Bridging Nigeria’s Productivity Gap for Economic Growth and Sustainability

The National Population Commission (NPC) puts Nigeria’s population growth rate at 3.2 percent per annum in 2023, while the Gross Domestic Product (GDP) rate stood at 2.3 percent in the first quarter of the year.  This figure implies that the population is growing faster than the economy.

The National Bureau of Statistics (NBS) says 33.3 percent of Nigeria’s population is unemployed.

Although in the last seven years, Nigeria has survived two recessions, economic growth has not been inclusive even as the country’s economy faces key challenges of low productivity and weak expansion of sectors with high employment elasticity.

Successive governments have tried to shift economic activity towards agriculture and the manufacturing sectors, the areas believed to have the potential of employing more than half of Nigeria’s workforce, but the moves are yet to yield the desired results.

Despite the expansion in the agriculture sector from 23 percent in 2015 to 26 percent in 2021, the manufacturing sector declined from 9.5 percent to 9 percent. During this period, non-oil exports as a share of non-oil GDP averaged 1.3 percent, while manufactured goods as a share of total exports remained low at 5.2 percent in 2021.

Given the importance attached to high productivity in boosting economic growth and the standards of living of the people, government planning, programs and policies continued to drive job creation necessary for productivity and sustainable growth.

Essentially, Nigeria is not producing enough for local consumption and export which resulted in a weak manufacturing base for a country with a large population thereby recording foreign exchange shortages, a limited number of jobs created to accommodate workforce entrants, and an import bill that can hardly be met or sustained by current export earnings.

At a time when the global economy faces a slowdown in productivity and growth, Nigeria should find a way of bridging the productivity gap for economic resilience and sustainability.

President Bola Tinubu’s Renewed Hope Agenda mantra must work with stakeholders to develop an agenda for economic and social inclusion that will stabilize the economy and free the needed resources to fast-track the resuscitation of the Nigerian economy.

In a recent broadcast, President Tinubu said that his administration has “…embarked on several public sector reforms to stabilize the economy, direct fiscal and monetary policy to fight inflation, encourage production, ensure the security of lives and property, and lend more support to the poor and the vulnerable”.

To achieve these lofty goals, the Renewed Hope Agenda must focus on improving the lives of the average Nigerian with practical strategies on how to structurally transform the economy.

Already, the government has set eight priority areas for itself namely: food security; ending poverty, economic growth, and job creation. Others are access to capital, particularly consumer credit, inclusivity, as regards youths and women, improving security, improving the playing field on which people and companies operate, rule of law, and fighting corruption.

It is believed that if these areas are improved upon and the enormous resources harnessed, Nigeria will take its place in the comity of nations as truly the giant of Africa, the continent’s largest economy, and one of the leading economies in the world.

The President Tinubu administration must do everything within its capacity to address headwinds facing the country by implementing critical and timely reforms to reduce inflation, shore up the value of the country’s currency protect the poor and vulnerable, and support economic recovery.

Accomplishing these goals will require a big push in exchange-rate management, monetary policy, trade policy, fiscal policy, and social protection measures.

These can be achieved by increasing transparency and predictability of exchange rate management policies to reduce speculation in the private and public sectors and ensure that agents can access foreign exchange in a timely and orderly manner, at agreed rates.

The monetary authority must prioritize price stability as the primary goal and continue its interventions in critical sectors to enhance access to credit by the manufacturing sector.

The fiscal authorities in Nigeria should create an enabling environment for productive activities to thrive by providing stable electricity, improving security, and building infrastructure like roads to ease transportation. The government must implement a harmonized tax regime that promotes healthy competition necessary to sustain inclusive growth, and economic transformation as well as improving efficiency in public and private sector operations in Nigeria.

The ability of the Nigerian government to up its games on these interventions will stimulate access to foreign direct investment flow thereby making Nigeria the first point of call by investors with higher returns of investments as promised by President Tinubu in New York and UAE recently.

Nigerians and indeed the global community are full of expectations that Nigeria’s economy will witness a remarkable turnaround under the administration of President Tinubu who has given assurances and commitment to world leaders and business owners that the journey towards Nigeria’s economic recovery, sustainability, and resilience had begun.