POPULATION DYNAMICS AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

This study investigated the relationship between population dynamics and economic growth in Nigeria. In addition, the study tried to identify the determinants of population growth as well as testing  for causality between  population  and economic growth  in  Nigeria.  Using annual  time  series  data  spanning  from 1970  to 2013,  the researcher  employed  multiple regression model for the first and second objective of the study while granger causality test was used to capture the third objectives. The researcher found that all the core variables of the study are inversely related to economic growth during the investigated period. The study further revealed that fertility, mortality,  net-migration,  per capita income and savings are strong  drivers  of  population  growth  in  Nigeria  while  there  was  no  visible  evidence  of causality  between  economic  and  population  growth.  Sequel to the findings,  the Nigerian government is expected to make direct efforts toward checking fertility rate in Nigeria. Also efforts should be made to improve the quality of Nigerian labour force through investment in education and skills acquisition programmes so as to improve productivity in Nigeria.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Economic growth is a fundamental macroeconomic policy objective which countries all over the world (i.e developed and developing) continue to strive to achieve. Although there are other important macroeconomic policy objectives such as full employment, price stability and balance  of  payment  equilibrium,  economic  growth  can  solely  be  facilitated  by  proper management  or  attainability  of  equilibrium  of  all  these  other   macroeconomic   policy objectives. Even in the developed countries where significant level of economic growth has been attained, efforts are still being put in place not just to sustain the level of growth but also to improve on the periodic rate of growth. Note that pressure is on the developing nations (Nigeria inclusive) to accelerate the level of economic growth as well as the rate of growth that are still relatively very low.

The expected thirst for continuous, substantial and sustainable level of economic growth and development nursed by countries all over the world, especially by the developing countries, has become a gigantic cross which governments and policymakers have to bear. Therefore, they strive to ensure that all available macroeconomic  apparatuses are properly directed or geared  to propel  all relevant  macroeconomic  variables  in the  right  direction  in order  to achieve this desirable objective.

The relationship between population and economic growth has been an important issue  of concern in economics and most especially among scholars from time immemorial.   Going a bit down the memory lane, Thomas R. Malthus (1766-1834) of the famous classical school of thought  ranked  among  the  very  first  set  of  scholars  to  observe  and  comment  on  the interaction between population and economic growth in the late 1790s. He explained in his paper titled  “an essay on the principle of population”  published  in 1798 that the rapidly growing rate of population posed  a great and  significant  threat to the entire existence  or survival of mankind. He explained further  that population if unattended, will outgrow the actual available means of subsistence in no distance time.

Though the gloomy conclusions of Malthus theory of population have not turned out to be entirely true particularly due to several unrealistic assumptions upon which the  theory was

based. The essentials of the theory cannot be completely disregarded because the theory at least became  a starting  point for other  famous economists  including  Marshal,  Pigou  and Keynes who later wrote on population. In modern time, population as well as its dynamics have remained vital variables that can influence economic growth as observed by scholars such as Akanwa, Anyanwu &  Ossai-Onah (2013); Akintunde, Olomola & Oladeji (2013); Kotani & Kotani (2012); Nwakeze & Omoju (2011); among numerous others.

The need to move the economy of modern day Nigeria forward facilitated the dire need  to have a comprehensive  data of her total human  populace  since almost  every  government regarded population data as a prerequisite for feasible economic and development planning. Thus, numerous efforts had been made to conduct at one point or another population census in  Nigeria.  In  fact,  the  history  of  population  census  predates  Nigeria  because  the  first population census was conducted in Lagos Island  and some parts of the mainland in 1866 (before  Nigeria  was  conceived).  According  to  Osagiede  (2014)  the  historical  trend  of population census in Nigeria  can be  discussed  under the population  guesstimation  period (1911-1941)  and the post population guesstimation period (1950 till date). The population guesstimation period  was characterised  by derivation of population figures by sampling or inferential deductions from records. Using of guesstimation and sampling during this period was majorly due to logistic, economic, social and other related or associated challenges of covering the entire nation. During this era, three different censuses were conducted namely: the 1911 census in which a total of about 16.06 million was recorded; followed by that of

1921 which revealed about 13% rise in population to around 18.72 million while it further rose to about 19.9 million despite exclusion of provinces in the Eastern region due to social restiveness that ensued from the misconception of the true motive behind the exercise in 1931 (Aluko, 1965; Okolo, 1999).

With the Second World War disrupting the decennial sequence of population census  in  a geographical area known as Nigeria today (the exercise fail to hold in 1941 due to the Second World War), the post population guesstimation period began. The 1950-53 population census was the first in this era and a total of about 30.42 million was recorded. This was followed by the  1962  population  census  which  result  was  cancelled  after  an  elongated  and  heated dispute/disagreement  resulting from the perceived inflation of figures from some quarters of the country. This cancellation of 1962 result led to the conduct of another population census in 1963 in which a total population of 55.6 million was announced. Although this result was

contested in court, the Supreme Court held that it lacked the power to cancel the result.  Note that the cancellation  of the 1973 population census conducted by National  Census Board (NCB) anointed  by the Yakubu  Gowon military regime coupled  with  political  instability dampened the possibility of conducting any other census until 1991; the official result of the

1991 census showed that total population of about 89 million was recorded. Although the population of Nigeria is slightly above 178 million currently (World Bank, 2015),  the last population  census  conducted  in Nigeria  was  that  of 2006  in which  the  outcome  of  the nationwide head-count was about 140 million. It is also vital to note  that the result of the (2006)  exercise  was  greeted  with  criticisms  despite  the  use  of  modern  equipments  and methods  in the  process  (Eniayejuni  & Agoyi,  2011;  Mimiko,  2006;  Okafor  & Adeleke,

2007).

Population dynamics or change involves studying both the short-term and long-term changes in  size  and  age  composition  of  population  including  the  biological  and  environmental processes influencing those changes. It has to do with the manner in which factors such as fertility,  mortality and migration affect population;  it also looks  at ageing population and population decline. Kotani and Kotani (2012); Odusina  (2011) and Tasim (2010) in their studies observed that population dynamics or change  is majorly influenced by the three (3) afore-mentioned demographic variables (i.e. fertility, mortality and net-migration). Therefore, these same variables will be used to capture population dynamics in this study.

Rate of fertility in Nigeria (like most developing countries) is relatively high. The  World Bank (2014) data showed that rate of fertility in Nigeria has remained at an average of 6 (births per woman) since 1960 (i.e. 6.35 in 1960; 6.47 in 1970; 6.78 in 1980; 6.49 in 1990;

6.10 in 2000 and 6.02 in 2010). The fact that rate of fertility has rarely fallen in the last few decades may be explained by the high level of early marriage in Nigeria coupled with high rate  of  unemployment  (Adebimpe,  Bamidele  &  Abodurin,  2011).  Odu,  Jadunola  and Parakoyi (2005) explained that fertility in Nigeria is unequal across geo-political zones due to dissimilarity  in culture and religious  affiliations.  Total rate  of  mortality (neonatal,  infant, under-5 and adult) on the average has been declining over the years. This decline may not be unconnected to the improving health/medical services globally. Rate of mortality is seen by researchers (such as Ayenigbara & Olorunmaye, 2012; Onanuga & Onanuga, 2014) as a vital variable capable of influencing level of productivity/output and economic growth. Also, the growing  rate  of emigrants  (outflow  or outward  movement  from  Nigeria)  is  indeed  very

disturbing. Strongly supporting this is the data from the World Bank (2014) database  that revealed that emigration is growing rapidly compared to immigration thus net-migration (the difference between immigration and emigration) has maintained a negative sign since 1992 (i.e. net-migration  that was -95,769 in 1992 rose to -170,000  in 2002 and to -300,000  in

2012).

Population dynamics has attracted less attention despite the fact that population size, location, structure, etc are believed to help shape and determine the scale and scope of development as well  as  influencing  the  attainment  of  sustainable  economic  growth  and  development including  poverty  eradication  in  Nigeria.  Although,  population  dynamics  or  change  is expected to be part of economic development plans and policies, it should be addressed in such a manner that respect and protect human rights. Since population change is expected to have a major impact on development agenda and the achievement of socially inclusive and environmentally sustainable economic development, it must be part of the solution alongside other important sustainable development strategies.

Given the prevailing view that population policies have the potentials to lessen or cushion the effects  of  the  pressure  of  population  growth  on  economic  growth  and   development, population  policy  has  thus  become  an  integral  part  of  the  overall  economic  planning. Similarly, the need to improve the welfare of people in the  society now and in the future means population as well as its growth   rate have to be  integrated  and prioritised  in the development plans of most third world countries (Akintunde et al., 2013).

Although population census has a long history in Nigeria (i.e. since 1866), the first cautious attempt made to influence  population  variables  in Nigeria  was contained  in  the “Nigeria policy  on  population  for  unity,  progress  and  self-reliance”  drafted  in  1988  (under  the Babangida-led military junta), the general objective of the population policy was to curtail the rapidly growing population in order to improve the overall standard of living of the Nigerian populace.    Furtherance  to  the  first  population  policy  was the  second  (Nigeria  policy on population for sustainable development)  which was  introduced  in 2003 by the Obasanjo’s administration.

The objectives of this second population policy as contained in the Nigeria Demographic and Health Survey (NDHS, 2004) include achievement of sustainable economic growth, poverty alleviation/eradication,   protection  and  preservation  of  environment,  provision  of  quality

social services, achieving equilibrium between population growth and available resources as well as attainment of social and economic development of the country in general. Whether the objectives  of these policies were achieved  or not became  a  contentious  issue among scholars and economic analysts. Some scholars (Adegbola, 2008; Enang & Ushie, 2012) were of the opinion that the major objectives of the  policies were met whereas others (such as Ebigbola, 1998 and Odusina, 2011) relying on facts and figures pertaining to the population growth rate (specifically making reference to the growing rate of population from 2.82% in

1991 to about 3.02% in 2006) concluded that the objectives of the policies were far  from being achieved.

Some  of  the  factors  believed  to  have  led  to  the  failure  of  these  population  policies  as contained in the studies of Ebigbola (1998) and Odusina (2011) include: religious beliefs, traditional or cultural beliefs and the voluntary nature of the policies. The researchers in their different  and  independent  studies  explained  that  some  of  the  recommendations  of  the population  policies  contradict  the  teachings  and  beliefs  of  some  religions  thus  making compliance almost impossible. Aside this religious sentiment, the cultural attachment of great importance to having a male child in different regions of the country made it impossible to influence the decision of households/families as to number of children they should have. The researchers  explained  further  that another  impediment  to the success  of these population policies was the voluntary nature of the policy, the voluntary nature of these policies means that Nigerians are not compelled to comply since there is absence of legal backing, sanction or incentive for compliance. Lastly, unstable nature of Nigeria’s politics gave neither room for continuity of certain policies nor guaranteed equal zeal towards implementation of such strategic and important policies on the part of the most successive government they conclude.

1.2 Statement of the Problem

Aside  the  fact that Nigeria’s  economy is currently faced  by many other  socio-economic challenges  that  are  hindering  the  attainment  of  its  various  macroeconomic  objectives (including economic growth), the high rate of population coupled with the alarming rate with which it is growing could be a big thorn on the  flesh of both Nigerian  government  and policymakers. The yearly rate of growth of population in Nigeria is extremely on the high side therefore the country still retains its rank as the highest in Africa (in term of population size). Nigeria is also ranked among the highest in the world with an annual rate of population

growth (i.e. 2.29% in 1970; 2.86% in 1980; 2.58 in 1990; 2.60% in 2005; 2.75% in 2010 and about 2.80% in 2014) that has been growing rapidly and consistently for some  years now (World Bank, 2014).

It was observed  in the literature  (Onwuka,  2006;  Odusina,  2011;  Adewole,  2012  among others)  that  rapidly  growing  population  in a country may  manifest  either  as  a  curse  or blessing. This implies that countries with huge population size can explore this demographic advantage  (population  size)  by investing  in education  of their  populace  (particularly  the younger  generation)  and  also  ensure  they  are  accommodated  or  engaged  in  stable  and rewarding  employments  as  this  could  enhance  productivity  which  in  turn  will  facilitate economic expansion  and growth.  For instance,  China’s rapidly expanding population size was efficiently managed and manipulated to positively impact the economy (Zhang, Guo & Zheng, 2012). The situation in Nigeria however seems not to be similar to that of China as sizeable  number  of  Nigerians  (in  their  prime/productive  age)  who  could  have  played significant roles in the development of the country have remained fully unengaged, stranded and helpless. Supporting this is the data from the World Bank (2014) which revealed that unemployment rate in Nigeria is still unacceptably and relatively high (i.e. 13.6% in 1991, rose to 13.8% in 2001 and 14.2% in 2012).

Not only could population growth pose significant threats to economic growth in Nigeria, population dynamics (to be captured by the earlier stated demographic variables) could also have its influence on economic growth of any country (Rutger and Jeroen, 2011; Akintunde et. al., 2013 & Olabiyi, 2014). The figures from the World Bank (2014) revealed that rate of fertility in Nigeria like many other developing countries across the globe remained very high. Fertility (births per woman) has been trending between 6.354 (recorded in 1960) and 6.002

(recorded in 2012). Also, the 21st  century breakthrough in medical researches seem to have

brought about improved medical and public health service which seems to have reduced the overall rate of   mortality (neonatal, infant, under 5 and even adult) in Nigeria. One  of the expected  natural,  rational  and economic consequences  of these (high rate of  fertility and declining mortality rate) is a rise in the age-dependency ratio (i.e. percentage of dependent population). Data from the World Bank (2014) and NDHS  (2013) have not disproved this because the age-dependency ratio (i.e. percentage of dependent population) for Nigeria has continued to rise since early 1960s (that is, from 79% in 1960 to 83% in 1970; rose to 86% in

2000 and is almost 90% in 2014). Therefore, as the age-dependency ratio continues to rise,

working population is expected to fall.  In summary, a decline in working population could also  lead  to  a  fall  in  total  productivity  which  in  turn  may  make  achieving  substantial economic growth difficult.

Note  that  apart  from  this  growing  age-dependency  ratio  (i.e.  percentage  of  dependent population) which could be a resultant effect of the complicated unemployment problem that has  plagued  the  Nigerian  economy  for  several   decades,  migration  (immigration   and emigration)  seems to pose a greater threat to  attaining  economic  growth  in Nigeria.  The number of emigrants from Nigeria is  growing significantly against that of immigrants; the data from the World Bank  (2014) revealed  that net-migration  has remained  negative  and rapidly rising especially since early 1990s (i.e net-migration that was -95,769 in 1992 rose to

-170,000 in 2002 and to -300,000 in 2012). Drinkwater, Lotti and Pearlman (2003) asserted that migration may drain away valuable talents since educated and motivated people are in most cases likely to migrate in search of opportunities. The researchers explained further that in 2000, about 10.7% of highly skilled  population (trained in  Nigeria) work abroad most especially in Organisation for Economic Cooperation and  Development (OECD) countries. Fadahunsi  and  Rosa  (2002)  noted  that  sixty-four  percent  of  Nigerian  emigrants  (on the average) have attained tertiary level of education. In summary, all these are strong evidence in support of the assertion that  many of those (professionals, athletes etc) who could have contributed to the development of Nigeria if engaged might have abandoned the nation and used their skills and intellect to aid the development of other countries.

In  addition  to  the  above,  Iniodu  (1998)  pointed  out  that  the  growing  population  has pressurised both limited natural resources as well as social amenities in Nigeria to the extent that diminishing returns becomes inevitable. This explains the decreasing peasant income and the accompanying widespread poverty among the rural dwellers. The incessant shortage of both  domestically   and   industrially   consumed   agricultural   produce   may  also   not  be unconnected to the over-stripping of these limited resources by the threatening rate at which population is increasing. Although, it is obvious that efforts had and are still being made by the  Nigerian  government  to  arrest  this  ugly  situation  by  putting  in  place  the  required economic plans/policies to combat it; this current economic conundrum is to say the a little bit far from being subdued. This study will investigate the relationship between population dynamics and economic growth in Nigeria thus providing recommendation(s) as to how these problems can be addressed.

1.3 Research Questions

Sequel to the above, the following research questions are expected to guide this study:

a.   How has population dynamics impacted economic growth in Nigeria?

b.   What are the determinants of population growth in Nigeria?

c.   What is the causal link between population growth and economic growth in Nigeria?

1.4 Research Objectives

The  general  objective  of the  study is  to  investigate  the  relationship  between  population dynamics and economic growth in Nigeria. The specific objectives are as highlighted below:

a.   To estimate the impact of population dynamics on economic growth in Nigeria. b.   To ascertain the determinants of population growth in Nigeria.

c.   To establish the causal link between population growth rate and economic growth in

Nigeria.

1.5 Research Hypotheses

This study is guided by the following research hypotheses:

H01: Population dynamics has no impact on economic growth in Nigeria. H02: Population growth has no significant determinants in Nigeria.

H03: There is no causal link or relationship between population growth and economic growth in Nigeria.

1.6 Significance of the Study

It is a common belief in literature that having adequate/complete  knowledge of a country’s population is a prerequisite for effective economic and development planning. This study is very significant  because  it seeks to explain and aid the understanding  of  the relationship between population dynamics and economic growth in Nigeria. This study is also expected to provide the much required information regarding the determinants of population growth in Nigeria thus helping the Nigerian government as  well as policymakers  not just to identify these determinants of population growth but also to understand their behaviour for adequate

control or manipulation in order to enhance the achievement of the country’s specific  and desired objectives.

Furthermore,  with the alarming rate of emigrants (most of which are highly skilled)  from Nigeria and the associated negative consequences which Drinkwater et al. (2003) noted as including brain-drain,  high rate of human-trafficking  and illegal migration  and diplomatic crises  between  Nigeria  and  the  destination  countries  (in  some  cases)  coupled  with  the perennial  influx  of mostly unskilled  immigrants  into  Nigeria  do  not just  make  planning difficult, it makes economic growth perhaps unattainable. Therefore, this study is important because it will enable government,  policymaker as well as other readers to understand the behaviour and/or interaction between one of the core variables of population dynamics (net- migration which seems to have been  neglected  in other studies) and economic growth in Nigeria.

It is also  important  to note that studies that seek to investigate  the relationship  between population dynamics and economic growth in Nigeria are still very much scanty despite the need to understand  the relationship  between these variables.  This  study is therefore  very relevant as it seeks to contribute or add to the scanty number of existing literature. Finally, this study is expected to serve as a vital or veritable tool to other researchers interested in related studies.

1.7 Scope of the Study

This is a country specific study that seeks to investigate the relationship between population dynamics and economic growth in Nigeria. The three (core) variables to capture population dynamics in this study are fertility,  mortality (using life expectancy  at birth as a reliable proxy) and net-migration. The study relies on the use of annual time series data that ranges from 1970 to 2013 (44years). The choice of the selected three variables and that of the chosen time frame for the study were dictated majorly by data availability.

1.8 Structure of the Study

This study is divided  into  five (5) chapters;  the first chapter  contains  brief  introduction, historical trend as well as overview of the variables of this study. This chapter has eight (8) sub-divisions  namely:  Background  of  the  Study,  Statement  of  the  Problem,  Research Questions, Objectives of the Study, Research Hypotheses, Significance of the Study, Scope

of the Study and Structure  of the Study. The Second  Chapter  concentrates  on review  of relevant related literature. This chapter has four (4) sub-divisions which include: Conceptual Literature,   Theoretical   Literature,   Empirical   Literature   and   Limitation   of   Previous Studies/Value Addition. The Third Chapter focuses on Methodology of the  Study and the chapter is divided into Theoretical Framework,  Model Specification,  Test for Stationarity, Estimation Procedure, Justification for the Model, Diagnostic Tests and Source of Data and Econometric  Software.  The  fourth  Chapter  presents  pre-estimation,  estimation  and  post- estimation results as well as evaluation of the Research Hypotheses while the Last Chapter summaries the findings of this Study and it has four (4) sub-divisions which are Summary of Findings, Policy Implications of Findings, Recommendation and Conclusion.

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