Nigeria’s ambitious N55 trillion budget and its path towards achieving a $1 trillion economy were laid before national economic managers, civil society groups, corporate leaders and international stakeholders yesterday, leaving many pondering the slim chances before the country, even as the grip on public revenue slips off.
As for the World Bank, which hosted the event to unveil its bi-annual Nigeria Development Update (NDU), the country has achieved a modest improvement – stabilising the foreign exchange reserves, raising business confidence and growing the public revenue-output ratio from 8.8 per cent share to 13.3 per cent last year, among other uptrends.
Still, it baulked at the prospect of achieving the $1 trillion economy target, noting that the feat could only be achieved if the country could quintuple its current growth rate.
The World Bank’s condition is a tall order for a country that is grappling with poor infrastructure required to accelerate business performance to grow tax revenue among other headwinds, such as poor public revenue.
But for post-COVID rebound, growth last year was at its fastest growth since 2014, when the current leading political party assumed leadership at the federal level. The economy closed the year at 3.4 per cent.
Earlier projections remained optimistic and suggested the speed could be sustained, but the bearish oil market and tariff crisis had added to the odds of sustaining the growth, with the International Monetary Fund (IMF) recently downgrading its projection to three per cent.
In nominal terms, the economy expanded by 17.1 per cent last year, growing from N229.9 trillion to N269.3 trillion (or $168.3 billion at the current exchange rate). If the country defies all odds and sustains last year’s growth, it will require 11 years to grow to achieve $995 billion (approximately $1 trillion).
This implies that the country would wait till 2036 as against the 2030 set government. But apart from pushing up the nominal growth rate, the government will also need to work at keeping the naira at its current exchange value (N1600/$).
If there is a significant depreciation of the currency, the country would need to wait longer to achieve the target or speed up growth far above 17 per cent nominal rate.
In the past three years, the naira has lost over 70 per cent of its value. This has pulled the country’s economy out of the African leadership position. The report also noted that the cash transfer programme has commenced but is slow. As of May 1, 5.6 million households were said to have received the N25,000 cash transfer once, while 2.4 million were paid twice, as against 1.24 million households that received the payment thrice. This suggests that 9.34 million households have received the conditional cash transfer.
To speed up development, it noted, economic reforms are necessary but not sufficient, while calling for sustained monetary tightening lower inflation, commitment to monetising fiscal deficits, improved balance sheet transparency, sustenance of market-reflective FX rates, increase transparency of oil revenue management and reduction in cost of governance.
Presenting the NDU report, themed ‘Building Momentum for Inclusive Growth’, the World Bank also expressed doubt about Nigeria’s ability to meet budgetary targets as contained in the 2025 budget estimates.
Beyond the self-set target, the report noted that the pace of growth would need to increase, expand prosperity and reduce poverty while rebalancing towards sectors and firms that are most productive, generate positive spillovers and create jobs and opportunities, especially for the poor and economically insecure.
For the Bretton Woods institution, though economic growth in the last quarter of 2024 increased to 4.6 per cent (year-on-year), pushing growth for the full year to 3.4 per cent, the highest since 2014 (excluding the 2021-2022 COVID-19 rebound), Nigeria does not have enough in its economic tanks to meets its development target.
