Nigeria’s GDP grew to 3.40% last year, but this remains suboptimal for its population. Significant currency devaluation has further impacted the economy, leading to a loss of $168 billion. Experts emphasize the need for more investments, policy reforms, fiscal discipline, capital optimization, and industrial strategies to achieve sustainable economic growth and improve living standards.
Nigeria’s GDP exhibited growth despite macroeconomic challenges, achieving an overall output of 3.40 percent last year compared to 2.74 percent in 2023. This growth rate remains insufficient for a populace of 200 million, as the GDP per capita has declined to a historical low. Additionally, the nominal economy has contracted by $168 billion due to significant currency devaluation, demonstrating the urgent need for strategic economic reforms.
To enhance GDP growth, Nigeria must attract both domestic and foreign investments, especially focusing on foreign direct investments. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprises, advocates creating an investment-friendly environment in the real economy over financial sectors, as the latter currently offers higher returns, deterring essential investment in production and services.
Adetilewa Adebajo emphasizes the necessity for the Nigerian government to overhaul its trade policies and realign industrial strategies to stimulate productivity in manufacturing and agriculture. Such reforms would not only address declining productivity but also improve investment policy incentives, vital for sustainable economic growth.
The government’s fiscal management requires immediate attention as Nigeria grapples with an increasing debt burden estimated at N150 trillion, exacerbated by a two-year cumulative deficit of N40 trillion. The projected N16 trillion for debt service in the 2025 budget surpasses allocations for essential sectors, indicating severe fiscal mismanagement that must be addressed.
There is also a pressing need for the government to revamp its capital structure to alleviate the debt crisis, suggesting asset sales to bolster revenue. Enacting policies that enhance productivity, create employment opportunities, and bridge the output gap is fundamental to improving Nigeria’s economic standing.
Moreover, the Nigerian government should establish industrial policies focused on achieving import substitution in critical sectors, reinforcing local production capabilities. By replicating successes in cement and fertilizer production, Nigeria can mitigate dependency on imports, as advised by Adebajo, diversifying its economy and bolstering job creation through agricultural advancements.
For Nigeria to enhance its GDP beyond the 3% threshold by 2025, strategic actions are required. Enhancing investment attraction, overhauling trade policies, cutting excessive fiscal spending, optimizing capital structures, and implementing industrial policies for import substitution are essential steps. Such measures aim to stimulate economic productivity and ensure sustainable growth, addressing the pressing challenges of a large population and declining GDP per capita.
Original Source: businessday.ng
