Economic challenges and solutions’ evolution

Presently, Nigeria ranks as the third-largest economy in Africa by nominal GDP, which stands at USD 377 billion, after South Africa (USD 480 billion) and Egypt (USD 430 billion), while Algeria ranks fourth at USD 317 billion.

The oil and gas sector dominates Nigeria’s exports and accounts for 90 percent of export revenue and represents 14 percent of GDP. The other drivers of the economy are financial services, telecommunications, agriculture, manufacturing and entertainment.

Nigeria is a mixed economy and a lower middle-income country with a GDP per capita of USD1,556 compared with South Africa’s USD16,000, and the reason for the disparity is Nigeria’s larger population.

South Africa’s population is estimated at 65.4 million people in 2026, while Nigeria’s population in 2026 is projected at 242 million people and to reach 400 million in 2050 at a growth rate of between 2.1 percent and 2.4 percent per annum.

The growing population poses a major economic threat unless a well-balanced economic output is essential to mitigate the major economic threat posed by the growing population with commensurate economic output.

In a previous article titled “Economy, Population Threat And Options”, which was published in The Sun newspaper on August 31, 2019, I noted that the imbalance between Nigeria’s population growth and economic growth posed a threat to the economy and that unless appropriate measures were taken to rectify the imbalance, it would cause drastic socio-economic disruptions going forward.

In the past, the Central Bank of Nigeria (CBN) had also noted that Nigeria was a country whose economic output must grow at least twice the population growth rate and warned about the scourge of unemployment and the need to adopt a proactive and holistic approach to halt the rising scourge.

The federal government and CBN are working pari passu and accordingly with the necessary fiscal and monetary policies to boost economic growth and development.

President Tinubu is ambitious about growing the economy and has set a target of a USD1 trillion economy by 2030.

And the CBN keyed into the president’s vision and has already implemented a major policy, the banks’ recapitalisation, which would contribute to driving the economy towards attaining the USD1 trillion target.

Bank recapitalisation is germane because the financial system is the axle upon which the wheel of the economy revolves.

The financial system is a major driver of the economy; thus, there is a need for a robust financial system, especially considering that Nigeria’s economy is largely driven by a bank-based financial system.

The implementation of the policy is expected to reinforce the strength, health and dynamics of the financial system and deepen financial intermediation.

It will enable a greater credit flow to the real sector, including the medium- and small-scale enterprises which are the engines of growth and which CBN is supporting through financial inclusion.

Besides a robust financial system which CBN ensures, other drivers of economic growth include investments, natural resources, technology, human capital, skilled labour and infrastructure.

Nigeria’s current stock of infrastructure is 30 percent of the GDP, which is below the World Bank benchmark of 70 percent, and experts have noted that it would require USD100 billion annually to bridge the gap.

Infrastructure deficit and inflationary pressure also contribute to poverty, and an estimated 62 percent of Nigeria’s population, which equates to about 130 to 140 million people, lives below the poverty line.

The National Bureau of Statistics (NBS) noted that over 60 percent of Nigerians were “multidimensionally poor”, which means that they lacked access to basic infrastructure, sanitation, employment and health care.

Going forward, to mitigate the infrastructure component of poverty, the National Integrated Infrastructure Master Plan (NIIMP) aims to increase infrastructure stock to 70 percent of the GDP by 2043.

President Tinubu empathises with citizens and has evolved some solutions towards ameliorating the economic situation in both the short and long term.

Three million vulnerable households have benefitted from the Renewed Hope Conditional Money Transfer Programme, which is a kind of “helicopter money drop”, and more than one million people have accessed support under government credit schemes.

The Nigerian Consumer Credit Corporation (Credit Corp) has disbursed N37 billion in consumer loans.

The Nigerian Education Loans Fund (NELFUND) has supported more than one million students with over N184 billion for tuition and upkeep.

And there has been an increase in the funding for primary health care facilities across the country.

On the inflation segment, CBN is in control.

Inflation is an economic headwind and a thief of value, which erodes income and purchasing power and lowers returns on interest, among other negative spin-offs that engender poverty.

CBN has fought inflation aggressively with persistent tight monetary policy and has been able to disinflate the economy to a lower degree, and it is still on it.

In addition to reducing inflation, the CBN has also been able to stabilise the economy, attract foreign capital inflows, increase the foreign reserves and achieve growth.

The economy grew by 4.0 percent in Q4 2025 and 3.89 percent in Q1 2026 and is projected to grow by 4.1 percent in 2026 and further to 4.3 percent in 2027.

CBN Governor Olayemi Cardoso and his team are well connected to the challenges of the economy.

They have the courage of their own convictions and are focused, decisive, strategic and result-oriented in solutions evolution.

Nwobu, a chartered stockbroker and policy analyst, wrote via [email protected]. Tel: 08033021230.