Nigeria’s $1trn economy ambition requires expansion beyond banking sector- Report

Business a.m.

The Nigerian government has been charged to broaden its economic growth strategy beyond relying solely on the banking sector in order to reach the ambitious target of a $1 trillion economy. 

Speaking at the unveiling of the Afrinvest 2024 Banking Sector Report, themed ‘Recapitalization: Catalyst for a $1 Trillion Economy?’, Chioke Ike, the group managing director of Afrinvest, stated that diversification and growth beyond the banking sector is crucial for Nigeria to achieve its goal of a $1 trillion economy. 

The Central Bank of Nigeria (CBN), in its announcement of new capital requirements for banks, made it clear that the country’s banks must be fortified and stabilised to adequately propel the realisation of President Bola Tinubu’s projection of a $1 trillion economy. 

While Afrinvest’s group managing director acknowledged the numerous benefits of recapitalisation, including enhanced lending capacity, increased foreign investment attraction, and better risk management, he cautioned that the banking sector alone would not be sufficient to facilitate the overall economic growth required for Nigeria to achieve its ambitious economic vision.

“To achieve a $1tn economy, Nigeria needs to grow beyond the banking sector. Every aspect of the economy must grow alongside it,” he said.

In his assessment of the measures required to attain a $1 trillion economy, Ike highlighted the crucial role of human capital development. He referenced the examples of Mexico, Indonesia, and Turkey, countries with higher GDP per capita and human capital indices, to support his assertion that for Nigeria to reach similar levels of economic growth and development, it must prioritise investment in its people and prioritize human capital development initiatives.

In light of the current challenging macroeconomic environment, highlighted by the ongoing national strike, Chioke Ike stressed that Nigeria possesses the necessary data and information to effectively manage its economy. However, for the country to reap the benefits of this wealth of data, he stressed that its political leaders must develop the discipline to be humble and attentive to the insights that can be gleaned from it.

During the event, John Onoja, the acting director of financial policy and regulations at the CBN, standing in for the CBN Governor, Olayemi Cardoso, assured that the central bank was unwavering in its dedication to realise the president’s vision of a $1 trillion economy. 

Onoja mentioned that the CBN was actively engaging with the banks to review their capital plans and facilitate a smooth recapitalisation process. In pursuit of this goal, he explained that the CBN is collaborating with other relevant institutions, such as the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the Nigerian Exchange (NGX), and the National Assembly, to ensure that the recapitalisation exercise is carried out in a manner that is effective, efficient, and in compliance with applicable regulations.

On his part, Taiwo Oyedele, the chairman of the presidential committee on fiscal policy and tax reforms, echoed the call for fiscal discipline and highlighted the necessity for revenue growth and increased competitiveness. 

According to Oyedele,in order for Nigeria to realise its $1 trillion economic vision, it must adopt a disciplined approach to fiscal policy, aim for sustainable revenue growth, and foster an environment that encourages competition and innovation.

Oyedele underlined the crucial role of a well-functioning banking sector, capital market, and consistent policies in achieving the $1 trillion economic vision for Nigeria. He further highlighted the potential for revenue generation by leveraging government assets, reforming government-owned enterprises like NNPC Limited, and harnessing the country’s solid mineral and natural resources.