Prominent economist and Managing Director Financial Derivative Company, Bismarck Rewane has stated that the $1 trillion economy target of the current administration will not be possible in the next five to six years.
He stated this during an interview session on Arise Tv morning show where he made comments on the recently approved windfall tax and GDP figures for the second quarter of 2024.
According to him, the current GDP growth rate of 3.19% is too slow to make any difference as about 75% of the sectors of the economy contracted during the quarter under review.
Furthermore, he noted that the country has fallen behind in its goal of being among the top 20 economies globally and that it’s not possible to achieve the $1 trillion economy target.
He said, “What are the broad mark economic goals of this economy? We want to be among the top 20 economies in the world, and then we were26. Today, we are 32 so we have worked our way down the ladder of success.”
“Secondly, we now said that we want the economy to be a $1 trillion economy but now we are $384 billion that means we have to have like 200% growth in the next 4 to 5years that is not going to happen.”
“We also said we want to insulate our economy from external shocks but as we integrate our economy into the global economy, we are facing those shocks.”
Windfall tax on banks
He further criticized the federal government’s intense focus on generating revenue through the windfall tax, arguing that it contradicts the investment-led growth strategy promoted by the current administration.
Additionally, Mr. Rewane observed that there is little incentive for Nigerians to pay taxes, as many citizens feel they do not see the benefits of the taxes they’ve already paid. He pointed out that despite Nigeria’s tax-to-GDP ratio increasing from around 4% to 9%, there has been no noticeable improvement in the well-being of the populace.
Regarding the windfall tax, he highlighted that Nigerian companies reported N1.4 trillion in foreign exchange revaluation gains, but also faced N1.7 trillion in forex losses during the same period, resulting in a net loss of N300 billion to the economy.
Backstory
During the Nigeria Economic Summit in 2023, President Tinubu stated that a $1 trillion economy is possible in the next 3 years while targeting the economy to reach $3 trillion by the end of the decade in 2030.
Nigeria’s GDP grew by 3.19% in the second quarter of the year from 2.98% posted in the first quarter of the year. The Presidency has celebrated the figure stating it is a sign of better things to come. However, inflation and the exchange rate remain clogs in the economic growth wheel.
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