Nigeria’s Productivity Crisis Worsens as Per Capita Income Declines to $877

Nigeria is facing a deepening productivity crisis, as the country’s per capita income has plummeted to $877, according to the latest data from the International Monetary Fund’s October 2024 World Economic Outlook. This marks a drastic decline from the $3,223 per capita recorded in 2014, signaling severe challenges in translating Nigeria’s vast population into sustainable economic growth.

Economists and analysts warn that the slide in income per capita reflects significant structural weaknesses in Africa’s largest economy, underscoring the urgent need for policy reforms, infrastructure development, and human capital investment.

With a population exceeding 220 million, Nigeria’s economy remains mired in sluggish growth. According to Tilewa Adebajo, CEO of CFC Advisory, the economy’s 3% growth rate has been undermined by stagnant productivity and rising unemployment. He noted in an interview with the Nigerian Tribune that an estimated 135 million Nigerians live in poverty, and the unemployment rate has surged to 40%, highlighting a serious lack of job creation and industrial output.

Adebajo attributes Nigeria’s low productivity to factors such as widespread insecurity, which has particularly affected farmers in the north and southeast, preventing them from accessing their land and disrupting agricultural productivity. While a few sectors—like mining, financial services, and waste management—achieved double-digit growth in 2023, the manufacturing sector recorded minimal growth at just 1.45%.

Former Minister of Solid Minerals, Dr. Obiageli Ezekwesili, voiced her concerns over Nigeria’s prolonged economic mismanagement. She argued that unsound policies enacted by successive administrations have steadily eroded citizens’ well-being, as evidenced by the decline in Nigeria’s gross domestic product (GDP) per capita from $1,876 in 2007 to $1,688 in 2023. Ezekwesili pointed out the stark difference between Nigeria and Singapore, which began their development journeys around the same time but diverged significantly due to governance quality. Singapore’s GDP per capita now stands at nearly 40 times that of Nigeria, largely because of its strategic investment in infrastructure and effective governance.

In terms of labor productivity, Nigeria lags far behind its African peers. The International Labour Organization reports that Nigeria’s productivity level—measured at $7 per hour—is significantly lower than Gabon ($26), Botswana ($21), and Egypt ($20). Investment strategist Temitope Omosuyi of Afrinvest Limited points out that Nigerian workers contend with unreliable electricity, poor internet connectivity, and high insecurity, all of which inhibit productivity and reduce overall quality of life.

Recent statistics from the National Bureau of Statistics (NBS) reveal that in early 2024, 84% of Nigeria’s working population was self-employed, marking a decline from the previous quarter’s 87.3%. Despite positive headline unemployment figures, the NBS highlights a high rate of underemployment, with many Nigerians engaged in low-paying or part-time work that fails to fully utilize their skills or provide job security.

Dr. Ola Brown, a British-Nigerian healthcare entrepreneur, emphasized Nigeria’s productivity gap by comparing the country’s average hourly wage of $3.24 with higher wages in countries like South Africa ($19.68), Turkey ($29.34), and the United States ($69). Brown illustrated the impact of low productivity with a bakery worker who can only produce a dozen donuts per hour, limiting their earning potential. Greater productivity, she argues, would enable higher wages and a more prosperous economy.

A recent report from the Nigerian Economic Summit Group (NESG) highlights Nigeria’s critical infrastructure deficit, with infrastructure only accounting for 35% of GDP—well below the World Bank’s benchmark of 70%. This gap severely constrains productivity across key sectors and hinders overall economic growth.

Comparing agricultural productivity, Kalu Aja, Lead Consultant at the ECOWAS Commission, pointed out that 100 farmers in the Netherlands can produce enough food for export thanks to advanced technology. Meanwhile, Nigeria’s 10 million farmers, largely dependent on traditional tools and unpredictable rainfall, struggle to meet domestic food demand. Aja urged Nigeria’s leaders to prioritize agricultural investments, such as purchasing tractors over luxury SUVs for officials, as a means to generate long-term wealth.

Corruption is another impediment to productivity, according to public affairs analyst Tochukwu Mana, who noted that political influence often dictates hiring, leading to an unmotivated workforce and weak service delivery.

The University of California’s Penn World Table ranks Nigeria among Africa’s least productive nations, with low scores in human capital investment. This reflects limited development in workforce knowledge, skills, and experience compared to countries like South Africa, whose human capital index is significantly higher.

Experts agree that Nigeria’s productivity crisis stems from a combination of governance failures, inadequate infrastructure, and security challenges. Without major reforms, the country’s potential for growth will remain stifled, leaving its population vulnerable to poverty and underemployment. Dr. Ezekwesili warns that Nigeria’s poor governance is now evident in daily life, with the most vulnerable citizens bearing the heaviest burden.

To move forward, analysts argue, Nigeria must pursue evidence-based policies, bolster human capital, and prioritize infrastructure development. Only by addressing these root issues can Nigeria harness its demographic potential, lift millions out of poverty, and pave the way for sustainable economic growth.