In this article, ITSIBOR ITSIBOR examines federal government’s ambitious $12 trillion GDP target and reports that many factors could be working against the drive for the possibility of a trillions-dollar Nigerian economy.
The soft speaking minister of finance, budget and national planning, Mrs Zainab Ahmed held the audience into a brief silence and dropped what economic analysts describe as ambition economic forecast with no practicable line of action.
The event was the launch of a national plan for financing safe schools in Nigeria which was held at the Federal Ministry of Finance, Budget & National Planning auditorium, Abuja. The minister took the opportunity to announce that the federal government is targeting to grow the nation’s Gross Domestic Product (GDP) to $12 trillion by 2050, with an average real GDP growth rate of 7 percent and an end period per capita income of $33,000 per annum.
Government is making the projection in a development agenda (Agenda 2050) currently being finalised by her ministry. The national plan focuses on achieving inclusive growth through the implementation of the long-term economic transformation blueprint aimed at mitigating current developmental challenges and attaining the upper middle-income country status.
But how possible is it? Are there concrete plans to put the economy on sustainable growth trajectory? What is on ground to take the ailing Nigerian economy through to that height within the next 28 years? Do the current realities – insecurity, high number of out of school children, epileptic power supply, fallen education standard, crude oil economy, skyrocketing debt stock and policy summersault and other economic indicators support that mission?
In third quarter of 2022, Nigeria’s GDP stood at N45.3 trillion, around N101 billion, a far cry to where the federal government expects it to be in 2050. The economy of Nigeria advanced by 2.25 percent from a year ago in the third quarter of 2022, decelerating from the second quarter’s 3.54 percent expansion and missing market estimates of a 2.95 percent rise.
That marks the eighth consecutive quarter of growth but at the slowest rate since the first quarter of 2021, attributable to the base effects of the recession and the challenging economic conditions that have hampered productive activities. The non-oil sector, which has been the key engine of growth since late 2020, expanded at a softer pace of 4.27 percent in Q3 (vs 4.77 percent in Q2).
Meanwhile, the oil sector shrank by 22.67 percent, after an 11.77 percent slump in the previous quarter, reflecting lower oil output as the average daily crude oil production stood at 1.20 million barrels per day, down from 1.43 mbps in Q2 and 1.57 mbps a year ago. According to data from the National Bureau of Statistics, oil production in Nigeria has fallen to historic lows partly due to the unprecedented theft of its crude production from pipelines and fields in the Niger Delta region.
Oil sector, which is the economy’s main stay is riddled with high volume oil theft in the delta region, official corruption through fuel subsidy regime and more. The authorities have failed to fix the nation’s four state owned refineries for local refining of crude oil, over the years. Since Nigeria’s return to civil rule in 1999, billions of naira have been voted for turn around maintenance of the refineries. But none of the administrations has been able to fix them.
That is why economic experts say the government target is a mere wish without deliberate or empirical approach to achieve a desired goal. Economic analyst Stephen Kanabe said beyond the grandstanding of political office holders, Nigeria needs a people-focused development plan that will deal with the core issues that make it difficult for industries to grow like access to credit facility, improved and stable power supply, security and policy consistency.
The current realities and even a forecast into the immediate future do not suggest that Nigeria would likely experience such a leapfrog. For instance, Nigeria, Africa’s largest economy, is currently ranked 131 out of 190 economies in the world on ease of doing business, according to the latest World Bank annual ratings.
The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operation stronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.
That alone is a betrayal to the mission of growing Nigeria’s GDP. Nigeria’s business environment has been polarized with lots of challenges. From the nationwide insecurity that has gravely affected the supply chain – causing double-digit inflation – to uncertainty, political, environmental factor, including change in government and global shocks like outbreak of COVID-19 pandemic and ongoing Russia-Ukraine war, the Nigerian investment climate is seen as muddy one for businesses.
Mohammed Munir who is also an economic expert say the lack of coordination between fiscal and monetary authorities is one of the issues affecting investments in Nigeria. “Let the both sides synergise. Double taxation, insecurity and poor electricity are major problems that have made ease of doing business a mirage in Nigeria,” he stated.
The finance minister admits that there is strong correlation between economic development and human capital. She affirmed that when she said “investments in a critical component of human capital such as education would result in a huge impact on the economic growth and welfare of Nigerians.” That is not in doubt.
At a figure of 20 million children currently out of school, Nigeria is one of the countries with the highest rate of out of school population in the world. According to United Nations Educational, Scientific and Cultural Organisation (UNESCO) the about 20 million population as at October 2022 is a far-reaching increase from the 10.5 million recorded in 2020.
Apart from that, recent figures from the Central Bank of Nigeria of Nigeria showed that manufacturing PMI in Nigeria decreased to 52.30 points in August from 53.20 points in July of 2022. Many experts say that is another indicator that the investment climate is still hostile.
Nigeria’s trade surplus shrank slightly to NGN 402 billion in September of 2022, from NGN 449 billion in the same month of the previous year. Exports declined by 11.9 percent year-on-year to a nine-month low of NGN 1,795 billion, mainly dragged down by lower shipments of crude oil (-6.9 percent), manufactured products (-79.1 percent), energy products (-86.4 percent) and solid minerals (-37.1 percent).
On the other hand, overseas sales grew primarily for other oil products (24 percent) and agricultural goods (14.4 percent). Meanwhile, imports slumped 12.4 percent to a 17-month low of NGN 1,393 billion, as a slump in purchases of other oil products (-80.5 percent) outweighed increases in imports of agricultural goods (18.4 percent), raw materials (17.9 percent) and solid minerals (11.8 percent).
