President Bola Tinubu wants to bolster the Nigerian economy from its present $441 billion to $1 trillion in 2026, but the economy must grow by 42.2 percent annually to achieve that.
On Monday, October 23, 2023, Mr Tinubu, told a group of businesspeople during the Nigerian Economic Summit (NES) in Abuja that the country’s gross domestic product (GDP) or economy could grow to $1 trillion by 2026.
“Distinguished audience, a $1 trillion Nigerian economy is possible by 2026 and a $3 trillion economy is possible during this decade. We can do it with double-digit, inclusive, sustainable and competitive growth,” he said.
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Economy Post’s data platform, Postlytics, interrogated that target and found it to be unrealisable.
The wild goose chase
Like several leaders, Mr Tinubu was confident that the Nigerian economy would become much bigger than it is.
The size of the Nigerian economy or GDP is $441 billion, according to the World Bank 2022 data. For Mr Tinubu to grow the Nigerian economy to $1 trillion, he will need to increase its current size 2.3 times.
By simple analysis, he must ensure that the economy grows by 42.2 percent in 2024, 2025 and 2026. If the country adds 42.2 percent growth ($186.102bn) every year in 2024-2026, the economy will hit $1 trillion.
In the last six quarters, the Nigerian economic growth has averaged 2.72 percent. With the target being to achieve 42.2 percent growth every year in 2024-2026, it means the economy or GDP growth must grow 16 times faster than it is currently doing. Hence the current average growth must quicken 16 times to achieve Tinubu’s target.
On the other hand, can Nigerian economy hit $3 trillion in 10 years? For the Nigerian economy to hit $3 trillion in 10 years, the economy must multiply itself 6.8 times.
In terms of growth, it will need to grow by 60 percent from the first year to the 10th year to achieve this target – other things remaining equal. If the country adds 60 percent growth ($264.6 billion) in the first to the 10th year, it will hit $3 trillion or a little more in 10 years’ time.
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With the average economic growth being 2.72 percent, the Nigerian economy must grow 22 times faster than it is currently doing to achieve that target.
“Have you ever seen any nation which grew by over 40 percent or 60 percent consistently for 10 years in your life time?” a Lagos-based economist, Mr Emmanuel Bisola, asked. “It is just one of those political promises, and I am not sure the president understands what it takes to achieve that.”
A near impossibility
To understand how easy or difficult it is to achieve Tinubu’s target, it is important to understand the global economic growth trajectory.
India, one of world’s fastest growing countries, recorded between 7 and 8 percent growth rate in the first and second quarters of 2023, according to S & P Global.
Projections for other countries in 2023 include: Bangladesh (6.52 percent), Rwanda (6.48 percent), Vietnam (5.68 percent), China (5.28 percent), Egypt ( 4.48 percent), among others, according to Yahoo Finance.
In the world, only one country has achieved close to Mr Tinubu’s target in recent times. Guyana reported 27.14 percent growth in the last five years and 62.3 percent in 2023, according to the International Monetary Fund (IMF), as reported by Yahoo Finance.
However, it did not maintain up to 40 percent growth in three years or 60 percent in 10 years as Tinubu is targeting.
Lack of reforms is a major drawback
Beside data, achieving extremely high growth rates in Nigeria is difficult owing to lack of reforms in several sectors, corruption, lawlessness and wastefulness.
Nigeria’s manufacturers self-generate 13,000 megawatts, according to the Manufacturers Association of Nigeria (MAN), and the sector is hard hit by a weakening currency and poor doing business environment.
MAN said its members had struggled to import raw materials into Nigeria owing to the scarcity of dollars and naira devaluation.
Agriculture, which contributes over 20 percent to the GDP, is hard hit by insecurity, poor land tenure system, lack of commercial equipment, and low investments.
President of Allied Farmers Association of Nigeria, Dr Austin Maduka, said Nigeria had not amended its 45-year-old Land Use Act, which was hurting investments in the sector.
Apart from amending the law, he stressed the need to boost security across Nigeria to drive agricultural production.
More so, investors are exiting Nigeria owing to a harsh doing business environment, according to analysts. This is not only happening in the manufacturing sector but also in oil and gas industry.
Economy Post recently reported that more than 100 manufacturers had exited the industry in the last five years due to a poor doing business environment.
Chief Executive Officer of Centre for Promotion of Private Enterprise, Dr Muda Yusuf, said the entire economy must be rejigged, arguing that there must be a new energy policy.
He noted that manufacturers were not competitive owing to high energy cost, high interest rate, poor infrastructure and logistics as well as policy flip-flops.
There is also the culture of wastages. President Tinubu currently maintains 10 presidential aircraft and shows no desire to merge 1,484 ministries, departments, agencies and corporations of the government in spite of a business case to do so. This costs the country huge revenues and robs the people of solid infrastructural facilities, analysts say.
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The cost of maintaining presidential fleet jumped from N4.37 billion in 2017 to N12.48 billion in 2022, according to data obtained from the appropriation bills of the Federal Government. It costs about N12.5 billion to maintain the fleet today, as earlier reported by Economy Post.
In his 2023 supplementary budget, Mr Tinubu budgeted N4 billion for renovation of his residential quarters, and N2.5 billion for renovation of the VP’s residence. He also earmarked N4 billion for renovation of presidential residence in Lagos, and N3 billion for rehabilitation of the VP’s official residence in Lagos. Mr Tinubu’s wife, who is not recognised by the Nigerian constitution, was allocated N1.5 billion to spend. Mr Tinubu is also spending N5 billion on a yatch.
Even with hardship experienced by Nigerians, the president earmarked N2.9 billion for SUVs to be used in the Presidential Villa, and another N2.9 billion to replace operational vehicles.
The National Assembly members recently received N68.52 billion worth of vehicles in spite of the hues and cries by several sections of the country.
Economy Post reported exclusively on October 17 that it cost the Nigerian National Petroleum Corporation, now the Nigerian National Petroleum Company Limited (NNPCL), nearly N17 trillion to carry out turnaround maintenance on its three refineries in 20 years.
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“If you want to achieve $1 trillion economy, you do not see the National Assembly buying cars worth N68 billion and pretending as if the poor were not suffering,” said Arise News Analyst, Mr Chika Mbonu, at a programme recently.
“You do not see insecurity or manufacturers suffering because of foreign exchange. Our oil production is struggling to rise above 1 million barrels a day, and state governors are building empty airports,” he added.
According to an accountability lawyer, Mr Damian Ehibie, “Nigeria needs to be more accountable to the people we lead.
“If you are spending billions of naira on travels, cars , leisure and recreational activities at a point when many families cannot feed twice in 24 hours due to your ill-advised petrol subsidy removal and implementation of palliatives, you are profligate.”
