[SPECIAL REPORT]
N
igeria, an African economic powerhouse, has the
capacity to move beyond its erratic growth over the
coming decades if it is able to leverage the number
of key advantages at its disposal. In the last decade, Nigeria
has seen its GDP fl uctuate in tandem with the volatility in
oil prices – most notably during the commodity slump of
2015, highlighting the state’s reliance on raw hydrocarbons
to drive growth. Cognisant of its worst recession in 25
years, the government introduced the Economic Recovery
and Growth Plan (2017-2020) – the ERGP – as a medium-
term developmental initiative focused on ‘restoring
growth, investing in people, and building a globally
competitive economy.’ In addressing long-term growth, the
EGRP prioritises macroeconomic stability and economic
diversifi cation. One of the key strengths of the plan lies in
the inherent recognition that the state’s tax-base, and its
subsequent inability to commit to large-scale public spending
which a nation would typically resort to in such a case, are
not only constraints over the short-to-medium term, but are
critical to long-term development. As such, the EGRP’s
approach to promoting long-term development aims to not
only build a stronger engine for growth, but a framework
capable of supporting it over the long haul.
In 2017, the IMF estimated Nigeria’s economy to have
reached $376.28 billion, allowing the West African state to
reclaim its seat as the continent’s largest economy. However,
in terms of real GDP per capita, the state performs a lot less
favourably, jumping from the largest economy to the 16th
wealthiest. Herein lays one of Nigeria’s largest obstacles, as
well as a potential driver of economic growth: its population.
As the largest population in Africa, and seventh-largest
globally, the state has a large base of human capital primed for
industries requiring an abundance of labour. Diversifi cation,
as such, prioritises a stronger focus on industries which
rely on labour-intensive inputs or large consumer markets;
12 • Nigeria-India• 2018
agriculture, manufacturing, services (including retail and
wholesale trade), construction, and real estate are among the
industries highlighted by the ERGP as they have a history of
contributing signifi cantly to Nigeria’s GDP (and, therefore,
demonstrate that the state has the capacity to develop them).
Navigating a Paradox
Nigeria’s government debt, as a percentage of its GDP,
is currently above 15 percent — which is low on a global
scale. However, with a tax base heavily reliant on volatile oil
prices (which itself only accounts for 10 percent of the state’s
GDP), it is unlikely that the state can aff ord to undertake
expansionary fi scal projects until the tax-base has been
widened. At the same, diversifi cation of the economy will rely
on a number of government led projects, particularly in order
to absorb the abundance in excess labour available to it. If
you cannot grow without spending, and cannot spend without
growing, then what does one do? Simply put, either one opts
not to grow or not to spend. The ERGP aims to navigate this
conundrum in a commendable way. Construction and other
large-scale infrastructure development projects are among
the initiatives identifi ed through the ERGP as foundations for
economic diversifi cation and growth; not only are these kind
of projects able to provide employment, but will concurrently
assist in developing the state’s underdeveloped and
overburdened network of utilities and transport capabilities
— a key prerequisite for other industries, such as retail and
manufacturing.
In achieving this monumental task, and in recognition
of the signifi cant costs which it cannot fi nance, the state
has approached the African Development Bank (AfDB) for
assistance in obtaining the funds required. At an estimated
$3.0 trillion out to 2044, the AfDB will not be lending Nigeria
the money it needs — instead, both the government of
Nigeria and the AfDB have opted to lobby the private sector