CLAIM: Doyin Salami claims that China’s income per head is 5 times more than what Nigerians earn; as opposed to 30 years ago when Nigerians earned double of what the Chinese earned.
TRUE: Data from the International Monetary Fund corroborates the claim. However, per capita income comparison is not the most accurate estimate. This is consequent on inflation, exchange rates, population demography, amongst other factors.
Nearly three decades ago, every Nigerian had as much as double the amount every Chinese had. Currently, the table has turned as the Chinese people now have five times what Nigerians have.
Mr Salami was one of the three-man panelists; others are Ibukun Awosika- Chairman, First Bank Limited; and Aliko Dangote- President/CEO, Dangote Group (represented by Nasir Ahmed- President Manufacturer Association of Nigeria, MAN).
Dubawa contacted the platform to ask for the transcript of Mr Salami’s speech.
In his opening remarks at the session, Mr Salami illustrated how the economy of Nigeria has meandered in terms of growth over the years.
“In 1990, Nigeria’s income per head was double that of the Chinese. Today, the Chinese are 5 times income per head of Nigeria’s.”Doyin Salami
To be clear, what is meant by income per head is the measurement of the amount of money earned per person in a country. It is used to evaluate the standard of living and quality of life of a population; and is closely monitored as an important factor influencing fiscal and monetary policy actions. It is calculated by dividing a country’s national income by its population.
The International Monetary Fund keeps record of the year-on-year per capita incomes of countries of the world.
In 1990, at a time when Nigeria’s population was 95.6 million (exactly 95,617,345), the agency puts Nigeria’s per capita income at $686.475 while that of China was $348.651, with their population a little above 1.15 billion (exactly 1,154,605,773).
Comparing the two per capita figures gives an approximate 2:1, alluding to the first part of Mr Salami’s claim.
As of 2019, the per capita income in Nigeria was $2,233.445 while the figure in China increased nearly five times over to $10,153.386. This year, Nigeria has a population of 201 million (201,748,560) while China’s population stands at 1.3 billion (1,398,582,297).
Comparing these figures shows China’s per capita income was 4.5 times more than Nigeria’s, which is significant to Mr Salami’s claim of “5 times”.
Limitations of comparison
Drawing comparisons between nations’ per capita income has its own limitations. First, it does not always reflect the accurate standard of living of the people.
For instance, if a town has a population of 50 people earning $500,000 per year, and 1,000 people earning $25,000 per year. The per capita income of that town would be ($500,000 × 50) + (1,000 × $25,000) = $50,000,000 in total income. When this figure is divided by 1050, the total population, the per capita income is $47,619 for the town.
Also, per capita income does not consider inflation rate — the fluctuation in prices over the years — in it’s calculation. This affects knowing the true extent of consumer purchasing power as a high inflation rate reduces the impact of an increase income, and vice versa.
For instance, in 1990 Nigeria’s per capita income was $686.475, a number that is lower than the 2019 figure of $2,233.445. But the tricky part is that goods and services were cheaper in 1990 and the value of Naira, Nigeria’s currency, was a lot stronger then.
In addition, since exchange rates vary from time to time and place to place, comparing the per ca-pita income of countries can give imbalanced assumptions.
Also, in the estimation of per ca-pita income, the entire population is considered, including children, the old, the sick and every other age groups that are not in active economic activities. Therefore, a country with a high number in this category could have its figure skewed.
Nevertheless, what is clear from both comparisons is that while China has experienced steady economic growth, the economic productivity value of each Nigerian has fluctuated over the years.
While data from the IMF corroborates this position, its instructive to note a few key points. Per capita income comparison is not the most accurate estimate. This is consequent on inflation, exchange rates, population demography, amongst other factors.