The Disconnect Between GDP Growth and People’s Lives
Muhammadu Sanusi II, the Emir of Kano and former Governor of the Central Bank of Nigeria (CBN), recently highlighted a critical issue during his keynote address at the 7th African International Conference on Islamic Finance (AICIF) in Lagos. He pointed out a growing disconnect between the nation’s Gross Domestic Product (GDP) and the actual standard of living of its citizens.
Sanusi emphasized that while GDP growth is often celebrated as a sign of economic progress, it may not reflect the reality for many Nigerians. He explained that growth in one sector of the economy could lead to a situation where the majority of the population becomes poorer, even as the overall GDP increases. This phenomenon, he argued, underscores the need to look beyond macroeconomic indicators and consider the micro-level impacts on everyday life.
A Helicopter View vs. Small Numbers
During his speech, Sanusi criticized the tendency of economists to take a “helicopter view” of economic data, focusing on large numbers such as GDP and inflation. While these metrics are important, he warned that they can obscure the more crucial details that affect people’s lives.
He noted that even if inflation rates decrease, essential items like basic drugs and food may become unaffordable for the poor. This discrepancy highlights the limitations of relying solely on broad economic indicators without understanding their real-world implications.
The Need for Inclusivity in Economic Growth
Sanusi called on Islamic financial institutions to rethink their approach to inclusivity. He urged them to focus on the bottom of the economic pyramid, rather than just serving urban centers. He argued that simply providing loans in major cities does little to improve the livelihoods of those in rural areas or small towns.
“The mechanic, the small restaurant owner, the seamstress with a fashion design shop—these Small and Medium Enterprises that employ 70% of our population,” Sanusi said. “Until we begin to grow those, we are not going to have the growth that is inclusive.”
He also challenged Islamic financial institutions to be more ambitious in their investments, aiming to build networks that reach the most vulnerable populations. According to him, this is the only way to ensure that financial instruments and funds truly benefit those who need them most.
Addressing Global Poverty Trends
Quoting statistics, Sanusi warned that by 2050, 85% of global poverty will be concentrated in Africa, with half of that occurring in Nigeria and the Democratic Republic of Congo (DRC). In Nigeria, he added, 70% of that poverty will be found in the North.
This projection underscores the urgent need for financial systems that support small-scale entrepreneurs and marginalized communities. Sanusi called for the use of finance to create economies that empower these groups and provide sustainable opportunities.
Cultural Practices and Women’s Empowerment
Beyond financial inclusion, the Emir emphasized the role of Islamic finance in addressing cultural practices that are not aligned with true Islamic values. He pointed out that certain traditions have been used to marginalize women and deny them economic opportunities.
Sanusi urged the Islamic financial system to take action by going to the grassroots, taking risks, and scaling up initiatives that promote gender equality. He stressed that empowering women is essential for achieving broader prosperity across the continent.
Conclusion: A Call to Action
In conclusion, Sanusi’s speech served as a powerful reminder that economic growth must be inclusive and equitable. He called for a shift in perspective, urging policymakers, financial institutions, and leaders to focus on the real needs of the people, particularly those at the bottom of the economic ladder.
By redefining success beyond GDP and embracing a more holistic approach to development, Sanusi believes that Africa can achieve a more prosperous and inclusive future.