The Nigeria’s Gross Domestic Product (GDP) has been projected to rise to $6.4trillion by 2050, thereby moving the country to the ninth position on the world ranking, surpassing Germany, United Kingdom, France, and Saudi Arabia.
This was stated in a report by PricewaterhouseCoopers, titled: “Nigeria: Looking Beyond Oil”.
However, in order to achieve the 2050 GDP projection in the report, PwC stressed the need for diversification of the country’s economic overdependence on crude oil. It pointed out that Nigeria’s intrinsic potential lies beyond oil, maintaining that harnessing this potential had become an imperative given the expectations of lower for longer oil prices and heightened competition in the oil market.
Based on recent trends, the report reviewed the impact of low oil prices on key economic indicators and the real sector as well as addresses the question of priority sectors that should be targeted for diversification efforts.
The PwC report identified agriculture, petroleum, retail and ICT as priority sectors with the most dominant transmission links to the overall economy.
It also noted that forward linkages to agro-processing and other services such as logistics as well as backward integration to input supply sectors could improve farm incomes, increase employment and improve domestic food security.
Potentially, Nigeria’s global agriculture exports could take-off at a rate similar to Brazil’s, with $59 billion in export revenues by 2030, it added.
Similarly, value added to oil and gas output needs to urgently improve by implementing diversification within the sector. This implies investments across the downstream sector to develop petrochemicals, fertilizers, methanol and refining, industries relevant in both industrial and consumer products which Nigeria currently imports.
Commenting on the findings of the report, the Country and Regional Senior Partner for PwC Nigeria and the West Market Area, Uyi Akpata noted: “Consumer spending is the largest driver of the economy, accounting for about 70 per cent of GDP and this is expected to be the boost for the retail sector growth even as population continues to expand.
“Thus, as incomes rise along with rapid urbanisation, it is projected that household consumption expenditure could reach $1.1 trillion by 2030, from $317 billion in 2014. With tele-density at 107.87, a large population of urban, young people and massive scope to improve internet broadband penetration, Nigeria is likely to see accelerated growth of its digital economy. More importantly, the opportunity to leverage technology to generate improved social and economic outcomes across other sectors has to be created.”
In detailing what needs to be done to support the projected economic growth, a PwC Partner and Chief Economist, Andrew Nevin, opined that the transition to a non-oil economy would not be an easy task.
Furthermore, PwC’s Partner and Head of Tax & Regulatory Services, Taiwo Oyedele noted that a well-structured tax system was important in the diversification of the economy. According to Oyedele, Nigeria needs to ensure sustainable fiscal management that is resilient to the global oil price cycles.
“Improving tax collection and administration have become imperatives for achieving national growth objectives. The framework for tax exemptions should be reviewed and approvals targeted at growth inducing sectors even as the government improves collection.
“Efficiency in government spending has to improve; there is room for substantial savings in capital outlays and operating expenditure across the three tiers of government,” he added.
The report was launched at a forum jointly organised by the Lagos Chamber of Commerce and Industry (LCCI).
In an address earlier, the LCCI President, Mrs. Nike Akande, said the sustained decline in global oil prices since 2014 has put the nation in a difficult position and consequently led to various fiscal and economic challenges such as the drop in foreign earnings, decline in foreign reserves, huge financial bailout for some state governments and unstable business environment.
According to her, the decline in crude oil price will change the country’s development focus for good if the right steps are taken to reduce reliance on oil.
“I believe that a holistic diversification of the economy is desirable and inevitable at this trying period. There are many alternatives to oil and there are a lot we can do to make the best out of the present situation.
“More than ever before as a nation, we need more strategic decisions and policies that will put the economy into the path of economic recovery and social prosperity,” she added.