing even more income inequality. Economic disparities were already a source of tension; the recent and unbalanced expansion may be serving to exaggerate them.
Analysis of the numbers demonstrates an unmistakable unequal distribution of wealth to poverty in Nigeria. Though Nigeria’s GDP per capita has almost doubled since it was last evaluated, over 60 percent of the population still lives under the international poverty line. In other words, over 100 million Nigerians are surviving on less than $1.25 a day while just a handful of others are able to enjoy the new prosperity. New World Wealth published a report last year finding that over 30 percent of Nigeria’s entire wealth is owned by the country’s 15,000 millionaires: 0.001 percent of Nigeria’s population.
Uneven wealth distributions, in addition to affecting people’s financial lives, have indirect social consequences. Business Action for Africa and Initiative for Global Development, two organizations cognizant of the effects business can have on poverty, released a report earlier this year about Nigeria’s recent economic progress titled “From Growth to Opportunity.” Though the report was overall very hopeful, it highlighted the fact that “inequality and unemployment – both a result of the country’s economic structure that has generated wealth in a narrow band of society – feed into social tension that time and again has led to tragedy.”
The divide between the prosperous and the poor in Nigeria, often described as a geographical divide between the conflict-riddled North and the newly-thriving South, is serving to exacerbate instability. Nigeria’s economic success has, unexpectedly, had negative consequences.
What is the good news?
Businesses can have powerful effects on economic structure. While they can create income inequality, they can also end it.
Business Action for Africa and Initiative for Global Development’s aforementioned report on the Nigerian economy noted that many businesses find it difficult to admit a “responsibility and a commercial imperative to make sure that the benefits of growth are shared throughout society.” However, the report still supports the role of business in ending poverty and contends that when businesses acknowledge this duty instead of disregarding it, they “can solve persistent social problems and have a catalytic impact.” The two organizations call for Nigerian businesses to emphasize the creation of sustainable economies, which, in the end, create more growth and benefit more people than quick-growth structures.
Far-reaching economic success in the country, in addition to decreasing poverty in Nigeria, would benefit business on an international level by creating access to a new market. Businesses everywhere that want to maximize their profits should make ending poverty one of their primary goals as it creates more economic opportunities for everyone involved. The state of the Nigerian economy is a matter of international concern because its success would be felt across the globe.
While the Nigerian economy has its difficulties, its future looks very hopeful. The country has an extremely young population, the median age falling somewhere between 14 and 17 years, and a high population growth rate. In fact, the UN estimates that the population of Nigeria will surpass that of the U.S. by 2050.
These facts demonstrate that Nigeria has a sizable group of people about to enter the workforce into a currently unbalanced economy. If local businesses can be refocused to include sustainable practices, keeping in mind their responsibility to the people they serve, it seems evident that widespread economic growth would follow. With such an abundant labor force full of optimistic people, Nigeria’s economic future looks promising.
Sources: Business Action for Africa, Business Fights Poverty, Forbes, United Nations
Photo: Alijazeria America