Nigeria Needs Five-Fold Growth to Hit $1 Trillion Economy by 2030 – World Bank

Private Sector Investments and Export-Led Strategy Key to Achieving Ambitious Target

The World Bank has warned that Nigeria’s economy must grow five times faster than its current rate to achieve the government’s $1 trillion GDP target by 2030. The global lender emphasized the need for private sector investments, foreign direct investments (FDIs), and an export-oriented growth strategy to bridge this gap.

Alex Sienaert, World Bank Lead Economist for Nigeria, presented these findings during the Nigeria Development Update (NDU) Report launch in Abuja. While acknowledging Nigeria’s positive economic outlook, he stressed that current growth rates fall significantly short of what’s required.

Indonesia’s Example: Lessons for Nigeria

Sienaert drew parallels between Nigeria and Indonesia, which surpassed the $1 trillion GDP mark over a decade ago. Both countries share similarities as mixed, emerging economies that implemented subsidy reforms. Indonesia successfully reduced its $14 billion gasoline subsidy burden in 2005, similar to Nigeria’s recent removal of petrol and FX subsidies.

“The private sector has to come in,” Sienaert emphasized. “It has to invest at scale; it’s helpful for there to be foreign direct investment, and it’s helpful for there to be exports so you can tap big markets.”

Budget Concerns and Revenue Projections

The World Bank expressed skepticism about Nigeria’s 2025 budget, describing it as “overly ambitious.” Sienaert questioned key assumptions, including:

• Oil production targets of 2.1 million barrels per day (current output: ~1.6 million)
• Projected crude price of $75/barrel (current Brent price: $65.14)

Monetary Policy and Inflation Challenges

Taimur Samad, World Bank’s Acting Country Director for Nigeria, warned that while macroeconomic conditions are improving, inflation remains “high and sticky” at 24.23% (March 2025). He urged the Central Bank of Nigeria (CBN) to maintain tight monetary policy, predicting inflation could average 22% in 2025 if current measures hold.

The CBN has raised benchmark interest rates by 875 basis points to 27.5% since Governor Olayemi Cardoso assumed office, with expectations of further rate holds in upcoming MPC meetings.

Ways and Means Reforms Reveal True Borrowing Costs

The discontinuation of CBN’s Ways and Means advances has exposed the actual cost of government borrowing. With this backdoor financing closed:

• Credit to government rose 19.8% year-on-year by December 2024
• 41% of bank deposits remain sterilized (27% in required reserves, 12% in CBN securities)

Government Response: Investment Momentum Building

Finance Minister Wale Edun reported growing investor interest in Nigeria’s telecom technology and broadband sectors. “We are trying to go to 7% growth, and I think building momentum,” Edun stated, emphasizing the need for investments to boost productivity and job creation.

CBN Governor Cardoso reaffirmed commitment to orthodox monetary policy: “If we’re able to continue the course, which we will, then over time, the inflation should moderate.”

For more details, read the original article on BusinessDay.