Jide Akintunde, Managing Editor/CEO, Financial Nigeria International Limited

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Subjects of Interest

  • Financial Market
  • Fiscal Policy

Nigeria’s $1 trillion economy 17 May 2024

Nigeria is well accustomed to spectacular policy failures. With the Operation Feed the Nation programme in the 1970s, the country aimed for national food security. President Shehu Shagari in the early 1980s targeted agro-based development with his Green Revolution programme. But as the next millennium drew close and Nigeria was behind in practically all the indicators of human development, policy shifted to the provision of social amenities like health, housing, water, education, etc., “for all” by year 2000.

These represent the best development visions for the country till date, as they focused on human development and social welfare of the citizens. But subsequent policymakers seemed to have learnt a negative lesson from the failure to attain the development goals of the pre-2000 era. Therefore, instead of trying to succeed where past efforts had failed, they started targeting rather esoteric goals that accord less priority to human development. Thus, Nigeria aspired to be a “top 20” world’s economy by 2020, prioritised investment in physical infrastructure, and now aims to be a $1 trillion economy within the next eight years.

There has been an unnoticed irony in Nigeria’s economic visioning. Up till 2000, when the country’s population was 122.9 million, government focused development vision on social welfare of the people. However, since then, and now that the population has nearly doubled to 218.5 million, our development policy has shifted from targeting the welfare of the teeming population. Therefore, it should not surprise anyone that by the third decade of this century social underdevelopment in the country has worsened, with national poverty and unemployment rates above 40%. By not trying to improve social welfare, we are evidently deepening underdevelopment.

The current vision of a $1 trillion Nigerian economy offers three important clues about the failures of the country’s economic visions. First, the visions are often anchored on plucking “low-hanging” fruits. With the country’s vast arable land, agriculture presents an opportunity, which policymakers believe would be easily tapped. So believing, they also rely on the vast population of the country. But after 50 years of pursuing this idea and the country is increasingly food insecure, the strategic policy error should have become apparent. Nigeria’s economic potential is not in its large population, neither is it in its expansive land and anything buried underneath it. The vast potential of Nigeria is in the productive capacities of Nigerians and the policies that try to optimise such capacities. This is true for every country, whether advanced or developing.

Second, the $1 trillion Nigerian economy target and Vision 20 2020 are unstrategically outward looking. The former is projecting the strength of the economy in a foreign currency. The GDP of countries are measured using their individual national currencies. The currencies are only converted into US dollars when the goal is to compare the value of output with other countries.

As for the latter, its announced intent was to displace economies that might otherwise have supported Nigeria’s growth. As Nigerian political leaders struggle with enabling fair domestic competition – geopolitically, economically, and even socially – it is surprising that they seem oblivious of how global geopolitics undermines the rise of developing countries. One of the miscalculations US policymakers think they made was supporting China’s ascension to the World Trade Organisation, believing that would bring a prospering China under the embrace of American values. But it is the opposite that has happened, with a prospering China now a counter-influence to the US in global affairs.

Third, achieving an economic vision requires well-horned strategies. According to World Bank and OECD data, Nigeria’s GDP rose to $472.6 billion in 2022. However, the World Bank now projects the Nigerian economic output to fall to $253 billion in 2024, based on the value of the naira which has sharply depreciated since June 2023 because of the implementation of policies advised by the multilateral development bank. Should this projection become reality, Nigeria would slip from Africa’s largest economy to the fourth-largest economy on the continent. This projection is very damaging as a smaller Nigerian GDP would lose the attraction of foreign investors that policymakers have targeted with the so-called market policies that have delivered human suffering to Nigerians in the last one year.

The World Bank’s projection is subject to revision because it is based on a volatile economic variable. Until then, it has dramatically changed Nigeria’s growth calculus. From a GDP of $485.6 billion in 2023, annual output growth of 8.36% would be needed to grow the economy to $1 trillion in the next 8 years. But based on the World Bank’s projection of Nigeria’s GDP of $253 billion in 2024, the economy must grow at 21.7% annually to reach $1 trillion in 2031. Neither of these two growth scenarios has officially informed the $1 trillion Nigerian economic vision, indicating its lack of rigour or clarity.

But Nigeria can achieve inclusive prosperity if it is driven by a clear vision of economic sustainability rather than sheer GDP size that may habour high inequality. This requires building the productive capacities of Nigerians, which entails improving their welfare, rather than building roads and bridges with foreign expertise and foreign loans as we have been doing for many years now.

Jide Akintunde is Managing Editor of Financial Nigeria publications and Director, Nigeria Development and Finance Forum (NDFF).