According to the International Monetary Fund (IMF) World Economic Outlook October Edition, Nigeria’s real GDP growth is projected to fall to 2.87% in 2023 from 3.25% recorded in 2022. Real non-oil GDP growth is projected at 2.96%, a decline from 4.98% recorded in 2022.
Like real GDP and non-oil real GDP, the 2023 projected real per-capita GDP growth is lower than the preceding year’s value. 2023 Real GDP per capita is projected at 0.35%, which is half the value for 2022, 0.71%. The low per capita growth rate is due to high population growth, and low productivity resulting in a sub-optimal growth rate.
Nigeria’s low productivity can be attributed to several factors including weak currency, unpredictable and irregular macroeconomic policies, and inadequate infrastructure development. To experience a large increase in per capita income that will move the country from a low-middle income country to an upper-middle income country, Nigeria needs to achieve a minimum of 5% growth in real GDP sustained over a long period of time.
A double-digit GDP growth rate as experienced in China would amplify the rate of income growth, and lift millions of Nigerians out of poverty within a short period. In the interim, the government needs to strengthen ongoing reforms in the foreign exchange market. The current irregularity in the market is hurting both domestic and foreign investors.
Also, a regular and reliable electricity supply is key to achieving the growth rate. The government needs to work with relevant stakeholders to address liquidity issues that have limited the ability of the sector to attract new investments required to upgrade existing generation and transmission channels as well as construct new ones.
The 2024 budget should be prepared in such a way that it signals the government’s committed efforts to achieve higher productivity by prioritizing capital spending.