The Nigeria Economic Summit Group (NESG) has projected that the country’s economy could grow at 6.4 percent to a nominal Gross Domestic Product of $744b by 2030.
It also sees the Nigerian economy expand to $2,700 per capita income, with the sectors contributing to the total output as follows: agriculture, 21percent; industry, 25 percent, and services, 54 percent. These will combine with an unemployment rate 16 percent and poverty rate at 35 percent, it said.
The projections are contained in NESG’s 2020 macroeconomic outlook released on Wednesday.
Noting that the Nigerian economy has remained fragile and on the path of recovery with economic growth at 2.3 percent, NESG believes that taking a deep-dive approach to fixing the country’s poverty problem would be a precursor to inclusive growth.
NESG in the report called on policy makers to be more proactive and innovatively develop strategies to address economic uncertainties.
The report shows the need for policymakers to be spontaneous and proactive in dealing with possible economic uncertainties such as complex challenges emanating from rising population, and rapid urbanisation. Others are advancement of technology, which will influence the future of work and skills, changing ecological situation and the adverse impact of climate change, among other factors, which will create significant pressure on food, jobs, infrastructure, social amenities and human capital, it noted.
The stage is set for 2020 as the 2020 Budget was signed into law in December. This is the first time in over 14 years the budget was signed before the budget year begins.
NESG is confident that the early passage of the 2020 budget themed “Sustaining Growth and Job Creation” is expected to result in improved capital spending, which is much-needed to stimulate economic growth and facilitate the delivery of infrastructure across the country.
It further noted that with oil price expected to stay above the budget benchmark of US$57 per barrel in 2020, Nigeria has an opportunity to grow the excess crude oil account, improve external reserves and meet its oil revenue target to fund the 2020 budget.
The Group however worries that the government’s plan of raising non-oil revenues through other sources such as the proposed communication tax, online tax, excise duty on carbonated soft drinks and toll charges, could have unintended negative effects on growth either through reduced consumer spending or reduced margins for businesses.
“It is expected that the introduction of these taxes and charges will improve non-oil revenue.
“However, the challenge for fiscal authorities is levying several taxes and charges on an economy that is recovering with economic growth still low at 2.3 percent.
“This could, therefore, have unintended negative effects on growth either through reduced consumer spending or reduced margins for businesses”.
NESG is of the view that revenue drive should, therefore, be implemented with caution going into 2020.
It also thinks Inflationary pressure will remain high in 2020 on the basis of the continued closure of land borders, the introduction of taxes and other charges directed at consumers and businesses as well as sustained pressure on businesses arising from an infrastructure deficit, poor power supply, high cost of credit”.
“Given these concerns, monetary policy is expected to remain tight in the year, although the CBN will continue in its effort to provide financial support and direct incentives to local businesses in order to stimulate local production and reduce the country’s ever-rising import bills”.
According to the report, Nigeria may need to implement reforms in the oil and gas sector to attract large investments into the upstream sub-sector and ultimately shore up oil production to take advantage of the heightened tension between the US and Iran as well as OPEC’s commitment to control supply in order to sustain higher prices will stiffen oil price in 2020.
It welcomed the leadership of the National Assembly commitments to focus on the Petroleum Industry Bill in 2020, noting that progress in the industry will largely depend on the speed of passage of the industry-wide legislation.