Will Nigerian

Will Nigerian "Boom Babies" Feed Prosperity or Entrench Poverty?

By Tim Cocks

Will Nigerian "Boom Babies" Feed Prosperity or Entrench Poverty?

Lagos, April 9 (Reuters) - In the time it takes to read this article, Nigeria will have added 50 people to its population, or about 11,000 a day. While some see these new consumers feeding an engine of prosperity, others fear they will create a crisis of poverty and unrest.

By 2050, the global Population Reference Bureau (PRB) projects it will be the world's fourth most populous country, with 400 million people - just less than the projected figure for the United States, but with only a tenth of its territory.

While Africa's most populous nation has long had business leaders salivating over its potentially huge market, especially retailers of fast-moving consumer goods, it is not clear whether it can turn a growing population - already at 170 million - into a richer society with widespread higher living standards.

Nigeria is often used by promoters of an "Africa Rising" narrative urging investors to buy into the continent's potential to reap a "demographic dividend" from an expanding population of young people of working age.

Yet in the waterside slum of Makoko, where 100,000 residents huddle together in homes on stilts that spill right out into the Lagos Lagoon, few feel on the verge of prosperity.

"We're poor, and not much is changing," said Benedicta Hunkpe, as she stirred a cauldron of fish stew over smoking charcoal while children swept along the water in canoes.

Demographers fear a crisis of poverty and social upheaval could offset gains from the birth of new consumers.

The 3,000 naira ($19) a week that the 55-year-old Hunkpe earns from selling fish helps feed her eight offspring and 10 grandchildren; her house sleeps 40 people at a time.

"The money is never enough," she said. "I wanted my children to go to school to give them a better life, but I couldn't afford it."

Sceptics say services and the environment can't keep pace with a population rising at 2.4 percent a year, according to U.N. figures. They fear swelling numbers of jobless and uneducated youths threaten the stability of a country already suffering an Islamist uprising in the north and oil theft, piracy and kidnapping by criminal gangs in the south.

"If we keep growing our population at this rate, without also growing our means to sustain it, we are heading towards catastrophe," says Owoeye Olumide, a demographer at southwest Nigeria's Bowen University.

"We have to do something very fast ... or we face more poverty and agitation or worse - disease, hunger, war."

NIGERIA RISING?

Few investment funds share this view. Banks like Renaissance Capital believe African demographics will spur an economic transformation of the sort Asia has seen.

"Only sub-Saharan Africa is positioned to experience 15-20 percent growth in the crucial 15-24 age range over the coming decades, which will provide the plentiful labour force the world economy will rely on," the bank said in a 2011 report entitled "The bottom billion becomes the fastest billion".

This will provide huge opportunities for retailers and the auto industry, for which "demographic data alone suggest Africa will be overtaking China within two generations".

Nigeria is already a big market for basic goods, like the soap, beer or flour sold by PZ Cussons, Nigerian Breweries and Flourmills of Nigeria.

And some are preparing for the next step up; South African supermarket chain Shoprite has plans for 700 stores in Nigeria, up from only a handful at the moment.

Yet countries that reap the "demographic dividend" usually do so only once population growth starts to slow.

While fertility rates are crashing across Asia and Latin America - mirroring falls in Europe a generation ago - in sub-Saharan Africa they remain high. A 2012 World Bank study put them at five children per woman; in Nigeria, it is 5.6.

The United Nations predicts sub-Saharan Africa's population will double by 2045 to 2 billion. Nigeria will account for a fifth of that, and some fear city infrastructure, education and the job market won't keep up.

"RUNNING TO STAND STILL"

Sprawling around a lagoon and the Atlantic coast, Nigeria's commercial hub of Lagos - a steamy, tropical city of some 21 million people, according to its government - receives hundreds of thousands of new arrivals each year from rural areas.

The city grows by 672,000 people a year, state data shows.

"It's like we're running just to stand still," said Ben Akabueze, the Lagos commissioner for Economic Planning and Budget, a sharply dressed, bespectacled man whose phone trills constantly with demands from state governor Babatunde Fashola.

"You roll out services, then so many more people arrive," he says. "Sometimes we can't quite cope."

Two thirds of Lagosians live in what are effectively slums with no reliable electricity or water. Most crowd into "face me, face you" accommodation squeezing whole families into seven- square metre rooms (75 square feet) sandwiched together along thin corridors.

{read_more}

Noah Semedi, head teacher at one of only two schools serving Makoko's tens of thousands, is lucky he can read at all.

"My dad has 22 children. I am the last born in the family, so I am the only guy that went to school," he told Reuters at the wood-hewn school, where 117 children in blue and yellow uniforms huddled around a jetty over the filthy water of the lagoon.

Residents of such areas are a long way from consumerism.

The 7UP that Owolala Elijah, 27, a fisherman, slurps at a village meeting was paid for by the local chief - he is rarely able to afford branded fizzy drinks himself, he says.

A Standard Bank study last year questioned Nigeria's potential as a mass consumer market. It showed that in some of the urban centres seen as promising, like Lagos, household incomes are far below the threshold for a retail boom.

It found 93 percent of Lagos households were in the poorest category, with monthly income lower than $390, compared with only 38 percent in Johannesburg.

Only retailers targeting "the bottom of the pyramid", like brewers or Swiss food group Nestle, can tap such people, said Standard Bank's head of equity product, Matthew Pearson.

"(Retailers) ... down in South Africa were most surprised," said Pearson. "Received wisdom was that the middle class in Nigeria was a lot bigger than it actually is."

That suggests retailers like high-end South African supermarket Woolworths, which set up in Nigeria in 2011, face a small market for some time. Strategies targeting middle-income groups that worked in places like India and South Africa may not yet work so well for Nigeria, Pearson said.

DANGERS OF YOUTH

Official figures say absolute poverty rose to 60 percent last year, from 54.7 percent in 2004, worsened by rapid population growth. Some 100 million Nigerians live in poverty.

"With that kind of pressure of population, the way Nigeria has worked ... would be very difficult to repeat over the next 20 years without some big catastrophe happening," said Antony Goldman, head of Nigeria-focused PM Consulting.

The PRF says nearly half of Nigerians are under 15, and in the "Middlebelt" - a region of central Nigeria populated largely by minority ethnic groups - violence is common among youth gangs, with disputes over scarce land and water. Dozens have been killed in the past week in Plateau state.

In the Niger Delta, gangs of mostly unemployed armed youths steal tens of thousands of barrels of oil a day from pipelines.

And the biggest threat to Nigeria's stability - the north's Islamist insurgency - is driven by its desperate, unemployed youth population, said Mohammed Junaidu, a northern opposition politician and academic, adding that Nigeria had 12 million children of school age who were not in education.

"It's a combination of failures of governance and the ticking demographic time-bomb," he said. "They urgently need to pacify these youths or face more instability and terrorism."

ROOM FOR OPTIMISM?

The government has for decades tried to curb population growth through family planning, but struggles to influence a poorly educated population, many living in remote rural areas, that values having many children, officials say.

"Nigeria needs an attitudinal change," says John Adegbite, executive director of NGO the Planned Parenthood Federation of Nigeria, adding that only around 10 percent use contraceptives.

Yet those who take a bullish view of Nigeria's economic future argue that its growth can still eventually lift large sections of society out of extreme poverty.

Charles Robertson at Renaissance Capital says over a third of children go to secondary school, compared with just 7 percent in 1975. That is now similar to India 20 years ago, he says.

He also thinks that, as Nigeria and Africa become more prosperous, populations will naturally rise more slowly.

"As African countries get richer, birth rates will drop dramatically," he said - as has happened in India and Egypt. As a result, he says, U.N. projections for Nigeria's population by 2050 will be "out by tens of millions".

For demographers like Olumide, that is too complacent.

"Without a change of reproductive behaviour, I can't see how we can slow population growth," he said. "We are just loading more people onto the table. Very soon, it's going to collapse."

Related news

Amazing: Nigeria's first online community radio debuts in Lagos

Amazing: Nigeria's first online community radio debuts in Lagos

Amazing: Nigeria's first online community radio debuts in Lagos