The World Bank has cautioned that Nigeria’s current economic growth rate may be too slow to meet the federal government’s ambitious target of transforming the country into a $1 trillion economy by 2030.
This was disclosed in its latest Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth”, released on Monday.
According to the Bretton Woods institution, achieving this economic milestone will require a significant ramp-up in the country’s growth trajectory, by as much as fivefold.
“The pace of growth in Nigeria needs to accelerate further to meet its aspirations and deliver poverty reduction and shared prosperity. The economy would need to grow at a rate about five times higher than recently to achieve a US$1 trillion economy by 2030, the government’s aspiration,” the World Bank stated.
Growth Without Inclusion
While Nigeria’s gross domestic product (GDP) grew by 3.84% in Q4 2024, according to the National Bureau of Statistics (NBS), the World Bank notes that this is far below the level required to reduce poverty, create jobs, and achieve long-term prosperity.
The report emphasized that it is not just the rate of growth that matters, but also the composition and inclusiveness of that growth.
- “To succeed, the economy has to grow at a faster pace, but also in a more inclusive way. Not only must the economy grow faster, but it also needs to grow in such a way as to generate jobs and opportunities for the Nigerians who need it most: the poorest and least prosperous,” the report said.
It noted that while sectors like finance and ICT are currently among the best-performing segments of the economy, they are not sufficient to drive mass employment. These sectors, although important for GDP growth, do not provide widespread job opportunities for the general population, particularly the youth and low-skilled workers.
Need for Structural Transformation
The World Bank advised that Nigeria’s growth composition must be rebalanced towards labor-intensive sectors and firms capable of generating broader economic opportunities.
- Agriculture, manufacturing, and services targeted at domestic consumption were listed as critical to achieving this transformation.
- These sectors have the capacity to absorb a large share of the labor force and deliver more equitable income distribution across the country.
- The report acknowledged that President Bola Tinubu’s administration has made bold moves in implementing reforms such as fuel subsidy removal and exchange rate unification.
- It however warned that without accelerating structural transformation and improving governance, the potential gains from these reforms may not be fully realized.
What you should know
During the Nigeria Economic Summit in 2023, President Tinubu stated that a $1 trillion economy is possible by the end of the decade in 2030.
Soon after, the central bank commenced a recapitalization of commercial banks as a major foundation for driving economic growth.
Several analysts, including the Managing Director of Financial Derivative Company, Bismarck Rewane, have stated that President Tinubu’s $1 trillion economy target of the current administration will not be possible in the next five to six years.
