As President Bola Tinubu assumes office, analysts emphasize the need to address a plan to achieve a 10% annual real GDP growth target. Foremost among these concerns is the issue of insecurity, which has hindered the efficient utilization of physical infrastructure spending due to banditry, terrorism, and kidnapping. To counter these security threats, a proactive and intelligence-driven approach must be developed to ensure the safety and stability of the nation.
Furthermore, recent constitutional amendments placing electricity transmission and railway transport on the concurrent list offer opportunities for investment and improvement in these sectors. Yet, the successful implementation of the Presidential Power Initiative (PPI), aimed at overhauling the national grid and increasing daily power supply from 5,000MW to 25,000MW, must be prioritized and seen through by the new administration.
Analysts recommend that the government prioritize investment in human capital development through initiatives such as a planned student loan program. Improving the skills and talent of the labour force would lead to increased productivity and increased diaspora remittances. Meanwhile, public sector reforms, including judicial and civil service reforms, along with measures to combat corruption, should be emphasized to improve the ease of doing business. By addressing these crucial areas, the incoming administration can lay a robust foundation for sustained economic growth in Nigeria.
Fiscal sustainability has become a significant challenge under the outgoing administration, with debt servicing consuming over 80% of revenue as of November 2022. However, decisions regarding the removal of subsidies and exploring revenue generation, such as increasing the VAT rate, may be challenging due to the incoming administration’s relative lack of popularity, with over 60% of the electorate voting for opposition parties. Nevertheless, the launch of the Dangote Refineries is expected to incentivize the incoming administration to consider removing subsidies altogether. Furthermore, experts suggest leveraging the capital market to securitize undervalued state-owned companies, allowing for proper valuation, attracting investment, and addressing fiscal and external sector liquidity concerns (see illustration 1 below)
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