Driving Growth: Nigeria’s $1trn economy achievable with key policies
Nigeria has set an ambitious goal to build a $1 trillion economy by 2030, a vision deemed achievable if decisive policies are implemented within the next three years. Financial analyst and managing director of Capital Plus Ltd., Oluwaseyi Odufuwa, shared these insights during an interview with the News Agency of Nigeria (NAN) in Lagos.
Odufuwa underscored the importance of sustainable finance as the foundation for long-term economic development, adding that strategic reforms in monetary and fiscal policies are crucial to reaching this milestone.
A Realistic Goal
Referencing President Bola Tinubu’s commitment to economic transformation, Odufuwa affirmed that achieving a $1 trillion economy within six years is possible, even as some experts express doubt due to current economic challenges.
“Nigeria’s GDP currently stands at $253 billion, with a 3.2% growth rate in Q2 2024 compared to 2.51% in 2023,” he said. While the 2024 budget targets a 3.76% growth rate, the current progress is encouraging. However, Odufuwa argued that to meet the $1 trillion target, GDP growth must accelerate to at least 6% annually.
Key Policies for Economic Growth
1. Controlling Inflation
Odufuwa identified curbing inflation, particularly food inflation, as a top priority. He explained that food prices significantly influence headline inflation, which has been consistently high.
“Addressing food insecurity could reduce inflation to around 28%-29%, improve food self-sufficiency, and free up foreign exchange through food exports, thereby boosting GDP,” he said.
2. Reducing Revenue-to-Debt Servicing Ratio
The expert also highlighted the importance of lowering the revenue-to-debt servicing ratio, which has dropped from 97% to 63%. While this is progress, Odufuwa noted that the global benchmark, as defined by the World Bank, is 22.5%.
By continuing this trend, the government can free up funds for infrastructure projects, spurring economic growth and enhancing GDP.
3. Increasing Oil Production
Achieving OPEC’s target of producing 2 million barrels of oil per day (up from the current 1.4 million barrels) is another critical step. Odufuwa acknowledged that insecurity in oil-producing regions remains a barrier but stressed that reaching the target could generate over $1 billion monthly, easing pressure on the naira and boosting the economy.
4. Rebasing the GDP
Nigeria’s GDP was last rebased in 2014, resulting in a 90% increase from $270 billion to $510 billion. Odufuwa advocated for another rebasing by the National Bureau of Statistics, which could significantly elevate the current GDP figures.
5. Diversifying the Economy
The analyst criticised Nigeria’s reliance on oil exports and called for diversification, particularly in agriculture. With agriculture contributing 16.8% to GDP ($42 billion), scaling up agro-exports could earn foreign exchange and stimulate growth.
Conclusion
Odufuwa’s analysis presents a roadmap for Nigeria to achieve its ambitious $1 trillion economy by 2030. Through targeted policies to curb inflation, increase oil production, reduce debt servicing, and diversify the economy, the nation can unlock its full economic potential.
With strong leadership and sustained reforms, Nigeria’s economic aspirations are within reach. The time to act is now.
Source: Businessday
