Why Nigeria’s demographic advantage keeps failing the economy

As Nigeria edges into 2026 amid unresolved tax reform debates and persistent security failures, a familiar paradox continues to haunt the national conversation: a young, energetic population everywhere in the economy, yet nowhere near its productive potential. With over 60 percent of Nigerians under 25, youth participation is visible across markets, farms, workshops, digital platforms, and informal enterprises. What remains elusive is productivity, measurable output, value creation, and sustainable income growth.

This gap is often misdiagnosed. The problem is not that Nigerian youth are idle, unskilled, or unmotivated. It is that the structures meant to convert effort into economic value are weak, misaligned, or absent, particularly at the local level where most young Nigerians live and work. At the centre of this failure sits Nigeria’s most neglected institution: the local government.

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Even the 2025 GDP rebasing, which more accurately captured informal and digital activities dominated by young people, did not resolve the contradiction. Youth labour is widespread, but output per worker remains low. This signals a deeper structural issue. Productivity is not generated by participation alone; it is produced by systems: skills pipelines, infrastructure, market access, logistics, finance, and governance. These systems are inherently local.

Meanwhile, Nigeria’s development architecture remains stubbornly centralised. Economic planning, funding priorities, and policy design are concentrated at federal and state levels, while local governments, constitutionally closest to economic life, operate with limited discretion, weak capacity, and persistent political interference. Councils that should be engines of place-based productivity have instead become administrative outposts.

“Most importantly, Nigeria must abandon the illusion that youth empowerment can be delivered solely through national programmes or headline initiatives. Productivity is built where people live. When local institutions fail, national ambitions collapse into statistics without substance.”

This is why the debate over local government autonomy matters far beyond constitutional theory. The 2024 Supreme Court judgement affirming the financial autonomy of Nigeria’s 774 local governments was rightly celebrated as a turning point. By prohibiting state governments from withholding statutory allocations, the ruling sought to restore councils as functional economic actors capable of responding to local realities, especially youth livelihoods.

However, the experience since then has exposed a hard truth: autonomy without institutional reform delivers little. By 2025, fiscal transparency assessments showed that the overwhelming majority of local governments performed poorly on accountability and service delivery. Many councils remained dependent on state governments for personnel control, project execution, and political survival. Legal autonomy existed on paper; development capacity did not exist in practice.

This failure is not accidental. Weak local governments suit entrenched political interests. State-level control over council funds and leadership sustains patronage networks, electoral leverage, and fiscal opacity. In such a system, productivity is not the goal; control is. The cost is borne by young people trapped in low-value informal work, subsistence agriculture, or chronic underemployment, not because they lack effort, but because their environments lack enabling institutions.

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International experience makes this clear. In China, decentralised fiscal authority allowed counties and municipalities to invest aggressively in industrial parks, vocational training, and local manufacturing ecosystems. Vietnam and Indonesia similarly leveraged subnational governance to strengthen small enterprises and agricultural value chains. In each case, national strategy mattered but productivity was built locally.

Nigeria offers its own partial evidence. High-revenue local governments in Lagos State, such as Alimosho, Ajeromi-Ifelodun, and Kosofe, tend to exhibit stronger service delivery and more youth-focused initiatives than their counterparts elsewhere. Outcomes remain uneven, but the pattern is instructive: where local fiscal capacity and administrative competence exist, productivity follows.

The lesson is not that autonomy alone is sufficient, but that it is indispensable when paired with reform. Functional local governments require transparent budgeting, professionalised administration, and clear development mandates. They need the authority to invest in feeder roads, vocational centres, storage facilities, digital connectivity, local markets, and enterprise support systems, the mundane but decisive infrastructure of productivity.

Equally important is accountability. Fiscal independence must be matched with public scrutiny. Federal and state frameworks should track local governments not just by spending, but by outcomes: jobs created, enterprises supported, value chains strengthened, and productivity improved. Councils that fail must be exposed; those that perform should be rewarded and replicated.

Most importantly, Nigeria must abandon the illusion that youth empowerment can be delivered solely through national programmes or headline initiatives. Productivity is built where people live. When local institutions fail, national ambitions collapse into statistics without substance.

Nigeria’s demographic advantage is real, but it is not automatic. Youth participation without productivity is not a dividend; it is a warning. If the country is serious about converting presence into performance, reform must move beyond slogans and court judgements to the hard work of rebuilding local governance.

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The choice is stark. Nigeria can continue to centralise power while decentralising failure, or it can finally invest in the institutions closest to its people. The future of its youth, and the credibility of its development agenda, depends on which path it takes.

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