Nigeria’s GDP grew by 3.40 percent in the past year, but this remains insufficient for a population of over 200 million, especially as GDP per capita is at a low. To enhance economic resilience and growth beyond 3 percent, Nigeria should focus on attracting investments, revamping trade policies, reducing fiscal spending, optimizing capital structures, and implementing import substitution industrial policies.
Nigeria’s GDP growth registered at 3.40 percent for the prior year, up from 2.74 percent in 2023, despite facing significant macroeconomic challenges. However, for a nation of over 200 million residents, this growth rate is deemed inadequate, especially as the GDP per capita has plummeted to historically low levels. The economy has endured a substantial nominal loss, with a decline of $168 billion due to currency devaluation, adversely affecting overall economic strength.
To overcome the 3 percent growth barrier, Nigeria must attract increased domestic and foreign investments. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprises, emphasizes the necessity of creating a more favorable investment climate in the real economy rather than financial markets, as the former currently yields lower returns.
Revamping trade policies is crucial for enhancing productivity, according to Adetilewa Adebajo, CEO of CFG Advisory. The government should realign its trade and industrial policies to improve productivity within the manufacturing and agricultural sectors, thereby fostering economic growth.
Additionally, Nigeria faces rising debt concerns, now exceeding N150 trillion, which is compounded by a considerable budget deficit. The need to cut excessive fiscal expenditures is imperative, as budget allocations for debt servicing overshadow investments in other critical sectors such as defense and education.
To mitigate its debt burden, the Nigerian government must optimize its capital structures. This approach includes asset divestment to enhance financial stability and ultimately achieve investment-grade credit ratings, which would foster an encouraging environment for growth.
Implementing targeted industrial policies aimed at achieving import substitution will also be vital for strengthening GDP. Adebajo advocates for a focus on local production in sectors such as sugar, where Nigeria can reduce dependence on imports while simultaneously boosting domestic agricultural productivity and employment.
To elevate Nigeria’s GDP growth beyond the 3 percent threshold, concerted efforts must be made in several key areas. Attracting investments, reforming trade policies, managing fiscal expenditure, optimizing government assets, and fostering import substitution are crucial steps. By addressing these foundational issues, Nigeria can capitalize on its potential for sustainable economic growth and improve the living standards of its citizens.
Original Source: businessday.ng
