PRESIDENT Bola Tinubu may not achieve his target of increasing Nigeria’s Gross Domestic Product (GDP) rate to six per cent annually, experts have said.
The experts told The ICIR that his government needed to implement certain reforms to improve some sectors of the economy before the goal could be feasible.
These reforms, the experts said, have to be piloted by the President with fiscal discipline within his cabinet.
Tinubu said in his inaugural speech in May that he would raise the GDP through job creation and food security to mitigate poverty.
He said, “My administration must create meaningful opportunities for our youth. We shall honour our campaign commitment of one million new jobs in the digital economy. We shall remodel our economy to bring growth and develop the GDP much better than we have seen through job creation, food security, and an end to extreme poverty.”
The President announced the immediate removal of fuel subsidy as a first step to meet the objective.
There have been mixed developments months after making the announcement. On the part of the government, the subsidy removal has saved up more spending, thereby increasing the allocation that goes to each state monthly through the Federal Account Allocation Committee (FAAC).
However, the downside to the announcement is the impact on household consumption, increasing the inflation rate to 27.33 per cent, the highest recorded in 18 years. Though the President has announced several palliative schemes to cushion the effects, they have not made a significant impact.
A recent report by the National Bureau of Statistics (NBS) disclosed that Nigeria’s GDP rate was 2.25 per cent as of the third quarter (Q3) of 2023.
The report showed that GDP grew slightly by 0.03 per cent in Q3, higher than the 2.51 per cent reported in the second quarter of 2023 growth.
The performance was driven mainly by the services sector, which recorded a growth of 3.99 per cent and contributed 52.70 per cent to the aggregate GDP growth.
While the agriculture sector grew by 1.30 per cent, from the growth of 1.34 per cent recorded in Q3 2022, the industry sector improved to 0.46 per cent from a negative territory of -8.00 per cent recorded in Q3 2022.
A senior research & policy analyst for BudgIT, Vahyala Kwaga, told The ICIR that to achieve the six per cent target, Tinubu would have to improve infrastructure, optimise regulation, and draw in FDI/FPI to about 4.5% to five per cent.
He said, “The tax-to-GDP question is similar to the ease of doing business question. Can the entire tax process be streamlined so that Nigerians can pay their taxes seamlessly? Also, will the government go after the top percentile of rich and wealthy Nigerians who pay an insignificant amount of tax compared to their earnings and assets?
“It would require intense harmonization of tax policy between not just government agencies but even between the federal and state governments.”
Also, The head of financial institutions ratings at Agusto and Co, Ayokunle Olubunmi, noted that the administration had to maintain consistency in making policies that could pull major economic activities into the country.
Olubunmi said Nigeria’s challenges were largely caused by crude oil theft and dilapidated infrastructure.
The ICIR reported how Nigeria might fail to meet the oil benchmark target for 2023, hence affecting funding of the 2024 fiscal budget.
“For us to really have such economic growth, there need to be policies that would unlock these benefits. It is not that there’s just one particular sector the government needs to focus on, but it needs to increase and make the private sector come into the country. If you are looking at foreign investors, what’s the exchange rate, inflation rate, and friendly environment to drive investment,” Olubunmi said.
Kehinde Ogunyale tells stories by using data to hold power into account. You can send him a mail at [email protected] (jameskennyogunyale@gmail) or Twitter: Prof_KennyJames