Olanrewaju Olaniyan, Adedoyin Soyibo, Akanni O. Lawanson and Noah Olasehinde Presentation at the NTA Conference, 24 July 2018

Transcription

1 Economic lifecycle deficit in Nigeria, : Assessment and policy implications Olanrewaju Olaniyan, Adedoyin Soyibo, Akanni O. Lawanson and Noah Olasehinde Presentation at the NTA Conference, 24 July 2018

2 Introduction Nigerian population is more than 180 million (largest in Africa) Nigerian population is projected to become the third largest population in the world by 2050 Population size has implications for both aggregate production and consumption

3 Economic lifecycle: The platform Economic lifecycle is fundamental feature of all economies The young and the old consume more than they produce through their labor. Primeage adults produce more than they consume. Large economic flows across age groups are the result. Decline in dependency ratios means that more of the incomes of the working age groups can be diverted to productive investments rather than being used up in the maintenance and upkeep of the nonproductive part of the population

4 Population age structure in Nigeria, Percent Age in years

5 Profile of per capita labour income in Nigeria, Peak labour income higher in 2004 than in 2010 or 2016 On average, more children are earning income and mostly from selfemployment, indicating prevalence of child labour Consumption at all ages was higher in 2009 than 2004 Highest labour income was at 46 years in 2004, 45 in 2010 and 58 in

6 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Proportion of per capita labour income in Nigeria, 2004, 2010 and 2016 ` Compensation of Employees Selfemployed Income Proportion of wages in labour Income is becoming more pronounced

7 Profile of per capita self employed and wage income in Nigeria, 2004 Profile of per capita self employed and wage income in Nigeria, Compensation of Employees Selfemployed Income Compensation of Employees Selfemployed Income Changing structure of labour income between 2004 and 2016 Selfemployed income is a large part of Nigeria s labour income Nigerians are entering into informal sector employment early and even the elderly continue working Profile of per capita self employed and wage income in Nigeria, Compensation of Employees Selfemployed Income

8 Share of labour income as a source of funding for consumption of individuals age 60 years and above More elderly in Nigeria are relying on Labour income to finance their consumption. This has implications for the role of asset income and transfers as sources of financing for the Nigerian elderly

9 Per capita consumption profile for Nigeria, 2004, 2010 and Per capita consumption of the elderly has gone down over the years

10 1.00 Composition of per capita consumption, Composition of per capita consumption, Education (Public) Health (Public) Other (Public) Education (Public) Health (Public) Other (Public) Education (Private) Health (Private) Other (Private) Education (Private) Health (Private) Other (Private) Composition of per capita consumption, Education (Public) Health (Public) Other (Public) Education (Private) Health (Private) Other (Private)

11 1.00 Public and private proportion of per capita consumption, Public and private proportion of per capita consumption, Public Consumption Private Consumption Public Consumption Public and private proportion of per capita consumption, Private Consumption 90+ Public Consumption Private Consumption

12 0.2 Per capita health and education consumption, Per capita health and education consumption, Education (Public) Health (Public) Education (Public) Health (Public) Education (Private) Health (Private) Education (Private) Health (Private) Per capita health and education consumption, Education (Public) Health (Public) Education (Private) Health (Private)

13 Lifecycle deficit in Nigeria, 2004, 2010, 2016 () () () ()

14 Trend of lifecycle deficit, 2004, 2010, Young age deficit (YAD) 4,798,136 18,469,646 43,928,536 Old Age deficit (OAD 189, ,424 1,630,071 Total deficit (YAD+OAD) 4,987,930 18,758,070 45,558,607 Total surplus for surplus ages 1,313,895 7,734,982 13,699,408 Lifecycle deficit 3,674,035 11,023,088 31,859,199

15 Policy implication: Lower fertility to reduce child deficit Jigawa Kebbi Kano Katsina Gombe Zamfara Sokoto North west Bauchi Yobe Niger North east Borno National Nasarawa Kaduna Plateau Adamawa Taraba North central Ebonyi Delta Imo Abia Oyo Benue Bayelsa Osun FCT Abuja South east Akwa Ibom Ogun Ondo South west Cross River Kwara Ekiti

16 6 Aggregate lifecycle deficit, Nigeria 2004, 2010,

17 Policy implication: Address inequality in educational attainment in Nigeria s geopolitical zones North Central North East North West 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% % % None Primary Secondary Post None Primary Secondary Post None Primary Secondary Post South East South South South West 100% 90% 80% 70% 60% 50% 40% 30% 20% 100% 90% 80% 70% 60% 50% 40% 30% 20% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 10% 10% 0% % % None Primary Secondary Post None Primary Secondary Post None Primary Secondary Post

18 Policy implication: Address unemployment and underemployment 70.0 Unemployment and underemployment in Nigeria by state, TARABA OSUN OGUN OYO EKITI ANAMBRA KWARA KEBBI FCT LAGOS ZAMFARA ONDO BENUE ADAMAWA EBONYI ENUGU DELTA BAUCHI Nigeria EDO NIGER CROSS RIVER KOGI ABIA IMO SOKOTO BAYELSA PLATEAU GOMBE KATSINA BORNO KANO NASARAWA AKWAIBOM YOBE KADUNA RIVERS JIGAWA Unemployment Rate % Under Employment Rate %

19 Policy implications The potential for a demographic dividend in Nigeria will be directly linked to a decline in birth rates that shifts the population s age structure away from a pattern dominated by large numbers of dependent children. Nigerian children and youths must have access to adequate and quality education and healthcare that will build their human capital so that they can find employment and contribute to the development of the country. Public sector rinancing of human capital for children must be addressed. These investments will achieve maximum economic impact if they are accompanied by a robust job market. If young adults can find productive employment, they will be able to enjoy higher consumption, invest in their own children, and set money aside for the future. Policies must be in place that support old age by giving workers adequate incentive to save and invest and thus prolong the demographic dividend. However, most citizens who are outside formal employment are not captured by any social insurance system.

20 Thank you