For Nigeria to realise its growth potential and come out of the woods, sustained investment and reforms have been identified as been very critical to these objectives.
To PwC, which observed this in its study, improvements in productivity would require investments to ensure a broad availability of good quality education as well as relevant vocational training to improve value-added activity across key sectors such as manufacturing and services.
The report also pointed out that if Nigeria can overcome the menace of corruption, the country’s GDP could rise by over $500 billion by 2030. It observed that deliberate efforts to reduce corruption will complement the Nigerian government’s diversification drive.
PwC in its ‘The long view: how will the global economic order change by 2050’ report, which highlighted developments in Nigeria and other emerging markets, observed that a weak business environment is holding back the country’s economic growth potential and slowing down the pace of development. It informed that Nigeria ranked 169th out of 190 countries in the World Bank’s 2017 Ease of Doing Business Index, lower than Niger, Madagascar and Sierra Leone.
“Other than protecting minority investors and getting credit, Nigeria ranks low on all other indicators and will need to particularly focus on improving electricity supply, simplifying the tax collection process and improving trading across borders so as to leverage its position as the hub of West Africa,” the report observed.
Commenting on the report, Dr. Andrew S. Nevin, PwC Nigeria’s Chief Economist and co-author of the report, said there will be a shift in global economic power away from the established advanced economies towards emerging economies in Asia and elsewhere.
According to the 72-Page report, Nigeria has the potential to move eight places up the GDP rankings to 14th by 2050, but it will only realise this potential if it can diversify its economy away from oil and strengthen its institutions and infrastructure.
Nevin said growth in many emerging economies will be supported by relatively fast-growing populations, boosting domestic demand and the size of the workforce, saying that this will need, however, to be complemented with investments in education and improvement in macroeconomic fundamentals to ensure there are sufficient jobs for the growing number of young people in these countries.”
In contrast to PwC’s previous 2015 edition, in which it projected Nigeria to be the fastest growing economy of the countries modelled, Nevis said Nigeria is now expected to be only the sixth fastest.
“This reflects the slowdown of the Nigerian economy over the last two years as a result of a fall in oil prices. In 2016, the economy officially slid into recession for the first time in recent years as key sectors contracted sharply across three quarters. Foreign exchange shortages and high inflation have hampered the growth of manufacturing and services, with administrative controls put in place by the Central Bank resulting in a reduction in foreign direct investment and foreign portfolio flows,” he stated.
According to him, Nigeria will average around two per cent yearly growth to 2020, with growth then picking up speed in the decades following to average almost 4.5 per cent per year between 2041 and 2050.
Along with South Africa, Nigeria, according to the report, is one of the few to see a marked acceleration of yearly average growth over the next few decades, as opposed to moderation.
However, to support long-term sustainable growth, the report observed that Nigeria needs to develop a broader-based economy, diversifying its exports to ensure its growth is not dampened by global price or demand shocks. Alongside this, Nigeria should develop its institutions and infrastructure, supporting long-term productivity growth.
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