Nigeria’s growth dilemma: Why productivity must catch up with output

Nigeria’s economy faces a critical challenge: output is growing, but productivity has failed to keep pace, limiting the extent to which economic expansion translates into higher incomes and improved living standards. CHIMA NWOKOJI writes on why focus must shift from simply creating more economic activity to enabling workers and businesses to produce more value from every hour worked and naira invested.

NIGERIA’S economic story over the past decade has been characterised by a persistent gap between output growth and productivity. Although the economy has expanded in nominal terms, driven by population growth, oil earnings, government spending and activity across services, the increase in output has not been matched by a corresponding improvement in the efficiency with which labour and capital are deployed.

The result is an economy that can record growth on paper, while millions of Nigerians continue to struggle with low incomes, high living costs, inadequate infrastructure and limited economic opportunities. More people are working and more goods and services are being produced, but the value generated per worker remains relatively low.

For Nigeria, closing this productivity gap is critical. Sustainable improvements in living standards will depend less on simply increasing the number of people employed and more on enabling each worker and business to produce significantly more value.

Productivity, broadly measured as the amount of goods and services produced for each hour worked, is therefore becoming one of the most important economic issues facing the country.

Productivity, not just hard work

Business analyst, Chika Mbonu, recently stated that Nigeria’s recent GDP growth figures have not translated into meaningful improvements in the daily lives of ordinary citizens, despite government…