How Nigeria’s economy can grow in double digits (I)

I did explore the idea of Nigeria’s economy growing in double digits when I ran for president in 2019. From get-go, the idea sounded egregious to establishment people, some of whom ventured that Nigeria should not think of more than a four to six per cent growth rate. In other words, we must continue along the lines of mediocrity. 

My research – which I made open – to the effect that the developed nations of today grew in leaps and bounds as they made their ways up, did little to convince anyone. Not even the fact that matured economies – pre-COVID were growing faster than us and are very likely to grow faster post-COVID as everyone generally reorganises to put that terrible past behind them.  

 Why should Nigeria be satisfied growing at two or three per cent? Why should four per cent GDP growth be a big deal for us? Why should six per cent make us ecstatic and braggadocios?  We need to remember where we are coming from. They say someone who does not know where he is going will be led in another direction by someone who takes him to another location. We must be able to determine our own destination. And setting a robust growth target is also a way of challenging ourselves to achieve more. 

I am, however not just pulling figures from the skies by speaking of these numbers. My hope is based on empirical projections from several sectors of the economy as we may see shortly. My ideas are not meant to be perfect though, and are therefore subject to critiques. Even the idea of measuring economic performance by GDP growth is itself flawed. 

Simon Kuznets in the 1930s invented the idea of GDP and put a caveat on it based on its inadequacy. But in spite of its inadequacy – measurement issues in informal economies, skewness to a few or singular sectors, and non-measurement of inequality and other metrics of human capital development – the GDP as a general tool is useful for those who are true to themselves. As much as GDP measurements do not equate to economic development, we also know that growth must accompany any process of real development.  

  I base my optimism that Nigeria’s economy should be able to grow by double digits in 2023 and beyond – an optimism that is shared by no less than Bola Tinubu, the APC’s presidential flagbearer – on several factors and sectoral developments such as:  

1.     The Buhari government has made some good investments which Nigeria should now reap, going forward. Developments like the Dangote Refinery, Lekki Ports, Second Niger Bridge, Calabar Ports redevelopment, and so on, are meant to add to economic activities and thus add to GDP growth in 2023 and beyond.  
2.     A reduction in the activities of terrorists and bandits and other marauders in the north should be able to get people back to the farms and allow the region breathe again. If the north, being the food basket of Nigeria and indeed West Africa and the region with the vastest arable land in Nigeria should find peace, this will create a good boost for the Nigerian GDP. I kind of believe that the worst is over for Nigeria and we should only grow from here.  
3.     If we view the economy through the neoliberal concept of boom and bust, the COVID-era represents a bust for Nigeria and the world as we entered another round of economic depression – which we pulled out of in record time. After the bust comes the boom. After a slump comes the growth. So, I say why not we grow at double digits? Base effect is what it is called.  
4.     The Buhari government seems to be getting a better handle of our petroleum sector as it winds up. The NNPC has been commercialised and is currently being streamlined. This means that there will be less waste and better accountability as some private sector standards are infused into that company. With our pipelines now being better secured using the help of local players (read Tompolo and company), and with the Kolmani Oil Field in the Bauchi/Gombe axis projected to add another 120,000 barrels per day alongside gas to the kitty, the petroleum sector in Nigeria is likely to witness a major leap in 2023 and beyond. 

A December 7, 2022 report in the Punch has it that Nigeria’s oil production has increased to 1.6m barrels already, up from 970,000 in September of the same year. This is a 70% increase in productivity if we are to believe the words of Bala Wunti, the head of former NAPIMS, now NNPC Upstream Investment Company. A 70% growth in the oil sector means a lot for the entire economy as it links with many other industries from oil servicing, to real estate, to our foreign exchange. A 70% growth in that industry could translate itself to a modest 7% growth in GDP if well harnessed. If we add the fact that Nigeria is actually a gas country with a bit of oil, and our NLNG is doing great with demand for gas on the increase worldwide, we could actually do better in the oil and gas sector.  

The current cashless policy of the Central Bank of Nigeria will also contribute something significant. This is because it will enhance transparency. People will eventually comply. With lesser ability to operate in cash and avoid accountability, the federal, state and local governments, will certainly be able to track transactions more and obtain revenue from source, along the lines of its taxes, rents, rates, duties, fees, fines, levies, and what have you. Very hopefully too, corruption will be curbed howbeit marginally, freeing up funds for the development of the country and investment in public goods. 

President Buhari wants this to be his legacy and I hope he succeeds. The success of the cashless policy could lead to a doubling and tripling of government revenue, putting Nigeria under less pressure to borrow for recurrent expenditure. Hopefully, we are talking about revenues raised from productive activities, and in a progressive manner, not from the poor and vulnerable. At present, the federal government has given a total tax holiday to companies with less than N25 million in yearly turnover, in response to the covid-19 problem. This is commendable but may not continue forever. 

A review of this policy will also boost government revenue greatly. I will suggest a rollback of this policy. It’s not being done in any other country I know around the world. In fact, UAE and Saudi Arabia, who never had any company taxes are now introducing some. Nigeria has the lowest VAT in Africa.