Economists Question Real Impact of Nigeria’s GDP Growth on Citizens’ Lives

Despite recent reports of Nigeria’s Gross Domestic Product (GDP) growth reaching 3.19% in the second quarter of 2024, financial experts and economists have voiced concerns that this economic improvement does not reflect the realities faced by ordinary Nigerians.

The National Bureau of Statistics (NBS) announced on Monday that the services sector played a significant role in boosting Nigeria’s economy, resulting in two consecutive quarters of GDP growth—rising from 2.98% in the first quarter to 3.19% in Q2. This growth is also higher than the 2.51% recorded in the same quarter of 2023.

According to NBS data, the industry and services sectors contributed more to the aggregate GDP in Q2 2024 than they did in Q2 2023, with the services sector alone accounting for 58.76% of the total GDP. The non-oil sector contributed 94.3% to the GDP, while the oil sector’s share stood at 5.7%.

However, despite these positive figures, economists are skeptical about the real-world impact of this growth. They argue that the economic improvements have not translated into better living conditions for most Nigerians. This sentiment echoes recent statements by World Trade Organization Director-General and former Nigerian Finance Minister Ngozi Okonjo-Iweala, who noted a steady decline in Nigeria’s economic fortunes since 2014.

While inflation has slightly decreased from 34.19% in June to 33.40% in July 2024, the prices of goods and services remain prohibitively high for many Nigerians, casting doubt on the effectiveness of policy interventions by President Bola Ahmed Tinubu’s administration.

Speaking on the matter, Prof. Segun Ajibola, a respected economist and former President of the Chartered Institute of Bankers, highlighted that Nigeria’s macroeconomic indicators, such as GDP growth, have yet to make a tangible impact on the population’s daily lives. He emphasized the need for government policies that bridge the gap between macroeconomic success and microeconomic realities, such as household income and consumption.

“The truth is, macroeconomic achievements may not improve living conditions unless they trickle down to the populace, particularly the masses struggling to make ends meet,” Ajibola said. He urged for a balanced growth strategy across all sectors—primary, secondary, and tertiary—to ensure sustainable development.

Gbolade Idakolo, CEO of SD & D Capital Management, also questioned the GDP growth figures, arguing that they do not accurately represent the current state of the economy. “The economy, in reality, is shrinking and requires drastic measures to recover,” he said, pointing out that many businesses are closing or downsizing due to the harsh economic environment.

Idakolo criticized the Central Bank of Nigeria’s (CBN) policies, including continuous interest rate hikes, which he said have further strained businesses. He called for immediate government action to support small and medium enterprises (SMEs) and the manufacturing sector through promised loan facilities and agricultural sector initiatives.

Prof. Godwin Oyedokun of Lead City University in Ibadan added that GDP growth might vary across different regions of Nigeria. He suggested that a more detailed analysis, including sector-specific data and business surveys, is needed to understand the factors driving growth in the industrial sector and to assess its sustainability.