Nigeria Must Grow Beyond Banking Sector to Achieve $1tn Economy
The Nigerian Federal Government has been advised to expand beyond the banking sector to achieve its projected $1tn economy. This was emphasized by Chioke Ike, Group Managing Director of Afrinvest, at the launch of its 2024 Banking Sector Report.
The report, themed "Recapitalisation: Catalyst for a $1 Trillion Economy?", highlights the need for the country to grow beyond the banking sector to drive its economic growth. Ike noted that while the recapitalisation exercise would enhance the capacity of banks to serve the larger economy, increase lending capacity, attract foreign investments, and promote better risk management, the banking sector alone cannot drive economic growth.
"To achieve a $1tn economy, Nigeria needs to grow beyond the banking sector. Every aspect of the economy must grow alongside it," Ike said.
He also emphasized the need for human capital development, citing the examples of Mexico, Indonesia, and Turkey, which have achieved higher GDP per capita and human capital indices. "Nigeria needs to invest in its people to achieve similar growth. We must prioritise human capital development to achieve a $1tn economy," Ike noted.
The Acting Director of Financial Policy and Regulations, Mr John Onoja, who represented CBN Governor, Olayemi Cardoso, maintained that the central bank is committed to meeting the $1tn economy target. "We are glad that the present administration has set this target, and we are committed to supporting it," he mentioned.
Oyaedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, also highlighted the need for fiscal discipline, revenue growth, and competitiveness. "Nigeria is a poor country with a budget of under $40bn, including supplementary budgets for all 36 states and 774 local governments. Our revenue is less than half of that amount," he said, highlighting the urgency for reform.
To achieve a $1tn economy, Oyaedele stressed the importance of a functional banking sector, capital market, and consistent policies. He also advocated for promoting prosperity by waiving taxes on capital, investment, production, poverty, and seeds, as well as optimising government assets and reforming government-owned enterprises.
Oyaedele noted that Nigeria’s over 60 official levies and taxes compared unfavourably to South Africa’s single personal income tax, which generated more revenue than all Nigerian taxes combined. "With these reforms, we can improve revenue collection and move towards a $1tn economy," Oyaedele concluded.
In order to achieve its ambitious target, Nigeria must prioritize human capital development, fiscal discipline, and competitiveness.
