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Economy, Population Threat And Options



The imbalance between Nigeria’s population growth which outstrips economic growth, poses a grievous threat to the economy, and except holistic measures are taken to reverse the imbalance or reduce it to the barest minimum, there is a high probability of a drastic socio-economic disruption in the not too distant future as a result thereof.

Increased unemployment, abject poverty and pervasive poverty mentality and culture of poverty, frustrations, anger, wrath and insecurity are concomitants of any fast-growing population without commensurate economic growth.

Nigeria’s population is presently 200 million with a demographic growth of 3.2 per cent per annum. The UN World Population Prospects 2019 report forecast it will exceed 400 million by 2050. In the near future, former chief executive officer, Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-Obi, in a presentation titled ‘Roadmap for Double-Digit Growth,’ forecast that the population will reach 234 million in 2025, at a Cumulative Average Growth Rate (CAGR) of 2.5 per cent.

The economy has witnessed fragile growth after the recession and is just returning to 2.03 per cent from 1.9 per cent. Unemployment rate is at 23.1 per cent up from 18.1 per cent in 2017 and poverty rate is at 50 per cent with about 86.9 million people living in extreme poverty on less than $1.9 per day.

Governor, Central Bank of Nigeria (CBN), Godwin Emefiele had noted that the economy needs to grow by at least six per cent. According to him, ‘‘Nigeria is a country that must grow by at least, twice the population growth rate and until we achieve that, we are not going to rest on our oars.’’

CBN had warned about the scourge of unemployment which is presently at 23.1 per cent up from 18.1 per cent in 2017. The apex bank expressed fear for Africa, but particularly for Nigeria’s share, with attendant unsavory consequences and the need to adopt a proactive and holistic approach to halt the rising scourge.’’

In tackling unemployment, CBN reportedly, has created more than 7 million jobs through its various agriculture schemes, and with continued efforts to lift the economy through other development finance schemes, support of small and medium scale enterprises, inflation management, controlling unbridled importation and smuggling, stimulating capital inflows, conserving foreign reserves and propagation of the ideals of nationalism through policies that support local production.

But as Emefiele noted, the challenges of the economy demands a proactive and holistic approach for greater impact. Beyond growth, the economy needs to jump from stage one to stage two in the concentric rings of economic growth and development. In an article captioned ‘President Buhari, the Economy and Capital Market,’ published in Thisday Newspaper in September of 2015, and which remains relevant in the present circumstance, I noted as per the expectation in Vision 20:2020 that ‘‘Nigeria is expected to be among the top 20 economies of the world with a minimum GDP of N144 trillion and a GDP per capita income of no less than N640,000 ($4,000) per annum by 2020 and the priority areas to achieve this target include physical infrastructure, real sector development, human capital development and governance.’’

Nigeria is the 31st largest economy in the world by GDP but it is evident that the expectation in Vision 20:2020 is unrealistic. The current stock of core infrastructure in Nigeria is estimated at 30 to 40 per cent of GDP which is far below the international benchmark of 70 per cent of GDP. In the article, I noted the strategic importance of the capital market as a major factor for spurring sustainable economic growth and development, and the imperative for a dominant market-based financing option over the bank-based to fast track growth and development. Excerpts from the article are as follows:

‘‘Forward looking nations explore the mechanism of the capital market to drive growth and development. In India, the expansion of the capital market has been noted as a major factor for its consistent economic growth. India’s GDP growth during January to March 2015 was at 7.5 per cent compared to China’s 7.0 per cent, making it the fastest growing economy and it was projected to grow at 8.2 per cent in 2018- 19.

Proceeds from Initial Public Offerings (IPOs) in India reportedly reached $5 5 billion in 2018 and $0.9 billion in Q1 2018-19 while Foreign Direct Investments (FDI) equity inflows reached $409.15 billion between April 2000 and December 2018. Mergers and Acquisitions (M&A) reached record $129.4 billion in 2018 and Private equity (PE) and Venture Capital (VE) investments reached $20.5 billion.

“As a strategy to develop infrastructure and deepen the bond market, the Indian government raised Foreign Institutional Investors’ (FIIs) investment to $40billion, with a prescription that the additional limit of $20 billion will be available to FIIs only for investments in corporate bonds issued by companies in the infrastructure sector.

‘‘Malaysia, which shares the same characteristics with Nigeria, reportedly was transformed sequel to the successful launch and implementation of the first and second CapitalMarket Master Plan (CMP1 and CMP2) and has since moved ahead of Nigeria in all metrics. It is instructive that equity financing through the mechanism of the capital market has remained an important source of funding for SMEs in Malaysia.’’

The capital market enhances the monetary transmission mechanism and helps in the spread of national wealth. The Nigerian economy is mature for a more vibrant capital market, and dominant market-based financing option to fast- track and engender inclusive growth.

Market-based financing has several advantages over the bank-based. One, it optimally allocates capital and enhances economic performance. Two, it catalyses industrial growth faster and helps economies to achieve inclusive growth through greater employment opportunities.


Three, it provides a window for the growth of small and medium scale enterprises through venture capitalism. Four, it helps companies to meet international best practices which attracts foreign direct investments. Five, it engenders macro-economic stability as money market interest rates are more sensitive than long-term rates in the capital market.

The absence of vibrant capital markets in developing countries is the reason central banks in such countries engage in development finance in order to bridge the financing gap, a role CBN has been playing with greater intensity.


– Nwobu, a business journalist can be reached via [email protected] Tel: 08033021230



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