PWC’s Partner & Chief Economist, Andrew Nevin has identified ten proven game changers that will salvage Nigeria’s economy from its present state to be among the top best economies in the world.
Nevin, who is a major voice in predicting trends and analyzing countries’ economies has provided infallible solutions to major sectors of Nigeria’s economy and has served numerous African banks, insurance companies, and capital market players across strategy, technology, operational, and regulatory issues.
Nevin spoke at the Economic Outlook Conference organized by Junior Chamber International, Victoria Island recently and highlighted the points:
1. Unlocking Dead Assets
According to Nevin, he said Nigeria holds at least $300 billion or as much as $900 billion worth of dead capital in residential real estate and agricultural land alone, saying that the high value real estate market segment holds between $230 billion and $750 billion of value, while the middle market carries between $60 billion and $170 billion in value.
Some of the assets he mentioned are Nigeria Social Insurance Trust Fund (NSITF) along Lagos-Badagry expressway, The National Assembly Complex at Tafawa Balewa Square, NECOM House at 15, Marina Street, NITEL Building;
Others are Secretariat in Ikoyi, Federal Government Ministry of Communications at Obalende, Lagos, Federal Government Secretariat in Ikoyi Lagos, and other over sixty abandoned properties belonging to the federal government in Lagos state.
He therefore called on the Federal Government to partner with the private sector to unlock and harness such capital for wealth creation and economic growth.
2. Harnessing The Power Of The Diaspora
Nigeria is the largest recipient of remittance in SSA accounting for over a third of flows to the region. Country’s biggest export is human capital. In 2017, Nigeria led the Continent in terms of remittance receipts but dropped to second place behind Egypt in 2018.
Almost half of Nigerian adults have indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre. Consequently, Nigeria accounts for over a third of migrant remittance flows to Sub-Saharan Africa.
Nevin estimated that these flows amounted to US$23.63 billion (2017: US$22 billion) in 2018, and represented 6.1% of Nigeria’s GDP. The 2018 migrant remittances translate to 83% of the Federal Government budget in 2018 and 11 times the FDI flows in the same period. Central Bank Governor, Godwin Emefiele has also pointed that the current annual remittance inflow is about $24 billion and could help in improving the balance of payment, reduce dependence on external borrowing and mitigate the impact of COVID-19 on forex inflows into the country.
3. Drive Export Growth Through Services
Two-thirds of the global economy is made up of the services sector which are higher value-added than physical goods. Nigeria’s creative and cultural industry (CCI) presently plays an important role and will probably generate $1 billion export revenue in 2020. Nigeria’s exportation of Nollywood, technology and financial services are good exports to invest in.
4. Need for Growth Across the Country
He also identified innovation hubs, industrial clusters and educations major catalysts that will drive economic growth and development.
5. Low investment/gross capital formation
Nigeria’s Gross Fixed Capital Formation stood at less than 20% of GDP in 2019. Sustained economic growth of a country’ has a positive impact on the national income and level of employment, which further results in higher living standards. It plays a vital role in stimulating government finances by enhancing tax revenues. This enables the government to earn extra income for the further development of an economy.
6. Move Informal to Formal Sector
Some people are self-employed in the informal sector because they want to avoid registration and taxation. But many people work in the informal sector through necessity, not choice. Today, there are two features of the informal sector that are well-recognized. Firstly, much of the informal economy contributes greatly to the formal economy. Secondly, women constitute the majority of precarious, under-paid, informal workers. Government must provide, digital inclusion, access to capital, legal protection, skilling and dialogue to move the informal to the formal sector.
7. Improving Business Environment
According to the World Bank’s report, Nigeria ranks 131 out of 190 countries on the World Bank Doing Business Index, moving up 15 places from 146th position in the 2019 Report. Government must consider total efforts to providing enable environment for businesses to thrive in Nigeria.
8. Nigeria’s big 3 distortions
Exchange rate, fuel subsidy and power sector are the three major distortion in Nigeria. Government must provide total structural and policy reforms to reporting the distortions.
9. Shifting from GDP lens to SDG Lens
It is not enough for the government to measure the strength of the economy through Gross Domestic Product; government must ensure that all efforts must be on deck to achieve all the indicators of the entire seventeen Sustainable Development Goals. Focusing and achieving the SDG will help the country in many ways.
10. Climate Change
Government must also pay attention to global warming on how it affects economic growth and development.