By Victor Ogiemwonyi
Nigeria’s quest for a $1 trillion economy, is just getting a start.
The rebased GDP should be a good foundation to build on. Whether we will be able to triple this GDP size, by 2030, growing at 3.13%, as in 2024, is a different kettle of fish. There is no harm in trying.
I guess the message
from the Administration, is that
they are serious about this.
My take is, if we end up with a $750b economy, we will be glad with it. We definitely, need a higher rate of growth to achieve it.
A $1trillion economy, will greatly reduce poverty and improve citizens standard of living.
So, it is a worthwhile goal.
While this is do-able, many other things will have to be aligned and on the same forward match.
One of the key addition to the GDP figure was the addition of the informal economy. This has become a large part of the economy no body was counting into our GDP. The impact of this sector of the economy has a lot of implications. Imagine the large population employed in the informal sector no one counts as part of the employment statistics. This has distorted that unemployment measurement for a long time. The National bureau of statistics ( NBS) recent review of our often published unemployment figure of 30%, was criticised as political when the revised figure was now 4.5%. What many of these critics did not process, was the fact that 30% of 200m population is 60m… if you consider only the adult population ready and available for work, the figure will even more crazy. it will be hard to accept that 60m Nigerians actually are doing nothing everyday. A 4.5% which is about 10m unemployed is more reflective of our unemployed adult population ready and available for work. Many of the larger figure of 60m claimed to be unemployed are in the informal economy and may be under employed but not unemployed. This new numbers represent a more likely situation of our unemployment figures. They all indicate the proper restart for the economy.
To achieve our goal, Government must continue on the reform strategy, every area where reform is needed, must be attended to. The Government must make clear and consistent policies that everyone can bet on.
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In a 2023 article, I said then, if the current reforms embark on, are to be successful, there must be consistency. I pointed to the CBN’s Naira market alignment programme, that must be supported with clear and consistent policies. I cautioned that arbitrary changes to policies, will make price discovery, more problematic. When the Naira crossed the N1000 to dollar rate mark, there was a lot of anxiety and I wrote at the time, that my price expectation was for the Naira to be exchanging around N1500 to a US Dollar. The logic for this, was simply to look at the South Korean currency, the “WON “ …With a productive economy as is South Korea, exporting to the rest of the world, plus a lower population, they had more to offer, yet its currency exchanges for about 1350 to the US Dollar. The Nigerian economy will have to be more productive, to get a stronger Naira.
So far, the CBN has held its nerves and rode out of the storm. The FX situation has improved and the Naira has stabilised.
The history of the CBN in this period, will be for the books.
Infrastructure Is Key To Getting To The $1 trillion Economy.
If we are to achieve this goal in
5 years as targeted by this Administration, every effort must be made to speed up our infrastructure development.
It is needed everywhere, whether is electricity, rail , roads, ports and Airports. The most obvious constraints people point to, is the Budget. Where are we going to get the financing from ? Fortunately, there are plenty of sources to finance infrastructure, if the required attention and sincerity of purpose is behind it.
There are Infrastructure Funds and infrastructure corporations, all over the world looking for the right opportunity as in Nigeria. Many of our large infrastructure projects will find financing, if we put the right policies and incentives in place.
Nigeria is attractive for the large population and potentials for building businesses around our infrastructure needs. We can use concession , longterm loans, sovereign Guarantees to do them, because we don’t have large enough Government, budgets to accommodate these kinds of developments.
Dragging them out in multiple budget appropriations, is what contributes to the failed projects and the corrupted process we run for these projects.
Electricity must be prioritised. We must aim to have 80% of the population guaranteed stable electricity in 5 years. This alone, will turbo charge the economy. If we add connections on rail and road transportation, for a large part of the population, for instance, …a trader can get on a train from Maiduguri to Lagos, shop for goods in Lagos, and be on his way back to base in Maiduguri , on the same day, is the type of vision, that will drive, our goal, to be a $1trillion economy by 2030.
The other two key ingredients to ensure success in reaching the goal will be to take the issue of our security seriously. Let’s start by decentralising it. Let’s have police at the Local Government, State and National levels… this will leave the Nigeria police to be a federal police with clear duties and authority to be more efficient as a police force. This one step alone, will immediately enhance security. Without this step, the current waste of security budgets without results will continue. Let each of the policing units, be held accountable for its jurisdiction and be properly funded. Proper security will lead to political stability, which is another main ingredient required to strengthen our economy and our way to a $1 Trillion economy.
Corruption As The Big Elephant In The Room.
Every development objective we want to achieve, will be undermined by the outrageous corruption in our system. We have to start, looking at it differently. This will include fixing our Courts and ensuring the rule of law prevails.
May be our current approach is faulty. We may have to take a look at preventive measures that will bring immediate solutions and change enforcement to plea bargain that yields results and serve as deterrent.
Let the EFCC have a forward and backward take on the issue of tackling corruption. First, ensure technology is used to the maximum , by imbedding their Operatives into offices and Departments where corruption occurs frequently.
EFCC can recruit and plant into the federal civil service, regular workers, who collect electronic evidence for the EFCC, that can be used to purge the system from time to time. The backward looking, will be to do thorough investigations, before inviting people and confronting them with incontrovertible evidence.
Allow them to bargain, to return their loot and settle and register agreements with the courts to regularise and also protect people from double jeopardy persecutions, they sometimes get into now.
Doing it right, is more important than doing it without results. The negotiated bargain settlement, will be more efficient and fruitful. The key to getting results will be how much work was done in doing a proper investigation and not the current Newspaper trials that end up, just a public show.
Corruption has eaten too deep, digging ourselves out, is what we need to do now. Anything quick, that will provide solution, is what we should focus on.
Ogiemwonyi is a retired Investment Banker and writes from Ikoyi, Lagos.
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