Five Strategies for Nigeria to Achieve GDP Growth Beyond 3% by 2025
Nigeria’s GDP growth reached 3.40 percent, though this is inadequate given the population size and falling GDP per capita. To enhance growth, experts recommend boosting investments, revising trade policies, managing debt effectively, optimizing capital structures, and implementing import substitution policies to strengthen the local economy and employment rates.
Nigeria’s GDP has demonstrated growth, achieving a 3.40 percent increase from the previous year’s 2.74 percent amidst significant macroeconomic challenges. However, this level of growth is concerning given the country’s vast population of 200 million and a declining GDP per capita, now at a historic low. The overall nominal GDP has declined drastically, illustrating the currency’s devaluation from N500 to 1600/$, resulting in an economic output reduced by $168 billion from last year’s numbers.
To surpass the 3 percent growth threshold, Nigeria must attract more investments, both domestic and international. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprises, emphasizes the necessity for a business environment conducive to real economic investments rather than financial instruments, which currently yield higher returns but do not contribute to the economy’s growth.
Revamping trade policies is also vital to enhance productivity. Adetilewa Adebajo, CEO of CFG Advisory, suggests that the government should reform its trade policies and adjust industrial strategies to address productivity declines in manufacturing and agriculture. Such initiatives could help stimulate economic growth effectively.
Moreover, Nigeria is grappling with a mounting debt, estimated at N150 trillion. Disturbingly, current budget projections allocate N16 trillion for debt servicing, dwarfing combined expenditures for key sectors such as defense, education, health, and infrastructure. There is a pressing need for fiscal discipline to mitigate the effects of borrowing on the economy.
To combat diminishing revenues, the government must optimize its capital structure through asset sales, aiming to improve its fiscal health and achieve a better credit standing. By implementing policies that drive productivity, the government could reduce the output gap and bolster economic growth.
Lastly, deliberate industrial policies promoting import substitution in critical sectors are essential for harnessing Nigeria’s economic resilience. By fostering local production, as witnessed in cement and fertilizer industries, Nigerian agriculture can benefit significantly, enhancing local supply chains and creating employment across various sectors. This strategic move could also help strengthen the economy’s capacity to meet regional demands.
In conclusion, Nigeria’s GDP growth, while positive, remains insufficient considering its demographic challenges and economic conditions. Strategic measures such as increased investments, trade policy reforms, prudent fiscal management, capital optimization, and industrial policies focusing on import substitution are crucial for the nation to exceed the 3 percent threshold. The implementation of these strategies can help sustain economic growth and improve living standards in Nigeria.
Original Source: businessday.ng
