There has been a lot of debate about whether the current administration of Senator Bola Ahmed Tinubu can achieve the target of a $1.0 trillion economy by 2030. Many people have claimed it is not a realistic target and should be revised downward. They claim the current administration is only grandstanding, with no clear pathway to achieving it.
While these pessimists cannot be blamed for their skepticism, especially given historical records and the Bureau of Statistics’ recent announcement of 4.43 percent economic growth, they argue that the current celebrated growth rate does not match the hype. They argue that the current GDP of $350 billion is $650 billion short of a target planned for achievement in four years. Their argument stems from the lack of any known growth in the real sector that can grow the economy by over 20 percent, with an average annual growth of $170 billion in absolute terms for the next four years. They argue that the administration has had the last four years to make a positive impact but instead has increased poverty to about 65 percent. These people also argue that growth can only come through the real sector and point out that the released figures show that growth has come only from Services, which, by their estimate, is unsustainable.
However, others believe the government can achieve whatever target it sets with the right political Will. They argue that the government has taken necessary steps and introduced reforms that can serve as the right foundation for such economic growth. They refer to the foreign exchange unification that has seen the exchange rate relatively stable over the last couple of years, fuel subsidy removal that has made available to the national budget an additional five trillion naira, tax reform which has enlarged the tax base, excluded the majority of people at the bottom of the pyramid, and streamlined tax payment, banking recapitalisation which is expected to create sufficient liquidity to support the real sector and provide funding to SMEs, and the NNPC reform which promotes a uniform and singular revenue account. They argue further that FDI conversations are picking up, with international organisations receptive to such discussions, especially when Moody’s has adjudged the economy as stable. They also highlight the shift in growth, moving from traditional oil to services and fintech.
Despite the division in thought, some experts have recommended that while the administration remains optimistic, it needs to take stock before concluding. They advised that inflation, which is driving up the cost of living; insecurity of lives and property, which has threatened agriculture and the movement of goods and services; foreign exchange volatility; and huge debt service costs have posed impending threats to the nation’s growth and should be addressed. They reason that for the economy to rise above its present level, the government should adopt a three-pillar approach.
Pillar 1 is Productivity and scale. Under this pillar, the government must focus on the productive sectors of manufacturing, power, and infrastructure to provide the jobs that lead to prosperity.
Pillar 2 is Investments and Capital. This pillar is crucial and should be applied in the following folds of encouraging local and household investment. People should temper their short-term appetite for returns and embrace projects with a long gestation period. Institutions like pension funds, insurance, and banks should lead the way, as long-tenor projects can create sustainable jobs. The capital markets should be encouraged to promote bond issuance to finance projects like housing, roads, etc. For FDIs, the government should be prepared to de-risk projects that would attract foreign investors. The continued reliance on ISPOs as the only form of credit enhancement by local funders, and some governments’ inaction on investors’ concerns, should stop. In today’s world, ISPOs are becoming outdated because they cannot address accountability and impact. The government should promote Viability Gap Funding, as it assures investors that funds will be committed judiciously, with strong accountability and better impact measurement.
Lastly, Pillar 3 should focus on Human capital and the digital economy. This cannot be overemphasized, as Nigeria, with about 60 percent youth, could become a global labour hub if properly equipped and empowered with the right conventional and digital skills. Identifying the tech and creative economy, and including women and SMEs, are all required to grow the economy.
Economic growth is a collaborative assignment; hence, with a country targeting one trillion and trying to close a $650 billion GDP deficit, policy execution must happen at all levels, from local government through the state to the federal. A firm, proper handshake between the private and public sectors is crucial, as both project sponsors and lenders come from this community. Consistent policy application should rank above politics or personal interest. Nothing is impossible when the strategy is right, and the right skill set executes it.
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