Auditing GDP growth in Tinubu’s administration

CSR Reporters noticed that the Bola Tinubu administration has eagerly highlighted the latest GDP figures released by the National Bureau of Statistics, showing a 68-basis point increase to 3.19 percent in the second quarter of 2024, compared to 2.51 percent in the same period the previous year. This growth rate is also an improvement over the 2.98 percent recorded in the prior quarter.

Oh well, at first glance, these numbers appear promising simulating that the renewed hope agenda of the BAT administration was indeed working. In fact, the Presidency asserts that these figures validate the government’s economic strategies, suggesting that the economy is on a path to recovery and growth.

But alas!

Even the blind have seen that the harsh realities experienced by households and businesses indicate that this celebration should immediately be put to a halt.

The government has overlooked the fact that Nigeria’s GDP shrank from $477 billion in 2022 to $375 billion in 2023, and due to the devaluation of the naira, it is projected to fall further to $253 billion in 2024.

Since 2014, the GDP growth rate has steadily declined to negative 0.9 percent, a trend attributed to inconsistent policies by the Director-General of the World Trade Organisation, Ngozi Okonjo-Iweala.

While GDP growth is generally a positive sign, it is ultimately meaningless if it doesn’t result in improved living standards for the population.

Concerns persist that the supposed benefits of economic growth may not be felt by Nigerians, who are dealing with inflation exceeding 33 percent compared to 25.8 percent a year ago, interest rates at 26.75 percent, and a naira exchange rate of N1,600/$1, down from N460/$1 in May 2023.

Analysts from Comercio Partners, an investment firm, note that Nigeria’s current score of 61.96 percent on Hanke’s Misery Index underscores the significant pressures faced by the population, despite reported economic gains. They suggest that Nigeria’s economy might be “immiserizing,” where GDP growth does not translate into better living conditions.

The average price of petrol surged by 223.21 percent to N769.62 per litre as of May 2024, compared to May 2023. Prices have since climbed above N1,000 in many states. Food inflation stands at 39.53 percent, and the cost of staples continues to rise. Over 173 million Nigerians cannot afford a healthy diet, and 133 million are multidimensionally poor.

The Q2 2024 GDP growth has been largely driven by gains in the services sector, which grew by 3.79 percent and contributed 58.76 percent to the overall GDP. Agriculture’s contribution was 22.61 percent, slightly lower than the 23.01 percent recorded in Q2 2023, though higher than the 21.07 percent in Q1 2024. The manufacturing sector’s contribution was 8.46 percent, down from 8.62 percent in Q2 2023.

Typically, economic growth should lead to greater prosperity, characterized by increased demand, job creation, higher tax revenues, and improved public services. However, the structural imbalances in Nigeria’s economy do not support this expectation.

The Federal Government should therefore prioritize dismantling the barriers that hinder investment, particularly in the oil and gas, agriculture, and manufacturing sectors. Nigeria cannot transition from an agrarian to a service-based economy without first building a strong industrial foundation.

According to the IMF’s latest models, Nigeria’s economy could grow by 5.0 percent if there were a 25 percent reduction in the bottlenecks surrounding governance and business regulations. To make a meaningful impact, the economy needs to grow by at least 5.0 to 8.0 percent annually, outpacing population growth.

Instead of focusing on GDP figures, economic development should be measured by the revival of the agriculture and manufacturing sectors, investment in education and skills to boost productivity, and addressing the electricity sector’s shortcomings. Ajaokuta Steel must be operational, the blue economy must fulfill its potential, and the government must address the issue of insecurity.

What about the business environment? The overall business environment needs significant improvement, including better infrastructure and access to capital.

Nigeria can create a more inclusive, resilient, and sustainable economy that benefits all its citizens, rather than just a select few. Economic growth must be felt in the daily lives of Nigerians, translating into better living conditions, opportunities, and a brighter future for the nation.

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