This week's 25th Nigerian Economic Summit focused on driving the country's industrial revolution and developing a competitive private sector economy by 2050. The discussions among government officials, policy makers and industry leaders over the two-day event focused on four key themes: 1) achieving rapid industrialisation; 2) transforming education; 3) managing demography; and 4) sustainable peace and security.
It was widely agreed that, for Nigeria to close the gap with global economic giants at the forefront of the fourth industrial revolution, the authorities must be audacious and develop a clear long-term agenda for transformation. The country must prioritise the areas in which it can compete and maximise opportunities; improvements in infrastructure and education are the key for its rapidly growing population to be an asset rather than a liability, and there must be an increase in public-private partnerships.
Our key highlights from the summit:
- According to Doyin Salami, Chairman of the Economic Advisory Council, Nigeria must maintain at least a decade of consistently high GDP growth above 10% – this growth should be inclusive and reduce poverty, helping transform its economy. To achieve this, the government should focus on infrastructure, health care and education, liberalising as many sectors as possible for private sector participation and direction.
- The government needs to be seen to: uphold the rule of law and the sanctity of contracts to attract investors; better communicate government policies, laws and plans; address insecurity; ensure macroeconomic stability; and align fiscal and monetary policies to attract private sector investment, supporting long-term economic growth.
- The Minister of Finance, Budget and National Planning stated that the proposed increase in VAT to 7.5%, from 5% is one of the ways of funding the 67% increase in the national minimum wage to NGN30,000. The ratio of VAT revenue to GDP is currently just 0.8%, against a median of 5% in developing countries overall, due to the low nominal rate and poor revenue collection strategies.
- The digitalisation of the economy will help to improve transparency, accountability and the collection of tax revenues; a difficult but necessary task is to remove subsidies across all sectors of the economy.
- Femi Gbajabiamila, the Speaker of the National Assembly, said that the Assembly will prioritise the middle class, the power sector and the fiscal budget in its approach to private sector legislation and is committed to the passage of the national minimum wage increase.
- The NERC plans to announce new power tariffs that better reflect market realities by January 2021, which should support power companies in their efforts to increase power generation and supply. Furthermore, there are plans in place to ensure that 30% of the nation’s power generation comes from renewable sources by 2030.
- To support the long-term growth of the financial services sector, particularly consumer lending and mortgage loans, existing data must be integrated into a centralised database. Moreover, there must be innovation in the use of such data to support market penetration. Also, there needs to be a drastic change in the country’s loan culture.
- The African Continental Free Trade Agreement presents an enormous opportunity for the continent given that intra-Africa trade currently represents just 16% of total trade in Africa. However, for the AfCFTA to be fully beneficial for Nigeria, it must incentivise the private sector and trigger an industrial and agricultural revolution. Power remains key for the country’s competitiveness, with 35-40% of manufacturing costs currently going into power production.