The Managing Director of Financial Derivative Company Limited (FDC), Bismarck Rewane, has criticized Nigeria’s $1 trillion GDP target, warning that the country lacks a clear strategy to achieve it. He compared the ambitious goal to “aiming for the moon” and cautioned that the absence of a focused development plan could significantly hinder progress.
Rewane shared his views during a December 2024 presentation at the Lagos Business School (LBS) Breakfast, titled “Economic Reform 2023/2024: Economy on a Mend or at a Bend.” He emphasized that while reforms had been implemented in search of economic redemption, the government’s credibility in executing these reforms would be tested at a high political cost.
Rewane highlighted that the administration of President Bola Tinubu set a broad macroeconomic agenda for the next eight years, targeting a GDP of $1 trillion, an average annual growth rate of 7%, single-digit interest and inflation rates, and an exchange rate of N900/$, alongside a natural unemployment rate. He outlined the government’s policy direction to achieve these goals, which includes eliminating fuel subsidies, floating the exchange rate, supporting SMEs, tightening monetary policies, and implementing tax reforms.
However, 19 months into the reform process, Rewane pointed out that the economic results have been modest. The real GDP growth rate increased slightly from 2.86% in 2023 to 3.2% in 2024, while inflation rose from 24.7% to 33.2%. The official exchange rate also saw a significant increase, rising from N889/$ to N1,603/$ between 2023 and 2024, representing a 43.92% change.
On a positive note, Nigeria’s trade balance improved by 70.54%, from $3.5 billion in 2023 to $13.78 billion in 2024, and the stock market capitalization grew by 51.92%, from N39.56 trillion to N58.3 trillion.
Rewane projected that the Naira would trade at N1,550/$ by February 2025, but he noted that while the exchange rate may stabilize, it remains misaligned, with a parallel market rate of N1,620/$ and a fair value of N1,151.26/$. He concluded that the Naira is undervalued by 26.53% in the foreign exchange market.
Rewane also analyzed the impact of reforms on government finances, pointing out that FAAC allocations rose by 43.38%, from N16.09 trillion in 2023 to N23.07 trillion in 2024. However, the fiscal deficit as a percentage of GDP grew from -5.4% to -5.6%, and total debt surged by 190.35%, from N46.25 trillion to N134.29 trillion. On a positive note, external reserves grew by 22.26%, from $32.88 billion to $40.2 billion.
Regarding corporate firms, Rewane noted a mixed impact from the reforms. He pointed out that quoted firms booked a combined foreign exchange loss of N1.7 trillion, while the top quoted banks recorded foreign exchange gains of N1.4 trillion in 2023.
Rewane projected that Nigeria would maintain its economic growth momentum in 2025, marking a departure from a decade of sluggish growth. However, he cautioned that the country must adopt a clear, actionable strategy to achieve its ambitious economic goals.
