The World Bank has disclosed that for Nigeria to achieve the $1trillion economy as envisaged by President Bola Tinubu administration by 2030, the government should increase the current Gross Domestic Product (GDP) five times. This was contained in its recent Nigeria Development Update titled, “Building Momentum for Inclusive Growth,” released last week, in Abuja.
Although the global bank acknowledged that some of the federal government’s economic reforms are on the right track, they are not enough to actualize Tinubu’s $1trillion economy by 2030. Apart from growing the GDP five- fold, the bank says that the government should urgently embark on deeper reforms and private sector-driven development that will accelerate productive growth, generate multiplier effects, create jobs and opportunities of scale.
During the 2023 election campaign season, Bola Tinubu promised to build a jumbo-size economy, aiming for $1trillion GDP by 2030. According to the Governor of the Central Bank of Nigeria, Olayemi Cardoso, key focus areas towards reaching the $1trillion economy target include curbing inflation, stabilising the exchange rate, enhancing the financial sector supervision, promoting financial inclusion, and increasing transparency in monetary policy decisions. While these are good monetary measures to stimulate the economy, we believe that more creativity in policy implementation is needed to achieve that ambitious goal.
We also believe that achieving the $1trillion GDP economy in five years is feasible, provided the government can effectively tackle key fiscal and macroeconomic challenges that that hamper growth and development. As the World Bank noted in its Nigeria Development Update, the current macroeconomic reforms are good for economic revival, they are not enough to sustain inclusive growth. For instance, Nigerian economy last year recorded its strongest recovery in three years in GDP terms, growing by 3.84 per cent driven mainly by the services sector.
Also last year, Nigeria’s annual GDP growth stood at 3.40 per cent, up from 2.74 per cent in 2023, fastest non-COVID-19 growth since 2015. However, some global downsides have threatened the realisation of the $1trillion economy target. Though the World Bank’s recent report sees Nigerian economy increasing from 3.4 per cent in 2024 to 3.6 per cent this year, and slightly rising to 3.8 per cent in 2026-2027, the latest IMF report downgraded Nigeria’s economic growth to 3.0 per cent from its earlier projection of 3.4 per cent, citing weakening oil production and escalating trade tensions between the United States and other countries may vitiate the $1trillion economy target.
In all, the projections from the World Bank and IMF are lower than the federal government’s projected annual GDP growth of 4.5 per cent outlined in the 2025 budget. Perhaps more dampening to the actualisation of the $1trillion GDP economy in 2030 is the latest statistics that Nigeria requires an average 38 per cent growth if it must achieve President Tinubu’s dream of $1trn economy. According to the World Bank, Nigeria’s economy was valued at $363billion in 2023, and data from the National Bureau of Statistics (NBS) put GDP for the first three quarters of 2024 at $134billion.
Based on this calculation, Nigeria will need to add at least $866billion between October 2024 and December 2030. This approximates to increasing Nigeria’s GDP size by 7.5 per cent times within the next five years. Experts are of the view that the feat will be difficult to achieve. For such exponential leap to happen within the next five years, the economy should grow by at least 8.4 per cent quarterly. In practical terms, it means that from 2025 onwards, annual growth must not be less than 38 per cent. This in effect means that annual growth will need an average of 40 per cent.
The IMF and some Nigerian financial analysts say that this aspiration is most unlikely to actualize. From 1960 to 2023, Nigeria’s nominal GDP recorded only a few exceptional increases. The economy posted 156.18 per cent growth in 1981, driven by high oil prices. In 1995, the GDP growth stood at 75.27 per cent, reflecting macroeconomic adjustments.
The federal government should heed the advice of the World Bank, IMF and financial experts in the country and put substantial effort towards realising the target of $1trillion GDP economy by 2030. The vision is not out of reach, but it demands concrete fiscal and monetary clarity by the government. No doubt, the recent bank recapitalization, foreign exchange (FX) reforms, as well as the fight against insecurity will boost the value of the naira and exports.