The average exchange rate shifted from N580.96/$ in 2023 to N1427.73/$ in 2024, while nominal GDP increased from N164 trillion to N190.92 trillion over the same period.
Our analysis indicates a greater than 50% decline in GDP over the period in question. Specifically, GDP totaled $282 billion for the first three quarters of 2023, compared to $134 billion in 2024. This substantial decrease, largely due to currency devaluation, seriously jeopardizes the government's objective of achieving a $1 trillion economy.
Nevertheless, President Tinubu maintains a positive outlook. The National Bureau of Statistics (NBS) reported a 3.46 percent GDP growth rate on November 25, 2024, a statistic the administration cites as evidence of progress. Special Adviser to the President on Media and Public Communications, Sunday Dare, underscored that this growth demonstrates the administration's commitment to economic development and improved quality of life for Nigerians.
However, a thorough analysis reveals a more complex situation, analogous to the academic progress of two students.
One student, initially scoring 40 percent, achieved a 10 percent improvement to 44 percent. Despite this progress, the student remained in the "Pass" category, indicating no significant change in overall academic standing.
Conversely, another student, starting at 65 percent, improved to 70 percent, a smaller 7.69 percent increase. This improvement, however, resulted in a promotion from the "Good" to the "Excellent" category, representing a substantial shift in academic performance.
A compelling parallel exists between Argentina and South Korea.
In the early 20th century, Argentina ranked among the world's wealthiest nations. Between 2003 and 2008, it achieved remarkable average annual GDP growth of 18 percent, driven by a global commodities boom and strong domestic demand. By 2011, the economy reached $530 billion. However, this expansion proved unsustainable.
By 2020, Argentina's GDP had contracted to $385 billion, according to World Bank data, representing a decline exceeding 27 percent within a decade. Factors such as inflation, debt crises, and political instability contributed to Argentina's entrapment in a middle-income trap, analogous to a student who improves academic performance yet remains at the same academic level.
In contrast, South Korea's economic path has been less volatile but significantly more stable. Between 2000 and 2014, South Korea's economy grew at an average annual rate of four to six percent. Its GDP increased from $576 billion in 2000 to $1.4 trillion in 2014. By 2024, it had exceeded $1.8 trillion, supported by investments in technology, infrastructure, and industrial growth.
While South Korea's growth rates may appear lower than Argentina's during certain periods, its economic transformation from low-income to high-income status is noteworthy—similar to a student whose modest improvement leads to a substantial advancement in their academic standing.
Both nations experienced growth, but only South Korea's was truly transformative. Argentina, despite its periods of rapid growth, remained economically stagnant due to insufficient structural reforms and a lack of sustainability.
Since Nigeria's last GDP rebasing in 2014, the economy has been growing at a diminishing pace. In 2014, the GDP was recorded at over $570 billion, but by 2024, this amount had plummeted by 77 percent to just $134 billion, according to the National Bureau of Statistics (NBS) report for Q1-Q3 2024.
The rationale of devaluation does not hold up, particularly in light of the government's ambitious trillion-dollar goals. Beyond devaluation, achieving sustainable economic growth necessitates more than mere statistical revisions.
Recent data from the General Household Survey (GHS) reveals a significant disparity between GDP growth and the lived experiences of average Nigerians. Approximately 65.8 percent of households indicated they could not afford healthy, nutritious, or preferred foods in the past month due to financial constraints.
Despite reported GDP growth and declining unemployment rates, a considerable segment of the population struggles to meet basic nutritional needs. The survey also indicated that the percentage of households concerned about food shortages due to financial limitations has surged from 36.9 percent in 2018/2019 to 62.4 percent in 2024.
Ironically, 70 percent of those experiencing food insecurity are involved in crop farming, a sector intended to ensure food supply. This situation highlights a concerning reality where high employment figures obscure the existence of a substantial "working poor" demographic.
Nevertheless, the administration remains committed to its $1 trillion target by 2030, with Sunday Dare reaffirming President Tinubu’s pledge for economic transformation. Dare stated that the GDP rebasing scheduled for early 2025 will “reflect the dynamism and significant changes across various sectors,” aiming to drive Nigeria towards shared prosperity.
However, this dependence on rebasing prompts essential inquiries: How will an increase in GDP through statistical adjustments lead to real improvements for Nigerians struggling to afford basic necessities? What measures will be taken to tackle the structural issues that impede inclusive growth?
Nigeria's strategy highlights a prevalent issue faced by many developing countries: an overemphasis on outcomes at the expense of the underlying processes. As Ifueko Omoigui-Okauru, the former executive chairman of the Federal Inland Revenue Service (FIRS), pointed out, "In developing a plan or a vision, sometimes people focus too much on the results and less on the process."
Rather than focusing solely on achieving a trillion-dollar economy, the federal government should prioritize and clearly communicate the processes necessary for sustainable economic growth. Strategic investments in education, infrastructure, healthcare, and institutional reform are essential for building an inclusive economy that benefits all Nigerians, not just a numerical target.
Without a clearly defined and inclusive process, the trillion-dollar economy goal risks becoming an unrealistic aspiration, failing to improve the lives of millions currently facing economic hardship.
Moreover, achieving this milestone would require an almost ninefold increase in Nigeria's economy. Given the recent third-quarter growth rate of only 3.46 percent, as noted by Yakubu Ibrahim, an economist and analyst at Economy Post, this target necessitates annual growth exceeding 20 percent from 2024 onward.