The Nigerian economy could rise to $6.4 trillion by 2050 to the ninth position among the world’s leading economies with policies and programmes aimed at diversifying the economy from over-dependence on crude oil.
Latest report by PriceWaterhouseCoopers, PwC said at that level of growth, the country’s economy could potentially surpass that of Germany, United Kingdom, France, and Saudi Arabia before that year.
The report said potentially, Nigeria’s global agriculture exports could take-off at a rate similar to Brazil’s, with about $59 billion in export revenues by 2030.
“Nigeria’s intrinsic potential lies beyond oil and harnessing this potential has become an imperative given the expectations of lower for longer oil prices and heightened competition in the oil market,” the report published on Friday said
Based on recent trends, the report reviewed the impact of low crude oil prices on key economic indicators and the real sector, particularly on priority sectors that should be targeted for diversification efforts.
It identified the priority sectors to include agriculture, petroleum, retail and ICT, with the most dominant transmission links to the overall economy.
“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,” the report noted.
Besides, it said value added to oil and gas output need urgent improvement through the diversification within the sector, pointing out that this demanded investments across the downstream sector to develop petrochemicals, fertilizers, methanol and refining, industries relevant in both industrial and consumer products currently being imported in the country.
Country and Regional Senior Partner for PwC Nigeria and the West Market Area, Uyi Akpata, said consumer spending was the largest driver of the economy, accounting for about 70 per cent of gross domestic product, GDP.
He said this was expected to be the boost for the retail sector growth, even as the country’s population continues to expand, with household consumption expenditure projected to reach $1.1 trillion by 2030, from $317billion in 2014, about compound annual growth rate, CAGR of nine per cent through 2030.
Mr. Akpata said with the country’s tele-density at 107.87, a large population of urban, young people and massive improvement in internet broadband penetration, Nigeria was likely to see accelerated growth of its digital economy.
PwC Partner and Chief Economist, Andrew Nevin, said the review of the business environment of some foreign companies in Nigeria, revealed four challenges, namely corruption, inadequate infrastructure, low skill levels and macroeconomic uncertainty.
These challenges, the report said, emphasized the need for the economic and regulatory environments to be transparent and conducive for business, by simplifying complex regulation and processes, and eliminating the hurdles to a bigger and more productive private sector.
“Significant reforms across the labour market, business environment and fiscal management will be required. A skilled workforce is critical to improving Nigeria’s productivity and efficiency,” the report said.
PwC Partner and Head of Tax & Regulatory Services, Taiwo Oyedele, said a well-structured tax system was important in the diversification of the economy.
“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, the report noted should be reviewed and approvals targeted at growth inducing sectors even as the government improves collection.
He proposed 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.
In addition, the government needs to be deliberate about increasing fiscal savings through a higher accretion to the Sovereign Wealth Fund which has investment objectives of diversification and improving long term economic prospects.”