The Managing Director of Financial Derivative Company Limited (FDC), Mr. Bismarck Rewane, has said the federal government’s $1 trillion Gross Domestic Product (GDP) economy ambition lacks a clear strategy to achieve it, describing it as akin to “aiming for the moon.”
Rewane gave this description in his December 2024 presentation at the Lagos Business School (LBS) Breakfast titled: “Economic Reform 2023/2024: Economy on a Mend or at a Bend.”
He said: “Nigeria’s ambition of $1 trillion GDP could be like aiming for the moon and the absence of a clear development strategy could be a major drawback.”
He remarked that the reforms were initiated in search of economic redemption but policy credibility will be stretched at a high political cost.
Rewane recalled that the economic destination of Bola Tinubu’s administration’s broad macroeconomic goals for the next eight years included the attainment of a GDP of $1 trillion, average annual growth rate of 7.0 per cent, single digit interest and inflation rates of 9.0 per cent and an exchange rate of N900/$ as well as natural rate of unemployment.
He further pointed out that the policy direction of the federal government for realising these goals are elimination of (petrol) subsidies, managed floating of the exchange rate in reality, palliatives targeted at the Small and Medium Enterprises (SMEs), monetary policy tightening, tax reforms and palliatives that are targeted towards consumptions.
However, 19 months into the implementation of these reform measures, Rewanesaid that evidence-based macroeconomic scorecard has shown that the economy recorded a mere 0.34 percentage change in its average real GDP growth from 2.86per cent in 2023 to 3.2 per cent in 2024 while average inflation growth rose from 24.7 in 2023 to 33.2.
In the same manner, the average official exchange rate rose from N889 to N1,603between 2023 and 2024, representing a percentage change of 43.92 per cent, it said.
The scorecard also showed that Nigeria’s trade balance improved from $3.5 billion in 2023 to $13.78 billion in 2024, representing a positive 70.54 percentage change while the stock market capitalisation grew from N39.56 trillion in 2023 to N58.3 trillion in 2024, representing a 51.92 percentage change.
Commenting on the exchange rate, Rewane said he expected the “Naira to trade at N1,550/$ by February 2025,” adding that the exchange rate of “the Naira will remain stable but misaligned” at parallel market rate of N1620/$; NAFEM rate of N1567/$ though its fair value should be N1151.26/$. He concluded that the Naira is undervalued at the foreign exchange market by 26.53 per cent.
Rewane also commented that the impact of the reforms on government is that FAAC allocation rose from N16.09 trillion in 2023 to N23.07 trillion, which represent a change by 43.38 per cent.
According to him, fiscal deficit’s percentage of the GDP moved from -5.4 in 2023 to-5.6 in 2024; total debt grew from N46.25 trillion to N134.29 trillion in 2023 and 2024 respectively to record 190.35 percentage growth.
But Nigeria’s external reserve rose from $32.88 billion to $40.2 billion in 2023 and 2024 respectively, which is 22.26 percentage growth.
Rewane also highlighted that the impact of the reforms on corporate firms was a mixed bag of losses for some and gains for others in 2023.
According to him, top 10 foreign exchange loss booked by quoted firms were N1.7 trillion while top quoted banks recorded foreign exchange gains of N1.4 trillion in 2023.
Rewane, however, projected that Naira would appreciate marginally before weakening, adding that “higher interest rate could lead to higher savings but also higher default rate.”
According to him, Nigeria will maintain economic growth momentum in 2025, breaking away from a decade of tepid growth.
Dike Onwuamaeze
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