By Nnasom David

Nigeria’s economic growth story is showing signs of recovery, but analysts have warned that rising Gross Domestic Product (GDP) figures alone may not translate into improved living standards unless the country can convert growth into jobs, higher productivity and increased household incomes.

Although macroeconomic indicators have improved in recent months, with the World Bank projecting that Nigeria’s economy grew by 3.4 per cent in 2024 — its strongest calendar-year performance since 2014, apart from the post-COVID-19 recovery period — concerns remain over the quality and impact of the growth.

The improvement has been attributed to reforms including foreign exchange liberalisation, fiscal adjustments and stronger performances in sectors such as banking and telecommunications, which have helped restore investor confidence.

However, analysts argue that the central challenge is not only the pace of economic expansion but the ability to ensure that the benefits reach millions of Nigerians struggling with unemployment, inflation and declining purchasing power.

They described the situation as a case of “jobless growth”, where an economy expands without creating enough employment opportunities to match the growth of the workforce.

Nigeria, with a population of more than 237 million people and one of the fastest-growing labour forces globally, requires millions of new jobs annually to meet the needs of young people entering the workforce.

According to analysts, the source of economic growth plays a critical role in determining whether it generates employment.

While sectors such as finance, technology and telecommunications have become major drivers of Nigeria’s economic expansion, their ability to create large-scale employment remains limited compared with labour-intensive industries.

Nigeria’s fintech sector, which has attracted billions of dollars in investment and produced successful companies such as Flutterwave, Moniepoint and Interswitch, has helped position Lagos as one of Africa’s leading technology hubs.

However, experts noted that technology-driven businesses often generate significant economic value with relatively small workforces.

In contrast, manufacturing, agro-processing and industrial sectors typically employ thousands of workers across production, logistics and supply chains.

They warned that continued reliance on service-sector growth without strengthening labour-intensive industries could allow the economy to expand while leaving millions without decent employment opportunities.

Vietnam was cited as an example of how targeted industrial growth can transform an economy. Following economic reforms, the country focused on export-oriented manufacturing, attracted global companies such as Samsung and created millions of jobs while reducing poverty.

Analysts said Nigeria could draw lessons from Vietnam by prioritising sectors capable of absorbing large numbers of workers.

Experts also stressed that GDP figures alone do not determine whether businesses will employ more workers.

They argued that companies make hiring decisions based on demand, profitability and the ability to expand, rather than headline economic growth figures.

This challenge is particularly significant in Nigeria, where high inflation has weakened household purchasing power and elevated interest rates have increased the cost of borrowing for businesses.

Small and medium-sized enterprises (SMEs), which account for more than 96 per cent of businesses in Nigeria and contribute significantly to economic activity, continue to face challenges including unreliable electricity supply, poor infrastructure and limited access to affordable financing.

As a result, many businesses have shifted focus from expansion to survival and maintaining operations.

Analysts said improving productivity and creating an environment where businesses can confidently invest and hire would be more important than celebrating GDP growth figures alone.

They pointed to India’s economic experience, where the growth of the technology sector created millions of high-skilled jobs and transformed cities into global technology hubs.

However, the Indian government also recognised that technology alone could not provide enough jobs for its large population, leading to initiatives aimed at strengthening manufacturing alongside digital growth.

Nigeria, they argued, faces a similar reality, requiring a balanced economic strategy that supports technology while expanding employment opportunities in manufacturing, agriculture and agro-processing.

Analysts said recent economic reforms had provided a foundation for improved investment confidence but stressed that the next phase should focus on making it easier for businesses to expand.

They identified reliable electricity, improved infrastructure, better access to finance, clear regulations and stronger technical training as key factors needed to encourage companies to invest and create jobs.

According to them, affordable financing would allow SMEs to move beyond survival mode and scale their operations, creating more employment opportunities.

They also emphasised that jobs are not created through government announcements alone but emerge when businesses have the confidence to take risks, expand production and employ more workers.

The experts said the true measure of Nigeria’s economic progress should not only be reflected in inflation rates, exchange rates or GDP figures but in whether businesses are expanding, graduates are finding employment and household incomes are improving.

While acknowledging that recent economic reforms represent positive steps, they warned that sustainable prosperity requires growth that directly improves citizens’ quality of life.

They noted that Nigeria must shift its focus from simply achieving higher growth rates to building an economy where growth creates opportunities for millions of people.

“Growth in reports may attract investors, but job creation is what builds a country,” analysts concluded.