Nigeria, Africa’s most populous nation and one rich in natural resources, now stands at a pivotal juncture. Despite a reported 3.4 percent GDP growth in 2024, the economy contracted in dollar terms, shrinking from $370.51 billion in 2023 to $187.67 billion in 2024, with per capita income falling from $1,656 to $763. This raises a fundamental question: What comes first in sustainable growth—an empowered population (workforce) or significant investment?
This “people versus investment” dilemma is not merely academic; it cuts to the core of Nigeria’s future. Even as the National Bureau of Statistics touts strong growth rates, the majority of Nigerian workers remain in the informal sector (ILO, 2018). Official unemployment rates have been revised downward to 4-5 percent due to methodological changes, yet millions still work in low-productivity jobs.
Nearly 95 percent of the workforce is engaged in subsistence agriculture or petty trade—jobs that provide mere survival without enabling upward mobility or innovation. Thus, while macroeconomic indicators suggest progress, the majority of citizens experience little to no improvement in their daily lives, thereby widening the gap between overall growth and living standards.
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Complicating matters are recent government reforms aimed at spurring investment. In an effort to improve fiscal discipline, fuel and electricity subsidies were scrapped, resulting in petrol prices surging by over 500 percent and electricity prices by around 250 percent. Alongside these measures, the government devalued the Naira by roughly 250 percent, further eroding the purchasing power of ordinary Nigerians.
These policies, intended to free up resources for investment, have instead raised the cost of living and cast doubt on the attractiveness of the investment climate as the populace can hardly afford basic things. If GDP growth continues to be prioritised without addressing social welfare, skills development, and job quality, Nigeria’s progress risks remaining superficial.
International experiences offer valuable lessons. China’s “people-first” approach transformed it from an agrarian society to a manufacturing powerhouse. Initially, leveraging its vast, low-cost labour force to attract foreign direct investment, China later invested heavily in education and vocational training, enabling a shift toward high-value industries. This case demonstrates that a well-trained workforce can attract quality investment, which in turn fosters further skills development and innovation.
Dubai presents another model, one built on massive capital investments. With its harsh climate, Dubai transformed itself into a global hub by investing in world-class airports, seaports, and logistics networks, as well as establishing free zones that offer 100 percent foreign ownership and tax incentives. While its success is largely driven by these investments, the city also relies on a diverse pool of foreign talent, highlighting concerns over long-term local capacity building.
Singapore, with limited natural resources, has shown the power of human capital. By investing in education and skill development, Singapore has attracted multinational corporations and spurred innovation across various sectors, including finance, technology, and advanced manufacturing. Its disciplined regulatory environment and strategic government intervention have sustained high-value growth over decades.
Japan and South Korea add further insight to this debate. Post-war Japan rebuilt its economy through education reforms, strong work ethics, and targeted industrial policies, with the “kaizen” approach driving continuous technological advancement. Similarly, South Korea shifted from imitation to innovation through state-led industrial planning, massive investments in research and development, and a focus on education. Both cases demonstrate that economic transformation necessitates a balance between human capability development and an environment that attracts and sustains investment.
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For Nigeria, the lessons are compelling. The nation’s challenges extend beyond a lack of capital; they are deeply rooted in a skills deficit that leaves many unprepared for high-value employment. As noted by Acemoglu and Robinson (2012), inclusive institutions that foster human capital are crucial for sustained, broad-based growth. Easterly (2001) argues that top-down policies without local input often fail to deliver sustainable results, while Sen (1999) and Becker (1964) emphasise the transformative power of investing in human capabilities.
Nigeria’s path forward must be twofold. First, the nation must overhaul its education and vocational training systems to create a workforce capable of driving industrial transformation. Investing in quality education is not just about increasing numbers; it is about equipping individuals with practical skills and an innovative mindset needed to compete in today’s global economy. Second, Nigeria must create an attractive investment climate by not only drawing foreign capital through strategic incentives and regulatory reforms but also by ensuring that domestic policies promote transparency, reduce bureaucratic inefficiencies, and encourage private-sector participation.
Balancing these imperatives—developing human potential and attracting investment—is critical to breaking the cycle of underemployment and low productivity. A virtuous cycle can emerge where a skilled workforce attracts quality investment, which in turn fuels further education and innovation, leading to sustained and inclusive growth. Without such a balanced approach, impressive macroeconomic figures may continue to mask a growing divide between economic growth and improved living standards.
As Nigeria navigates these challenging waters, the debate over people versus investment remains both urgent and central. Policymakers, business leaders, and civil society must collaborate to craft strategies that address both human and capital deficits, paving the way for a more resilient, competitive, and inclusive economy. Ultimately, the true measure of Nigeria’s progress will be seen not only in GDP numbers or capital raised but in the everyday lives of its people—their skills, opportunities, and ability to thrive in a rapidly changing world.
Sodik Olofin, an economist at NESG, writes from Lagos, Nigeria
