Maximising demographic dividend in Nigeria

Demographic dividend is simply the economic growth potential that can result from shifts in a population’s age structure, mainly, when the share of the working age group (15-64) is larger than the non-working age group share of the population (14 and younger and 65 and above). Hence, demographic dividend is usually associated with population growth of the labour force age group and a reduction in mortality and fertility rates. Demographic dividend has been argued to account for between 25 and 40 per cent of the economic transformation experienced by the East Asian Tiggers and Nigeria should take a cue from this.

This phenomenon is important to Nigeria as Nigeria is Africa’s most populous nation with an estimated population of more than 170 million, having grown at 2.7-3.2 per cent annually for the past several decades. The population Division of the Department of Economic and Social Affair of the United Nations Secretariat (2008) stated that Nigeria is the world’s eighth largest country and by 2030, it will have an additional 68 million population.The country has a very large youthful age structure, with nearly three quarters of its population under the age of 30. Even if fertility and mortality rates decline substantially, Nigeria will still have a youthful age structure and without effective population policy to reduce the high fertility rate, Nigeria will add a further 63 million by 2050, making it the fifth most populous nation in the world after India, the United States and Pakistan.

This phenomenon started as fertility rose through the first quarter century after independence, with each woman bearing an average of seven children in the mid-1980s, which led to high population growth coupled with dramatic declines in mortality especially among infants, as public health improved, population growth began to stabilise. Babies have much greater chance of surviving to adulthood, at the same time; a large ‘baby boom’ generation is now entering the workforce. The net result is that there are now more adult available to support each child in the population, depending on how fast fertility rates drop. The population age structure began to look less like a pyramid, with many young children and progressively fewer older cohorts, instead a “youth bulge” began to appear as the number of infants declined while the youth began to age. How this translates to demographic dividend and a concomitant effect on economic growth is that there is increase in labour supply, saving rates, human capital and domestic demand.

It is pertinent to note that this demographic trend has a two face implication on Nigeria’s economic development. From generation to generation, the youth has remained the treasure and strength of any society as they are vibrant and dynamic young men and women with visionary minds and their strength can be utilised for good or bad activities. Therefore, their potentials need to be optimally harnessed. Unfortunately, either for lack of opportunity or positive encouragement, the youths misuse their potentials and many countries rather than reaping the dividend of the youth bulge have to contend with youth restiveness and radicalism which were caused through factors such as wrong perception of the youth of their role in society, general apathy, youth unemployment, abuse of technology among others. Furthermore, because the youth populations are dependents who need access to education, healthcare and other social services, it would mean that rapid population growth will put substantial pressure on the country’s capacity to provide quality social services such as new schools, more clinics, adequate sanitation, as well as food and provisions to meet basic needs. Most importantly, the economy will have to generate enough jobs to absorb the millions of young people joining the labour market every year. Studies have shown that demographic dividend can be substantial but the dividend will not come automatically if it is not backed by adequate policies, the youth bulge would lead to demographic bomb as a larger number of jobless youth could be a potential source of social and political instability, violence, conflict and greater dependency of these bulging youth at old age. On the other hand, this age structure can be a potential opportunity for growth.

The phenomenon of youth bulge should lead to demographic dividend as the increase in the number of working age adults lays the foundation for demographic dividend, if appropriate policies are in place to support productive employment, the larger working-age cohorts can produce more on a per-worker basis thus boosting per capita income, since workers are typically active savers, national savings can increase and extra savings can be directed into new investments that yield additional returns. Increased numbers of employed youth also contribute to reduction in inequality, thereby enhancing the prospects for social coherence and stability which are keys to development and growth. The age transition also lead to increase demand for assets as Nigerian live longerworking adults have the opportunity to save more for retirement as dependency ratio reduces.

Nigeria has a substantial demographic opportunity on the horizon, but, reaping demographic dividend is not automatic as the Nigerian youth is faced with the frailty of the Nigerian economy, therefore, conscious efforts needs to be taken and achievable policies need to be made to ensure that Nigeria use the privilege of her large youthful population to boost her economy.

For Nigeria to reap from this dividend, government must stem the tide of unemployment as education and human capital are not transmitted into productivity in the face of unemployment leaving demographic dividend to be of no effect. There is need for an upgrade of the skills and competencies of the youth in line with the country’s comparative advantage. Nigeria must diversify from oil coupled with crash in price of crude oil, with an emphasis on sectors that will improve the employment prospects of young people which is necessary for both rural and urban areas. For rural areas, agriculture is vitally important therefore, there should be greater investment in support for farmers, which will make rural areas well positioned for a long agricultural boom also reducing the level of migration to the urban areas. Also, sexual reproductive health plays an important role in taking full advantage of the demographic dividend. Families should be enlightened on the need to plan and space their children as reduction in the number of children allows families to invest more in their children’s education and health, increasing skills and human capital, on the other hand fewer children will help families to spend less on children’s education, health and other needs, thereby creating opportunity for saving and investment. Women should be enlightened on the use of contraceptives and planning of their children so that they can be healthy to contribute to strengthening the financial well-being of their families and communities.

Furthermore, as education is key, there must be access to quality primary, secondary and post-secondary education both for the boy child and girl child and Nigeria must adopt policies that will develop its workforce and ensure that it is productive. Policies aimed at reducing poverty and youth empowerment are essential to the attainment of demographic dividend; youth empowerment helps to reduce the level of poverty and the tendencies for young people to engage in criminal activities. Culture of entrepreneur should be encouraged among the youths and government should provide credit facilities for them thus an enabling environment should be created for the private sector to invest in infrastructure and initiate good macro-economic policies. Furthermore, the problem of shortage of infrastructural facilities, particularly power supply that could aid small and medium-scale enterprises should be appropriately and adequately addressed.

Also savings and investment among the current working age population should be encouraged so that they can have assets to rely on in old age. The Nigerian pension system needs to be all inclusive, it needs to be deepened and enhanced to involve more participants.

• Olojede is on the staff of Nigeria Social Insurance Trust Fund, Abeokuta.