The Reality of Nigeria’s Recession Exit: Between GDP Growth and Sustainable Development

The Reality of Nigeria’s Recession Exit: Between GDP Growth and Sustainable Development

Author ~ Bekeme Masade-Olowola

2014 saw the commencement of a steady decline in the value of the naira and the skyrocketing of the cost of goods. The Gross Domestic Product (GDP) prophets preached the gospel of emancipation from the hands of economic recession that besieged the nation since the first quarter 2016 and assured Nigerians that our dear economy would be restored in no time. While other nations were heading towards the path of sustainable development, hunger-stoked Nigerians eagerly awaited the economic recovery theory of the GDP. The long awaited Messiah did vaguely arrive in the form of the 0.55 percent growth, as witnessed in the second quarter of the National Bureau of Statistics (NBS) report released on September 5, 2017.

But the over-arching question is: Does GDP growth really improve overall societal well-being, and the ecosystem on which human life depends?

The Real Meaning of GDP

Ironically, the promulgator of GDP – Simon Kuznets in 1934 warned that “The welfare of a nation can scarcely be inferred from a measure of national income”.  This simply implies that the economic variable (aka GDP), was only meant to measure the total monetary value of all finished goods and services produced within the nation in a given time period – yearly or quarterly. This has been widely misconstrued and misapplied by many countries, where economic growth and living standard of the people are calculated using Per Capita GDP; whereas the Per Capital GDP is only meant to divide the total monetary value of all finished goods and services produced within a nation by the number of its population.

Following the official release of the second quarter GDP report, the Statistician General of the Federation, Dr Yemi Kale, personally acknowledged that growth in GDP does not guarantee adequate wealth distribution, and that “…it’s up to the government to create policies to ensure that the benefit of growth is spread across properly. The inability to spread it across properly doesn’t mean the growth doesn’t exist … it’s just that there’s a problem with the distribution of the benefits across the country”. It is pertinent, therefore, to draw a distinction between the various economic indicators, as according to him: “A recession is not about the price of your goods, it is not about whether unemployment is going up or down, or if there is quality education; it’s purely your gross domestic product – where your output of goods and services in the economy are going down”.

Has the GDP Growth Improved the Quality of Life?

The economic growth, as recently reported, failed to calculate the overall societal wellbeing of the vast majority of Nigerians and the ecosystem on which human life depends. One may wonder if the quality of life has really improved ever since the era of the so called economic boom in the 1970s, when the country experienced rapid growth in GDP by 11 percent average, till the emergency of the recent economic recession in the first quarter of 2016. Conversely; unemployment, extreme poverty, inequality, high mortality rate, insecurity, climate change, resource depletion, and environmental degradation have always prevailed and resulted in poor quality of life in Nigeria. The GDP growth experienced prior to the recession, was evidently unable to improve the quality of life 53.5% Nigerians living below poverty line.

While the ecosystem has seriously been debilitated by unsustainable resource demands, those who calculate the GDP growth never considered the cost of environmental pollution and depletion of resources that have transpired in the course of providing the goods and services that drive the recent economic growth.

Unsurprisingly, some of the emerging economies, such as India and Brazil, that were recently declared to be amongst the world’s top ten biggest economies by GDP are also treading towards this calamitous path of GDP addiction. For instance, while the IMF’s (International Monetary Fund) World Economic Outlook Database on April 2017 reported that India is the world’s fifth top economy by GDP, India recorded 21.2% of population living below poverty line. Ironically, the poverty line is very high compared to Scandinavian countries that have reported lesser figures in their GDP reports, but have ensured equal distribution of wealth and improved living standard of their citizens.

Why is Sustainable Development Trajectory Better?

According to the Brundtland Commission, 1987, Sustainable Development trajectory seeks for intergenerational equity where the needs of the present generation is met without compromising the ability of future generations to meet their own needs. It is also geared towards integrating the needs of the people and goals of businesses with the conservation of the ecosystem, to find the right balance between the three dimensions – people, profit, planet.

The United Nations’ member states on September 25, 2015, adopted the Sustainable Development Goals (SDGs) made up of 17 different goals with 169 targets to facilitate the realisation of sustainable development by the year 2030. Unlike the GDP, these ambitious universal set of goals seek to ensure inclusive development where inequality (economic and gender), extreme poverty, hunger, environment pollution are no more, without sacrificing the economic progress of the people. With the extensive collaboration and the application of innovation, the SDG seeks to address the wellbeing of people and uplift their living standards.

To achieve these ambitious goals, this is the time for government and private sectors to commit and work collaboratively to ensure that Nigeria is not left out of achieving these wonderful goals by the end of the year 2030.

What Indices Should Nigeria Adopt to Achieve the SDGs?

If adopted, the following indices – The Gross National Happiness Indicator and The Human Development Index – will put Nigeria into ascendancy as a sustainable society. Why?

The Gross National Happiness (GNH) Indicator:  The GNH index includes nine domains of progress: health, time use, education, cultural resilience, living standards, ecological diversity, good governance, community vitality, and psychological wellbeing. This indicator emphasises that the ultimate goal of every human being is happiness. This was developed by the former King of Bhutan who promulgated that sustainable development should take a holistic approach towards progress and give equal importance to non-economic aspects of wellbeing. Today, the whole world is celebrating for inclusive economic development is integrated with environmental conservation, cultural heritage, and good governance.

The Human Development Index (HDI): This index was developed by the United Nations Human Development Report to ensure that the capacity of the people and their self-development are ultimately considered while grading the development progress of every nation. The HDI ranks countries globally on the three major dimensions of human development: a long and healthy life – which is life expectancy at birth; being knowledgeable – which is literacy rates and academic enrolments; and decent standard of living.

  1. Gross Domestic Product (GDP). I
  2. Kale Explains Why Nigerians Can’t Feel Impact of GDP Growth. Ndubuisi Francis and Udora Odichimma, Thisday September 7, 2017
  3. Kale Explains Why Nigerians Can’t Feel Impact of GDP Growth. Ndubuisi Francis and Udora Odichimma, Thisday September 7, 2017
  4. Nigerian Gross Domestic Product Report (Q2 2017) National Bureau of Statistics
  5. Poverty & Equity. The World Bank
  6. The World’s Top 10 Economies. Investopedia, Prableen Bajpai, CFA (ICFAI), July 7, 2017
  7. Sustainable Development. United Nations
  8. Sustainable Development Goals: All You Need to Know. May 13, 2015 UNDP

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