Nigeria’s GDP growth reached 3.40 percent, yet it remains insufficient for a population of over 200 million. Key recommendations for growth include increasing investments, overhauling trade policies, managing fiscal spending, optimizing capital structures, and pursuing targeted industrial strategies. Adopting these measures is critical to enhancing productivity and economic well-being.
Nigeria’s GDP registered a growth of 3.40 percent last year, reflecting a recovery from the 2.74 percent growth recorded in 2023, despite ongoing macroeconomic challenges. However, this growth is deemed inadequate given Nigeria’s large population of over 200 million, leading to a declining GDP per capita. The economy also faced a nominal loss of $168 billion due to significant currency devaluation, which dropped from approximately N500 to N1600 per dollar.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprises, highlights the necessity for increased domestic and foreign investments to surpass the 3 percent growth threshold. He emphasizes that the investment climate must become more favorable for real sector investments rather than merely for financial instruments, as current conditions favor the latter, hindering economic growth.
Adetilewa Adebajo, CEO of CFG Advisory, calls for the federal government to overhaul its trade policies and revise HS Codes, aiming to address decreasing productivity within manufacturing and agriculture. Adebajo insists that enhancing investment policy incentives is critical to achieving meaningful growth in these sectors.
With Nigeria’s debt now at approximately N150 trillion and a significant fiscal deficit, measures to curtail excessive government spending are urgently required. The state budget for 2025 indicates that debt service obligations will exceed combined allocations for defense, education, health, and infrastructure, raising concerns over fiscal sustainability.
Adebajo suggests that the government ought to optimize equity by divesting from specific assets to alleviate its debt burden and attain a better credit rating. Policies aimed at boosting productivity, job creation, and closing the existing output gap are paramount for economic advancement.
Furthermore, targeted industrial policies for import substitution are crucial for sustaining GDP growth amidst global disturbances. The government should replicate successful models previously established in the cement, fertilizer, and petroleum sectors by addressing local production for sugar through its existing refineries, enhancing agricultural productivity and employment opportunities.
To elevate Nigeria’s GDP growth beyond the current 3 percent, a multi-faceted approach is essential. This includes boosting investment, reforming trade policies, managing government spending, optimizing capital structure, and prioritizing industrial policies for import substitution. Strategic implementation of these initiatives could significantly enhance productivity and economic stability, thereby benefiting the population.
Original Source: businessday.ng
