In accordance with the provisions of the Fiscal Responsibility Act and best practices in public finance management, the Federal Government prepares a medium-term expenditure framework every year to review economic performance and make projections for the medium term. The MTEF is the foundational document that undergirds annual budgets. This discourse reviews the economic growth projections of the extant MTEF- the 2024-2026 MTEF- being considered by the National Assembly. The review is to determine whether the projections are realistic and sufficient to lift tens of millions of Nigerians out of poverty and place Nigeria on the path of sustainable development.

It is imperative to understand that the MTEF consists of five key parts namely a macroeconomic framework, a fiscal strategy paper, an expenditure and revenue framework, a consolidated debt statement setting out and describing the fiscal significance of the debt liability of the Federal Government and measures to reduce any such liability; and a statement describing the nature and fiscal significance of contingent liabilities and quasi-fiscal activities and measures to offset the crystallisation of such liabilities. The growth projections are found in the macroeconomic framework which sets out the macroeconomic projections, for the next three financial years, the underlying assumptions for those projections and an evaluation and analysis of the macroeconomic projections for the preceding three financial years.

As a background to the growth proposal, the MTEF states that: “Real Gross Domestic Product grew by 2.51 percent (year-on-year) in the second quarter of 2023 slower than 3.54 percent recorded in the second quarter of 2022. The economy posted positive, albeit lower than expected growth, for the eleventh consecutive quarter, despite a multitude of headwinds. The growth performance was driven largely by the sustained non-oil sector growth. The non-oil sector grew by 3.58 percent in real terms in Q2 2023. This rate was lower by 1.19 percent points compared to the rate recorded in Q2 2022.”

It noted that non-oil sector growth was driven by information and communication (telecommunication); finance and insurance (financial institutions); trade; agriculture (crop production); manufacturing (food, beverage & tobacco); construction; and real estate, subsectors. Furthermore, it acknowledged that the “oil sector, which has contracted since Q1 2020, further declined by -13.43 percent in Q2 2023 compared to -4.21 percent in Q1 2023 and -11.77 percent in Q2 2022. Contraction is largely owing to years of underinvestment, crude oil theft, and pipeline vandalism. Large-scale oil theft from pipelines and wells has hobbled oil output and crimped exports in recent years.”

The MTEF 2024-2026 proposes GDP growth rate of 3.76 percent, 4.22 percent, and 4.78 percent respectively for the years 2024, 2025 and 2026. The GDP growth will be mainly driven by the anticipated increase in domestic oil refining capacity, telecommunications, crop production, and slight growth in investment and employment, with the bulk of projected growth coming from the non-oil sector. On the face of it, these projections seem realistic considering the half-year average GDP growth of 2.41 percent in 2023. But the projections seem to be an acknowledgment of the government simply coasting along the ordinary flow of economic events without substantive efforts to change the tide and assert itself on the economy. With a population growth average of 2.5 percent a year, the growth projections will just be a little above population growth.

Essentially, if the growth projections are realised, there will be little or no impact on the living conditions of Nigerians, hardly any new jobs, or improvements in the standard of living. Furthermore, the projections cannot lift tens of millions of Nigerians out of poverty to stabilise the economy. Nigeria needs to grow consistently at between seven and 10 percent for up to 10 years to eradicate poverty, build human capital, accumulate industrial capacity and increase its exports beyond the value of its imports.

While we are expecting growth from the non-oil sector, there is no reason not to expound on the frontiers of growth in the oil and gas sector. Two of the reasons for the contracting oil sector contribution to GDP vis crude-oil theft, and pipeline vandalism are routine matters that can be successfully addressed by Nigeria’s vast security architecture and sincerity of purpose by the Federal Government. The third, which is underinvestment, can also be successfully addressed through increased investments by Nigerian National Petroleum Company Ltd in oil and gas production to achieve not less than 2.5 million barrels per day in 2025 and 3.0 mbpd in 2026. This will improve foreign exchange receipts as well as revenue available to the three tiers of government; and facilitate improvements in the value of the naira as the Central Bank of Nigeria will have more resources to defend the naira. More foreign exchange inflow will also respond to import-driven inflation. The resources for the NNPC to increase investments need not come from sovereign debts but can flow from an initial public offer at the international capital market. Alternatively, the NNPC can embark on asset valuation and securitisation which grants the NNPC access to credit from international capital markets to improve production. The process and conditions for securitisation and gaining access to credit will provide the opportunity for the NNPC to improve its governance structures, efficiency and performance to rank as a world-class oil company. This will add to increases in domestic refining capacity which the MTEF has acknowledged as a source of growth.

The growth expected from crop production can be extended to animal husbandry through investments in ranches. For instance, the resources voted in the 2023 Supplementary Budget to agriculture (provisions of agricultural implements and infrastructure) in the sum of N70.2bn at N11.7bn per geopolitical zone, if judiciously managed, can be used to develop between six and 12 ranches. The land will be provided by state governors under the Land Use Act while the Federal Government provides buildings, water, electricity, feedstock/grasses, processing facilities, etc. This will not only reduce insecurity arising from farmer-herder clashes but also improve crop production.

Nigeria’s growth driven by agriculture can exceed the proposals in the MTEF if the full value chain idea is explored. This is about increased yield per hectare or increased production of meat, milk and fish using virtually the same quantum of available resources through the deployment of innovation and efficiencies – improved seeds, seedlings, stem cutting, pest and disease-resistant varieties that adapt to the changing climate and improving extension services. Targeting critical crops like cotton, palm tree, cocoa, rubber and groundnuts and spices may be imperative. The value chain improvement will include value addition and processing so that agricultural products are not just traded raw but value can be added at the right quality to position the goods for export and import substitution. The phytosanitary and trade retarding challenges at our export terminals and ports which deter exports will also be addressed. All these can be achieved in an environment where the governments set the right policy framework and initial investments while allowing the private sector and communities to drive economic growth in the medium to long term.

Restoring security across the country is an overarching imperative that will impact the production of goods and services in all sectors of the economy, improve the rule of law, restore confidence and guarantee the basic need for the security of lives and property.