Bismarck Rewane, a prominent economist and Managing Director of Financial Derivatives Company, has stated that the current administration’s target of achieving a $1 trillion economy will not be possible within five to six years.
During an interview on Arise TV’s morning show, Rewane commented on the recently approved windfall tax and the GDP figures for the second quarter of 2024. He highlighted that the current GDP growth rate of 3.19% is too slow to make any significant impact, especially since about 75% of the economy’s sectors contracted during the period under review.
Nigeria Falling Behind Economic Goals
Rewane pointed out that Nigeria has fallen behind in its goal of being among the top 20 economies globally. He emphasized that achieving the $1 trillion economy target is not feasible.
He explained:
- “We wanted to be among the top 20 economies in the world. We were 26th, and today, we are 32nd, so we have moved further down the ladder of success.”
- “We aimed for a $1 trillion economy, but we are currently at $384 billion, which would require 200% growth in the next four to five years, and that is not going to happen.”
- “Moreover, we intended to insulate our economy from external shocks. However, as we integrate our economy into the global market, we are increasingly exposed to those shocks.”
Concerns Over Windfall Tax and Revenue Generation
Rewane criticized the government’s emphasis on generating revenue through the windfall tax, arguing that it contradicts the administration’s strategy for investment-led growth. He expressed concern that Nigerians have little incentive to pay taxes, as many feel they do not see the benefits of the taxes they already pay.
He noted that despite an increase in Nigeria’s tax-to-GDP ratio from around 4% to 9%, there has been no noticeable improvement in the populace’s well-being. He also highlighted that while Nigerian companies reported N1.4 trillion in foreign exchange revaluation gains, they also suffered N1.7 trillion in forex losses during the same period, resulting in a net loss of N300 billion to the economy.
Background on the $1 Trillion Target
During the Nigeria Economic Summit in 2023, President Tinubu declared that achieving a $1 trillion economy was possible within the next three years, and he set a target of reaching a $3 trillion economy by the end of the decade in 2030.
While Nigeria’s GDP grew by 3.19% in the year’s second quarter, up from 2.98% in the first quarter, inflation and exchange rate challenges remain significant obstacles to sustained economic growth.
