GDP Growth Doesn’t Mean Prosperity
The Nigerian government has once again rolled out its familiar narrative of economic success. This time, it celebrates a 3.46% GDP growth in the third quarter of 2024, lauding it as a triumph of its economic policies. Ministers and officials take turns praising the achievement, while the president tweets about a bright future ahead. But beneath this carefully crafted celebration lies a deeper issue: the growing disconnect between the economic indicators the government touts and the lived reality of ordinary Nigerians. The so-called growth is not an indication of prosperity, but rather an illusion of progress—one that hides a troubling economic crisis.
While the government’s narrative of GDP growth may sound encouraging, the fundamental issues affecting Nigerians remain unresolved. Inflation continues to rise, interest rates are soaring, unemployment is at staggering levels, and the most vulnerable populations are falling further behind. What is being celebrated is not actual prosperity but an economic mirage—numbers that look good on paper but fail to make any meaningful difference in the lives of most Nigerians.
Prosperity Is Not A GDP Number
The government’s obsession with GDP growth as the ultimate indicator of economic success overlooks a critical fact: GDP does not measure wealth distribution. It only captures the total value of goods and services produced in an economy. While a rise in GDP might seem like a positive development, it fails to reflect how that growth affects the lives of the average Nigerian. The recent 3.46% growth, for instance, is largely driven by inflation, not by real increases in goods and services. When prices rise without a corresponding rise in income, this is inflation-driven stagnation, not real growth.
For many Nigerians, growing GDP means little when wages fail to keep pace with the rising cost of living. Basic goods and services—food, transportation, education—are becoming increasingly unaffordable. Instead of celebrating economic growth on paper, the government should focus on ensuring that this growth is felt in the pockets of ordinary Nigerians. Prosperity is not just about the numbers; it is about real, tangible improvements in people’s daily lives.
Inflation, which reached 33.88% in October 2024, represents a silent tax on the poor. Every increase in inflation erodes purchasing power, making it harder for Nigerians to afford necessities. For many, the government’s claim of economic growth is an illusion that vanishes when they try to buy food, pay transport fares, or cover school fees. If the government truly cared about prosperity, it would prioritize controlling inflation and ensuring that economic growth translates into real improvements in people’s lives.
The GDP Myth: A Detached Reality
Another troubling aspect of Nigeria’s GDP growth is the fact that it is largely driven by the services sector. While this might seem like progress, it raises important questions about the inclusiveness of this growth. The service sectors driving GDP growth—financial services, telecommunications, real estate—are not the types of industries that create mass employment or raise the standard of living for ordinary Nigerians.
The service sector, while crucial, cannot be the sole driver of economic prosperity. Nigeria’s agricultural sector, which supports over 60% of the population, is stagnating. The fact that agriculture is not growing at a pace commensurate with population growth signals an unbalanced economy. Many Nigerians remain trapped in poverty, despite working in agriculture. The lack of growth in this critical sector is indicative of the economy’s broader imbalances.
An economy that relies too heavily on one sector—especially a sector that does not create widespread job opportunities—cannot be considered prosperous. True prosperity requires a diversified economy, where agriculture, manufacturing, technology, and services all play key roles. Without diversification, the country will continue to face widespread poverty and inequality, even if GDP continues to rise.
Interest Rates: Stifling Growth
The government’s economic policies have created an environment that is hostile to real growth. The recent increase in the Central Bank’s interest rates to 27.5% is a prime example of how government actions are stifling investment and entrepreneurship. While the central bank argues that the rate hikes are necessary to control inflation, in reality, they are making borrowing prohibitively expensive for businesses and consumers alike.
Small and medium-sized enterprises (SMEs), which are essential for job creation and economic development, are particularly affected. With interest rates this high, these businesses cannot afford to borrow to expand or even to maintain their operations. Larger businesses are also hesitant to invest in such an environment, leading to stagnation in the private sector.
The implications of these high interest rates are disastrous for unemployment and entrepreneurship. By making credit expensive, the government is choking the very sectors that could provide jobs and alleviate poverty. In a country with rising unemployment, particularly among the youth, an environment that makes it harder to start or grow businesses is a critical misstep.
The Unseen Crisis: Poverty, Inequality, and Unemployment
While the government celebrates GDP growth, it fails to acknowledge the mounting crises of poverty, inequality, and unemployment. The unemployment rate in Nigeria remains stubbornly high, with youth unemployment hovering around 40%. This means that while a select few benefit from the so-called “growth,” the majority of Nigerians continue to struggle with poverty and joblessness.
The government’s failure to address these critical issues underscores its misguided priorities. No nation can truly claim prosperity when its citizens cannot meet their basic needs. The rising wealth gap and the stagnation of the middle class are clear indicators that Nigeria’s growth is neither inclusive nor sustainable. Rather than celebrating abstract economic metrics, the government should focus on policies that create jobs, increase wages, and provide greater access to education and healthcare.
Why the Government Is Blind to Reality
The government’s continued focus on GDP growth can be partially explained by cognitive biases. One such bias is the “availability heuristic,” where policymakers give disproportionate weight to the most readily available data—GDP growth figures. These numbers are the easiest to measure and report, but they fail to capture the nuances of economic well-being.
Moreover, the government’s optimism bias—where decision-makers believe that positive outcomes are more likely than they truly are—has led to a persistent belief that Nigeria is on the right path, despite the visible signs of distress. Until the government acknowledges the limitations of GDP as an economic indicator and listens to the real concerns of ordinary Nigerians, this disconnect will persist.
True Prosperity: Beyond the Numbers
Nigeria’s obsession with GDP growth is distracting policymakers from the more important task of building a truly prosperous nation. True prosperity is not about the numbers; it is about improving the lives of the people. Prosperity should be measured by the reduction in poverty, the creation of jobs, better access to healthcare and education, and the broad distribution of wealth across society.
To achieve true prosperity, the government must move beyond the superficial metrics of GDP and focus on creating an economy that works for everyone. This means addressing inflation, diversifying the economy, ensuring that job creation is a priority, and reducing inequality. It means ensuring that economic growth is felt by every Nigerian, not just the elite few. Only then will Nigeria achieve real, meaningful prosperity.
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