Recent data from the National Bureau of Statistics (NBS) show that Nigeria’s gross domestic product (GDP) plummeted in dollar terms by a staggering 52.63 percent nominally between 2023 and 2024 (first to third quarters), using prevailing exchange rates in those periods.
The average exchange rate in the first three quarters of 2023 was N580.96/$, while that of 2024 was N1427.73/$. The cumulative nominal GDP for 2023 (Q1-Q3) was N164 trillion, while that of 2024 was N190.92 trillion in the same quarters (Q1-Q3).
BusinessDay’s analysis shows a GDP decline of over 50 percent within the period. The GDP of the first three quarters was $282 billion in 2023, and that of 2024 stood at $134 billion.
Nigeria’s nominal GDP has been shrinking in dollar terms
This sharp decline, largely driven by currency devaluation, seriously jeopardises the government’s ambition of achieving a $1 trillion economy.
President Tinubu, however, remains optimistic. On 25 November 2024, the NBS announced a GDP growth rate of 3.46 percent, a figure the administration has seized upon as a sign of progress. According to Sunday Dare, his special adviser on media and public communications, this growth underscores the President’s commitment to a robust economy and improved living standards for Nigerians.
Yet, a closer examination reveals a more subtle story—one that can be likened to the tale of two students and two economies.
One student, initially scoring 40 percent, improved to 44 percent, representing a 10 percent increase. Despite this growth, the student remained in the ‘Pass’ category, with no significant change in status.
Meanwhile, another student, who started at 65 percent, improved to 70 percent—a smaller increase of 7.69 percent. However, this was sufficient to elevate the student from ‘Good’ to ‘Excellent,’ fundamentally altering their academic standing.
A similar comparison can be drawn between Argentina and South Korea.
In the early 20th century, Argentina ranked among the world’s wealthiest nations. Between 2003 and 2008, it achieved an average annual GDP growth rate of 18 percent, driven by a global commodity boom and strong domestic demand. By 2011, its economy reached $530 billion. However, this growth was unsustainable. By 2020, Argentina’s GDP had contracted to $385 billion, according to the World Bank—a decline of over 27 percent within a decade. Inflation, debt crises, and political instability kept Argentina trapped in the middle-income cycle, much like the student who improved their score but remained in the same grade.
In contrast, South Korea’s economic trajectory has been less dramatic but far more consistent. Between 2000 and 2014, South Korea’s economy grew at an average annual rate of four to six percent. Its GDP rose from $576 billion in 2000 to $1.4 trillion in 2014. By 2024, it had surpassed $1.8 trillion, underpinned by investments in technology, infrastructure, and industrial development.
South Korea’s steady growth, though numerically lower than Argentina’s during certain periods, transformed its economy from a low-income to a high-income status—much like the student whose modest percentage increase led to a significant change in standing.
Both countries experienced growth, but only South Korea’s was transformative. Argentina, despite periods of high growth, remained economically stagnant due to a lack of structural reform and sustainability.
Increasing at a decreasing rate
Since Nigeria’s last GDP rebasing in 2014, the economy has been increasing at a decreasing rate. In 2014, the country’s GDP stood at over $570 billion. By 2024, this figure had depleted by 77 percent, falling to a mere $134 billion (Q1-Q3, 2024) after the NBS report.
The devaluation excuse fails to hold water, especially given the government’s trillion-dollar ambition. Devaluation aside, achieving sustainable growth requires more than statistical adjustments.
Recent findings from the General Household Survey (GHS) highlight a stark contrast between GDP growth and the reality faced by ordinary Nigerians. About 65.8 percent of households reported being unable to afford healthy, nutritious, or preferred foods in the last 30 days due to lack of money.
While GDP is growing and unemployment rates reported to have decreased, a significant portion of the population remains unable to meet basic nutritional needs. The survey further revealed that the proportion of households worried about food scarcity due to financial constraints has doubled from 36.9 percent in 2018/2019 to 62.4 percent in 2024.
Ironically, 70 percent of those facing food insecurity are engaged in crop farming—a sector meant to provide sustenance. This paints a troubling picture of an economy where high employment rates mask the reality of a large population of “working poor.”
Yet, the administration remains focused on its $1 trillion target by 2030, with Sunday Dare reiterating President Tinubu’s promise of economic transformation. According to Dare, GDP rebasing in early 2025 will “capture the dynamism and significant changes in various sectors,” propelling Nigeria towards shared prosperity.
However, this reliance on rebasing raises critical questions: How will a statistical boost in GDP translate into tangible improvements for Nigerians struggling to afford basic necessities? How will it address the structural challenges hindering inclusive growth?
Process vs Result
Nigeria’s approach exemplifies a common challenge among developing nations—an excessive focus on outcomes while neglecting the process. As Ifueko Omoigui-Okauru, former executive chairman of the Federal Inland Revenue Service (FIRS), observed, “In developing a plan or a vision, sometimes people focus too much on the results and less on the process.”
Rather than fixating on a trillion-dollar economy as an end goal, the federal government must communicate and prioritise the processes needed to achieve sustainable growth. Investments in education, infrastructure, healthcare, and institutional reforms are essential for creating an economy that benefits all Nigerians, not just a statistical figure.
Without a clear and inclusive process, the ambition of a $1 trillion economy risks being little more than a numerical illusion—one that does little to improve the welfare of millions who still struggle to make ends meet.
“Besides, Nigeria would need to expand this economy by nearly nine times to achieve the $1 trillion target. We just had a growth rate of 3.46 percent in the third quarter, which is insufficient by any means,” said Yakubu Ibrahim, economist and analyst at Economy Post, who noted that this translates by over 20 percent annual growth from 2024 to 2030.
Source: norvanreports.com