Finance expert and an economist have listed strategies that Nigeria needs to follow to achieve the present government’s one trillion dollar economy by 2023.
According to them, creating the right environment that can attract investment in key sectors of the economy including insurance and pension sectors would drive economic growth for the country.
Wale Okunrinboye, chief investment officer of Access ARM Pensions speaking on achieving the set target called on long-term and institutional investors to take a more active role in financing sectors critical to Nigeria’s industrialization and economic growth.
Speaking at the 9th Nigerian Association of Insurance and Pension Editors (NAIPE) conference in Lagos, Okunrinboye highlighted the need for pension funds, insurance companies, and other key financial stakeholders to collaborate with the government to achieve Nigeria’s ambitious goal of becoming a $1 trillion economy.
He emphasized that countries transitioning from underdeveloped to developed economies typically undergo a robust phase of industrialization, followed by the growth of high-service sectors. However, Nigeria, like many Sub-Saharan African nations, has largely bypassed the industrialization phase, relying heavily on the services sector. This gap, he noted, poses a significant challenge in job creation and fostering sustainable economic growth.
Okunrinboye stressed that attracting both local and foreign investments is essential for Nigeria to become a fully industrialized economy. He urged pension funds and other long-term investors, traditionally focused on government securities, to diversify their portfolios into critical sectors that can drive industrialization.
On his part, Afolabi Olowookere, managing director/chief economist, Analysts Data Services & Resources Limited said to achieve the set objective, the Federal Government must tinker with the current policies and speed up infrastructure development to encourage more investments, if it must realise the $1 trillion economy projection.
Read also: Insurance brokers role seen lifting sector contribution to GDP
According to Olowookere, the country’s Gross Domestic Product grew from 2.98 per cent in the first quarter of the year to 3.19 per cent in the second quarter, noting that the forecasts in the short to medium term remained weak.
He said inflation and other socio-economic manifestations, such as interest rates could constitute obstacles to achieving the projection.
Okunrinboye continuing said, “To transition into a fully industrial economy, we need to attract investments—some of which should be local, and some foreign. This is where pension funds and other long-term investors come in.
“A large portion of pension fund investments is currently in government securities, but recent discussions have focused on the need to invest beyond government securities as a way to catalyse and develop the economy
“For long-term investments, pension funds, insurance companies, and the broader financial system, it’s time to engage the economy, collaborate with the government, and work with stakeholders to develop financing arrangements that support critical projects. These projects should help Nigeria achieve industrialization and boost exports, Okunrinboye said.
“For institutional investors, now is the time to find ways to directly engage with the economy. We must invest in projects that drive industrialization and are export-focused. By doing so, we will generate revenue, enhance exports, create jobs, and increase tax revenues, ultimately propelling Nigeria towards the $1 trillion economy target set by the government.”
Okunrinboye further highlighted that Nigeria’s large but underutilized labour force represents its greatest resource. “Our workforce is semi-skilled due to limited education. Typically, such a labour force is absorbed by industrial sectors. But without fully passing through the industrial phase, we aren’t creating the jobs necessary for widespread economic development,” he explained.
Olowookere further noted that the financial and insurance sectors account for 6.579 per cent of Nigeria’s GDP, but continue as the major driver of economic growth.
He said, “It has remained the fastest-growing sector in recent time. The performance of the Nigerian economy has been mixed in the last year.
“The performance of the financial sector and fiscal space has been largely positive. However, changes in the real sector of the economy have not been impressive.
On the Nigerian insurance sector’s outlook and contribution to the GDP, Olowookere mentioned that the total assets in Nigeria’s insurance industry grew by 36.9 per cent in Q1 2024 from N2.4 trillion in Q1 2023 to N3.3 trillion.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
