Nigeria’s GDP grew to 3.40% in 2023, but this remains insufficient given its large population and declining GDP per capita. Key recommendations for growth include attracting investments, reforming trade policies, managing fiscal expenditures, optimizing capital structures, and implementing import substitution industrial policies to enhance productivity and economic stability.
Nigeria’s Gross Domestic Product (GDP) has shown an increment, registering a 3.40 percent growth last year compared to 2.74 percent in 2023. Despite this growth, it remains inadequate given the country’s large population of approximately 200 million. The GDP per capita has substantially fallen, compounded by the depreciation of the Nigerian currency, which has dropped from about N500 to N1600 per dollar. Adetilewa Adebajo, CEO of CFG Advisory, emphasizes the urgent need to address the economic challenges termed the ‘Output Gap.’
To surpass the 3 percent growth threshold, Nigeria must attract greater domestic and foreign investments. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprises, stresses that creating a favorable investment climate in the real economy is crucial, as current financial returns incentivize investments in financial instruments over the productive sector.
The federal government should overhaul its trade policies to enhance productivity in manufacturing and agriculture. Adebajo suggests reforms in the Harmonized System Codes and the investment policy incentives to stimulate growth in these vital sectors of the economy.
Nigeria’s escalating debt, now exceeding N150 trillion, necessitates a reduction in excessive fiscal spending. With a budget allocation for debt service surpassing combined expenditures for defense, education, health, and infrastructure, addressing this deficit is imperative for economic stability.
To navigate its financial challenges, the Nigerian government should optimize its capital structure by selling assets aimed at reducing its debt. Adebajo advocates for policies that will bolster productivity, generate employment, and close the existing output gap to foster economic growth.
Furthermore, implementing targeted industrial policies for import substitution is essential. Following the success in cement and fertilizer production, the government could develop local industries to reduce imports in critical sectors. This includes establishing a roadmap for domestic sugar production to fortify agricultural productivity and employment opportunities.
The path to achieving a robust and sustained GDP growth hinges on these strategic investments, policy reforms, and industrial initiatives to maximize Nigeria’s economic potential.
In conclusion, Nigeria’s GDP growth, while currently showing positive trends, needs substantial improvements to effectively support its large population. Increasing domestic and foreign investments, reforming trade policies, managing fiscal expenditures, optimizing government capital structures, and implementing strategic industrial policies are essential measures to foster economic development. Addressing these areas will help close the productivity gap and pave the way for sustainable growth beyond the 3 percent threshold.
Original Source: businessday.ng
