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A CONVERSATION ON GDP AND WELL-BEING

The Economy

The Gross Domestic Product (GDP) growth narrative has always justified the need to push for a thriving economy. GDP, a well-loved global economic indicator/lens for measuring/framing the standard of living; gives an estimate of all goods and services produced in the market. This makeshift metric only gives a rough estimate leaving out essential non-monetary aspects of the economy like unpaid work, leisure, environmental cost, well-being and many other informal activities outside the sphere of the market. Economists and policymakers are quick to focus on the GDP figures as feedback on their performance or the progress of a country but what is next if truly GDP figures no longer translate to well-being?



The GDP-figure lens through which policies have been made and with which policymakers and governments have long operated has affected how we solve economic and individual problems all over the world. It shapes our belief as self-centered, “rational” human beings (which is not always true). The GDP-growth-reliant lens is central to how we frame the world (not just economics), make sense of the world, think about solving problems and analyze what is feasible or not. This GDP-figure narrative rooted in traditional economics is no longer a sustainable option to move us forward. It has done so much damage that as a country, Nigeria needs to look for solutions to translate the GDP figures to wellbeing. It needs to be intentionally focused on well-being so that it becomes indifferent to the GDP figures as a way of framing economic policy and planning.


In the words of Joseph Stiglitz “How we describe success, affects what we strive for. If GDP is what we think is success, people will strive for GDP”


Nigeria with Africa’s largest youth population and a GDP figure of 397.3 billion USD in 2018 ahead of South Africa’s 368.3 billion USD remains the world’s poverty capital. Despite GDP growth at an average of 7% per year between 2000 and 2014 according to the World Bank. The GDP dropped by 2.7% in 2015, while the economy contracted by 1.6% during the 2016 recession, this shows the economy has not been resilient enough to withstand shocks. Also, The first quarter 2020 GDP report published by the National Bureau of Statistics showed that real GDP grew by 1.87 % compared to 2.27% in the last quarter of  2019.  While the Oil GDP grew 5.06% compared to 4.59% in the last quarter of 2019, the Non-Oil GDP declined at 1.55% compared with 2.06% in the last quarter of 2019. The IMF World Economic Outlook (April 2020) predicts Nigeria has Projected Real GDP growth of (negative) -3.4% change. After the 2016 recession.


The Nigerian Federal Government in March 2017 launched The Economic Recovery and Growth Plan (ERGP) for 2017 – 2020 aimed at economic growth “leveraging the ingenuity and resilience of the Nigerian people”. Despite the laudable projections of the plan with five main priorities like macroeconomic stabilization with low inflation, agriculture as a tool for food security, energy sufficiency, improved transportation infrastructure and driving industrialization; recent figures from national statistics say otherwise.

Nigeria’s growing GDP per capita and purchasing power figures remain disconnected from millions of Nigerians. Despite the rally for diversification from oil, the numbers prove yet again that Nigeria is yet to feel the gains outside the oil economy (the only sector with GDP growth).  With a very slow recovery pace and an economy barely hanging onto a growth of less than 2% and ranked 152 of 157 countries in the World Bank’s 2018 Human Capital Index, the GDP figures alone is a weak ally to depend upon to lift millions of Nigeria out of poverty.


GDP Limitations, Inequality and Well-being

The goal of the GDP metric was to show how well global economies grew and it was believed to have a relationship with well-being/standard of living. Well-being in terms of good health, education, basic infrastructures, satisfaction, happiness, and leisure work/activities we enjoy; which GDP figures cannot accurately measure. GDP which measures economic development and all the consumption that happens in the market has ignored the negative effect of growth-styled economics on human well-being across the world. It is meant to serve and a yardstick for measuring how well a country is doing. It assumed that the higher your GDP, the better is it for your economy. The more economic activity generated, the better the output, reflected in higher figures (whether it meant building prisons, construction after an environmental catastrophe, illegal arms purchase, or health-spending by citizens for treating terminal diseases from pollution; it was never if it benefited many citizens or just a few elites, it was just a figure showing how much was exchanged within the confine of the market). The GDP has been faulted as not only leaving out the effects of spending on well-being, it does not reflect local economic gains and distribution of benefits.



Life Expectancy 

Despite higher GDP figures, and high per capita income across many developed countries of the world, life expectancy and well-being are lower when compared to other developed countries with lower per capita income, which cannot be justified by GDP figures. People in places like Sweden (82.8 years), Canada (82.4 years), Costa Rica(80.3years), and Puerto Rico(80.3years) with lower income per capita have better life expectancy compared to the United States (78.9 years) with far more income per Capita and a higher GDP (according to 2019 data). For poorer countries like Nigeria, the situation is far worse. Nigeria, a country that boasts of having the biggest economy in Africa has a life expectancy of 54.7 years compared to countries with lower GDP figures like Togo (61 years), Niger (62.4 years), Ghana (64.1 years), South Africa (64.1 years), Haiti (64 years), Benin (61.8 years) and Cameroon (59.3 years).


Inequality and uneven Distribution; For millions of Nigerians, GDP figures are just numbers, they cannot put food on the table or pay their bills. GDP figure may be very high, but the benefits are unevenly distributed, raising the ceiling for the 1% instead of raising the floor for the poor. Lagos state with the highest internally generated revenue for 2019 with 29.88 percent of the national revenue of N398,732,246,493.38. The high revenue has neither translated to better well-being for many Lagosians nor improved their life expectancy; which is not different for Nigerians in other parts of the country.


The inequality statistics by NBS show that the 2019 national poverty rate at 40.09% in 35 states including the FCT (excluding Borno State), representing 82.9 million persons while the urban poverty rate stands at 18.04% far lower than the rural poverty rate at 52.10%.  The highest poverty rate is 87.73% and the lowest at 4.50%.  The national inequality rate is at 35.13% (excluding Borno), while the urban inequality rate is at 35.13%. Rural inequality rate at 32.77%. The highest inequality is 40.2% & Lowest is 23.49%.  The world poverty map shows that half of Nigeria’s total population lives in extreme poverty. According to the 2019 UNDP Multidimensional Poverty Index (MPI) which shows the data of the poorest of the poor, indicates that 46% of Nigerians are affected by different dimensions of poverty; 53.5% live on $1.90/day (reinforcing the data on the world poverty map); Intensity of deprivation is 56.6% and 32.3% of Nigerians are affected by severe multidimensional poverty. The MPI is based on 3 key dimensions; health, education and standard of living, all of which as central to human well-being. 


Nigeria ranks 157 out of 185 countries in the last Human Development Index (HDI) figures with an HDI of 0.534 listed among countries with low human development. Nigeria and Gambia have similar MPI but Nigeria has higher inequality amongst the multidimensionally poor with a variance of 0.029 than Gambia (0.018). Being in the poorest 40% with HDI that has not improved despite a growing oil GDP, there must be a different approach to translating these figures to well-being.

Coronavirus Pandemic.


Amid the pandemic, only essential workers and needs that are not the top priority of the GDP metric have remained relevant. The bulk of the money spent is on needs, on things that will aid our survival, and less on luxury. The head of the United Nations Development Programme, Achim Steiner has said in its latest report that unlike the Ebola virus outbreak in West Africa and the 2008 Financial crisis, the novel coronavirus outbreak is a set to yearly development returns, a triple threat to education, health, and income. The new report COVID-19 and Human Development Report by UNDP focused on Assessing the Crisis, Envisioning the Recovery showed that 6 out of 10 children are presently not getting any form of education as a result of school closures around the world. There is a glaring divide from UNDP estimates of just 20 percent of out-of-school children in primary education compared with 86 percent in poorer countries. As COVID-19’s global death toll exceeds 300,000 people and global per capita income is expected to fall by 4 percent this year, human development will be hard hit in poor countries. See http://hdr.undp.org/en/hdp-covid


The outbreak of the novel coronavirus has resulted in global human and economic costs, with plenty of advocacy for well-being before the economy; turning the numbers to practical solutions. Many countries that are “development models” have not managed the pandemic well. Countries like Italy, the United States, and Great Britain have had more deaths per capita compared to places like Kerala or New Zealand. The pandemic has exposed many systems and economies that have not turned high GDP numbers to better healthcare systems, and basic minimums for their citizens, leaving many vulnerable to the outbreak, health-wise and economically.

If the GDP figures miss out on the details vital for our overall well-being, creating more inequality, does not encouraging trickle-down or translation of the high numbers to prosperity and flourishing, what other options are there?


The Sustainable Development Goals (SDGs)

The 17 United Nations SDGs with 169 targets launched and adopted by the Member States in 2015 offer a template for peace and prosperity for people and the planet with the 2030 deadline. Economic prosperity means combining the Sustainable Development Goals (SDGs) and the Gross Domestic Product (GDP) at every stage of resource planning and governance for the dividends to be translated to well-being. The 2030 Agenda and the Sustainable Development Goals are time-bound targets for Prosperity, People, Planet, Peace, and Partnership – known as the five P’s to which countries have committed themselves  The 17 SDGs contain targets that are essential to our well-being (Poverty,  food/hunger, health, equality, the environment, rural and urban planning, water and sanitation, peace, gender, education and partnership).



Why SDGs?

Environmental Consideration; Using the SDG-lens in planning and policymaking considers the environmental impact of socio-economic decisions; a limitation of the GDP and HDI. It is not enough to calculate how many cars or diesel generators are bought or sold as a means to show more spending, hence a higher GDP figure, it is also important to consider the environment as well as the health impact of this spending. This allows for a cost-effective, systemic and sustained approach to goal-oriented decision-making.  For example, SDG targets and indicators are tools for effective city planning (SDGs 4,7,9,11, 12,,13), waste management/pollution (SDGs 9,11, 14, 15,13), health (SDGs 1,2,3,6), biodiversity management (SDGs 7, 13,14, 15) and security (SDGs 5,10,16,17).


Besides, aiming for excessive growth like “developed” countries means the planet and limited resources will be stretched beyond the earth’s carrying capacity. The SDGs are focused on well-being within the planetary boundaries and countries like Nigeria with low Sustainable Development Index have the leverage to succeed if the policy and planning with the SDG Lens are established. The SDGs help us to do more with less, consume less, recycle more and make healthier choices. It offers the perfect blueprint to translate economic dividends to well-being.

Equity and Measurable Progress; It provides a measurable, equity-focused solution approach to challenges that are different from the GDP framework. Planning based on equity is not only affordable but can be replicated with flexibility across different levels of the economy and long-term solutions that are sustainable during and beyond the pandemic.  The SDGs create room for systemic collaboration that will be useful in a country like Nigeria with a diverse cultural background. The driving force is to leave no one behind.


Building an SDG-Oriented Economy

The complexity of the 17 SDGs, 169 targets and 231 Indicators requires an overall understanding of implementation within the context of different countries; it is not a case of one-size-fits-all. Understanding how these SDG targets can be translated into a workable empirical framework to fit within the Nigerian policy context is critical to the transition to an SDG-oriented economy. It has become important for governments to balance tradeoffs in planning and effectively allocate limited resources through financing targeted at the SDGs. There have been different methods for evaluating and Implementing SDG targets and indicators.


One method described in a paper by McArthur and Rasmussen (2019) outlines “a country-level methodology for identifying which issues and people are getting left behind”. Despite the popularity of the SDGs and their mention by policymakers, the empirical relevance has been a challenge when it comes to real applications in different contexts. The paper describes using the “leave no one behind” mantra as a driving force of the SDGs to conduct empirical analysis at the country level. Using Canada as a case study, they offer a framework for harmonizing the different indicators.

 The second method is through SDG transformations. The UN 2019 Sustainable Development Report generated 7 major findings which included SDG operationalization through six transformations, alarming climate change trends, eradicating poverty, high-income countries generating environmental effects, human rights abuse sustainable land use and healthy diets, eradicating poverty and countries falling short of their political commitment to the SDGs.


The transformation idea originated from “The World in 2050 Initiative” which was focused on organizing the flexible implementation of all SDGs realizing the need for deep structural changes across sectors. SDG transformations offer pathways for successfully achieving both long- and short-term policy and planning. The six transformations are designed on two guiding principles; (1) Leave no one behind (2) Circularity and decoupling of resource use from human well-being; offer stakeholders a platform for shared understanding on how to operationalize the 17 SDGs with 169 targets within different government structures while considering interdependencies across all SDGs. Government and stakeholders must be determined to design interventions based on improving policies, and private and public investment rooted in the SDGs. To successfully transform society, SDG transformations must align with the way the different governments are organized for effective implementation through system-based approaches; leaving no one behind.

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