- Nigeria’s GDP May Hit $1.45 Trillion by 2030
Notwithstanding the prevailing economic challenges which the country is undergoing, latest report by PricewaterhouseCoopers (PwC) on the nation’s future has projected that Nigeria’s Gross Domestic Product (GDP) may hit $1.45 trillion by 2030 if corruption is reduced and effective policies are implemented.
At biennial growth rates of five and seven per cent till 2030, the report estimates that Nigeria’s GDP could be $530 billion higher if corruption is reduced to levels comparable to Malaysia, while arguing that national policies should be guided not only by improvements in GDP but also a broader measure of development through the Human Development Index (HDI).
The report added that translating economic growth into real improvements in the lives of the average citizen poses a real challenge for policy makers, noting that three critical levers need to be improved to enable Nigeria reach its socio-economic targets which are measured by a high human development status.
The report identified the levers to include, improving the ease of doing business, enhanced labour productivity and reduction of the overall level of corruption perception.
Arguing its case, the report notes: “Despite strong economic growth at a CAGR of 5.3 per centpost-rebasing, Nigeria has been plagued with the jobless growth phenomenon as employment growth has only averaged 1.3 per cent. However, growth has not been broad based with persistent incidences of high poverty, unemployment and underemployment. Official unemployment rose from 6.0 per cent in 2011 to 8.2 per cent in 2015, with a growing number of youths massively underemployed at 18.3 per cent of the labour force.
Though growth in the Nigerian economy has been driven by more labour-intensive sectors such as agriculture and services, income opportunities have been limited due to low productivity levels and thus has not resulted in improved living standards for Nigeria’s growing population, hence, the need for developmental measures beyond GDP.
Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew S. Nevin in his reaction said: “This research draws on a more direct and measurable approach to tracking improvement in human development. Using qualitative analysis, academic reviews and country case studies, we identified three critical levers that need to be improved for the average Nigerian to feel the impact of any growth in the economy.”
Progress across the three levers the report highlights, could result in a significant improvement in Nigeria’s HDI score thereby attaining a high human development status by 2030.
Specifically, PwC posits that Nigeria should target to improve Ease of Doing Business ranking through a higher Distance to Frontier score of 61 by 2030 (45 as at 2015).
Similarly, Labour productively currently at $3.61/hour should be improved to $12.05/hour by 2030 while Corruption Perception Index (CPI) score should be improved from 26 in 2015 to 34 by 2030.
“Translating economic growth into real improvements in the lives of the average citizen poses a real challenge for policy makers. Tracking progress across these three levers has the potential to boost the attention on HDI as priority in the public agenda. An analysis of these levers can identify areas requiring policy attention and specific strategies targeted at improving overall wellbeing can be formulated”, Nevin added.
IMF Staff Completes Virtual Mission to Lesotho
Lesotho has been struggling with the fallout from the pandemic and a sharp decline in revenues from the Southern African Customs Union (SACU); The authorities and the mission team made significant progress in their discussions on policies that could be supported by the IMF under a financial arrangement.
A team from the International Monetary Fund (IMF), led by Mr. Aqib Aslam, conducted a series of virtual missions, most recently from September 7 to October 15, 2021, to discuss the authorities’ economic and financial program and their request for IMF financial support.
The authorities and the mission team had productive discussions on policies that could be supported by the IMF under a financial arrangement. The program under discussion would aim to support a durable post-pandemic recovery, restore fiscal sustainability, strengthen public financial management, and ensure the protection of the most vulnerable. Other key structural reforms to be implemented include strengthening governance and fostering private sector investment to spur inclusive growth and employment over the medium term.
At the end of the visit, Mr. Aslam issued the following statement:
“Lesotho has been experiencing twin economic shocks resulting from the pandemic and a decline in revenues from the Southern African Customs Union (SACU) that have proved to be highly volatile. Public expenditures have been increasing while SACU revenues were buoyant but have not adapted to their decline and the limited growth in other revenue sources. At the same time, the economy has been in recession since 2017. The resulting fiscal and external imbalances, if left unaddressed, would continue to put pressure on international reserves and lead to government payment arrears.
“Discussions emphasized the need to support a robust and inclusive post-pandemic recovery. To this end, the mission discussed with the authorities a number of options for containing the fiscal deficit to a level that is sustainable and can be fully financed. The team noted that the adjustment should be focused on expenditure measures while boosting poverty-reducing social spending to protect the most vulnerable. Complementary actions include efforts to broaden financial access and inclusion; strengthen financial supervision; modernize the legal frameworks for bank lending, business rescue, and restructuring, and digitalize payment systems.
“On the fiscal front, efforts should focus on addressing the public sector wage bill, which is one of the largest in the world compared to the size of the economy; saving on public sector and official allowances; better targeting education loans; streamlining the capital budget and initiating gender-responsive budgeting. Discussions also considered measures to modernize tax policy and improve domestic revenue mobilization. The mission noted the need to address long-standing PFM issues to ensure the provision of reliable fiscal data, the integrity of government systems, and the sound use of public resources.
“Significant progress was made during the visit, and discussions will continue in the coming weeks. If agreement is reached on policy measures in support of the reform program, an arrangement to support Lesotho’s economic program would be proposed for the IMF Executive Board’s consideration.
“The IMF team thanks the authorities for their hospitality and constructive discussions.”
The IMF mission met with Prime Minister Majoro, Minister of Finance Sophonea, Central Bank Governor Matlanyane, and other senior government officials. The team also met with representatives of the diplomatic community, private sector, civil society, and multilateral development partners.
Nigeria’s Inflation: Prices Increase at Slower Pace in September 2021
Prices of goods and services moderated further in Africa’s largest economy, Nigeria in the month of September 2021, the latest report from the National Bureau of Statistics (NBS) has revealed.
Consumer Price Index (CPI), which measures the inflation rate, grew at 16.63 percent year-on-year in September, slower than the 17.01 percent rate achieved in the month of August.
On a monthly basis, inflation rose by 1.15 percent in September 2021, representing an increase of 0.13 percent from 1.02 percent filed in August 2021.
Food Index that gauges price of food items grew at 19.57 percent rate in the month, below the 20.30 percent rate recorded in August 2021.
The increase in the food index was caused by increases in prices of oils and fats, bread and cereals, food product N.E.C., fish, coffee, tea and cocoa, potatoes, yam and other tuber and milk, cheese and egg.
However, on a monthly basis, the price of food index rose by 0.20 percent from 1.06 percent filed in August 2021 to 1.26 percent in September 2021.
The more stable twelve months average ending in September 2021 revealed that prices of food items grew by 0.21 percent from 20.50 percent in August to 20.71 percent in September.
Prices of goods and services have been on the decline in Nigeria in recent months, according to the NBS. However. on masses are complaining of the persistent rise in prices of goods and services across the nation.
Some experts attributed the increase to Nigeria’s weak foreign exchange rate given it is largely an import-dependent economy.
Global Debt Rises by $27 Trillion to $226 Trillion in 2020 – IMF
The pandemic has led to an unprecedented increase in debt—issued by governments, nonfinancial corporations, and households the IMF estimated in the latest Fiscal Monitor report. In 2020 global debt reached $226 trillion and increased by $27 trillion, the IMF estimated Wednesday (October 13) in Washington, DC.
High and growing levels of public and private debt are associated with risks to financial stability and public finances, said Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department.
“According to preliminary estimates from the Global Debt Database, global debt by governments, households, and non-financial corporations reached $226 trillion. That represents an increase of $27 trillion relative to 2019. Both the level and the pace of increase are record highs. We know that high and rising debts increase risks to financial stability and public finances,” Gaspar said ahead of the Fiscal Monitor release.
Gaspar emphasized that countries with a high credibility fiscal framework benefit from better bond market access. They also experience lower interest rates on sovereign bonds.
“A strong message from the fiscal monitor is that fiscal credibility pays off. Countries that have credible fiscal frameworks benefit from better and cheaper access to bond markets. That’s a precious asset to have in an uncertain and difficult times like COVID 19. Fiscal credibility pays off!,” added Gaspar.
He also recognized that while the international community has provided critical support to alleviate fiscal vulnerabilities in low-income countries, still more is needed.
“In 2020, the IMF’s rapid financing and the G20 Debt Service Suspension Initiative contribute to make resources available to the countries that need it the most. But more is needed. With a general allocation of SDRs of $650 billion, liquidity has been provided, but much more could be achieved if rich countries would make part of their resources available to the developing world. By doing so, donors would be contributing to fighting the pandemic and to the achievement of sustainable and inclusive growth,” said Gaspar
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