The pace of growth in Nigeria needs to accelerate further to meet its $1 trillion economy aspiration and deliver poverty reduction and shared prosperity, the World Bank has said.
The bank said the economy would need to grow at a rate about five times higher than recently to achieve a US$1 trillion economy by 2030, which is the Nigerian government’s aspiration.
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President Bola Tinubu had earlier announced the country’s target of growing the economy to $1 trillion within the next eight years, a goal likely to depend on how well domestic financial institutions can mobilise and allocate capital.
In line with that mandate, the Central Bank of Nigeria reiterated earlier in the year that the ongoing banking sector recapitalisation was essential for Nigeria’s ambition to become a $1 trillion economy, describing the programme as a strategic response to evolving economic realities and global financial shifts.
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The World Bank in its report said that to move towards meeting this aspiration, the composition of growth needs to be rebalanced to key economic sectors and firms that are most productive, generate positive spillovers, and create jobs and opportunities at scale, especially for the poor and economically insecure.
“At present, the best-performing sectors of the economy, like finance and ICT, while important as drivers of growth, are not sources of mass employment, and the vast majority of Nigerians do not have yet the skills and opportunities to participate in them,” the bank said.
“At the same time, government spending has until recently also been skewed towards the better off segments of the population, including through the unsustainable, costly, and highly regressive PMS, implicit FX, and electricity subsidies, rather than towards enhancing access to and quality of public infrastructure and essential services.”
The bank said as a result, most Nigerians remain underemployed and trapped in low productivity, low earning, subsistence farming or informal sector work.
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“To boost inclusive growth, the government could consider a private-sector led, public sector-facilitated growth strategy,” the report said.
With fiscal space created through recent macro-fiscal reforms, the World Bank said Nigeria now has a historic opportunity to improve the quality of spending and invest in human capital, social protection, and infrastructure.
“The allocation of public resources can begin to shift away from the past unsustainable, regressive, and wasteful pattern, and rather towards meeting Nigeria’s large development needs, including the government playing its essential enabling role of providing basic public services,” it said.
