CFG’s Report Doubts Rebasing Nigeria’s GDP, CPI will Yield Desired Results
.Says GDP lost over $300bn in 8 years
.Gains from subsidy being used for debt servicing
Dike Onwuamaeze
The CFG Advisory has expressed doubt that the federal government’s move to rebase Nigeria’s Gros Domestic Product (GDP) and Consumer Price Index (CPI) would yield desired economic outcomes.
The CFG expressed this view in a report, “Nigeria 2025 Economic Forecast: From Reform Fatigue Quagmire to Sustainable Growth.”
The report placed the responsibility for returning the economy on the path of recovery on the government, which it said should implement policies that would stabilise the exchange rate, lower interest rate and foster productivity.
According to the report: “Plans to rebase GDP and CPI is of particular concern. Rebased unemployment numbers do not reflect the reality. The ongoing exercise to rebase GDP and CPI might, therefore, not yield the desired results. Nigeria’s GDP at $195 billion has declined over the last decade losing over $300 billion in value due to devaluation, low productivity and stagflation.
“The country is no longer the largest Economy in Africa, ranking fourth behind South Africa, Egypt and Algeria. This owing to prolonged policy inconsistency since the economy came out of post COVID recession.”
It noted that 3.5 per cent GDP growth in 2024 is not sufficient to deliver value for the size of the Nigeria economy, stating that expectations of GDP growth should be between 8.5 per cent 10 per cent.
The report said Nigeria’s GDP grew in excess of 8.0 per cent in 2011 and 2014. “In both years, inflation was within a band of 11-13 per cent and interest rates 12-15 per cent.
“Our analysis and charts of the historical data, confirms that when inflation and interest rates are within this band, and real rates are positive, high GDP growth rates are assured, which is a pointer for monetary policy formulation. Nigeria requires 8.0 to10 per cent GDP growth,” the report said.
CFG emphasised that policy implementation that would enhance productivity is critical to reviving underperforming sectors of the Nigerian economy in 2025 and reposition them for recovery from stagflation and sustainable growth.
It said: “In 2023 only three sectors of the economy experienced double digit growth. They were mining and quarrying 26.16 per cent; water and waste 11.93 per cent and financial Sservices 28.21 per cent. Manufacturing was a paltry 1.45 per cent reflecting the lack of productivity in the Nigerian economy. 2024 H1 did not fare better as only oil and gas recovered with an impressive 10 per cent growth with all other sectors maintaining the 2023 growth levels. Policy implementation to enhance productivity is critical to revive all the other sectors of the Nigerian economy in 2025 for recovery from stagflation and sustainable growth.”
According to CFG, “the fundamentals of the Nigerian economy are sound but poor economic leadership has failed to realise the potential and grow the economy. The success or failure of our projections in 2025, will depend on governments commitment and sincerity to implement policy,” adding that “a coordinated approach is required to drive the economy out of stagflation and meet the sustainable GDP growth targets in 2025.”
Reviewing the state of the Nigerian economy, the report stated that the current economic reform has plunged the economy in an economic quagmire as the economy is, “still deep in stagflation, after 18 months of reforms have failed to achieve a sustainable growth trajectory because the government had the cart before the horse in the course of implementing the reforms.”
It said that the outcome of the reform, “is 300 per cent currency devaluation, debt in excess $100 billion and an economy deep in stagflation. Household and firms are bearing the brunt of the reforms, with low purchasing power, low productivity, high interest rates and unfavorable exchange rates.”
