Nigeria is currently the world's 22nd largest economy and the largest in Africa but the country is still heavily dependent on crude oil. Over recent years, efforts have been made to diversify the economy with particular emphasis on agriculture, solid minerals and the entertainment industry.
Yesterday, PwC estimated that the Nigerian economy would surpass those of Germany, the United Kingdom, France and Saudi Arabia by 2050.
Disclosing this at the Lagos Chamber of Commerce and Industry stakeholders forum on the state of the economy, tagged Nigeria: Looking Beyond Oil, PwC partner and chief economist Nigeria, Andrew Nevin, said that to attain the goal, however, diversification must continue.
Mr Nevin said: “Nigeria’s intrinsic potentialities lie beyond oil and harnessing these potentialities has become an imperative, given the expectations of lower for longer oil prices. Based on recent trends, our report reviews the impact of low oil prices on key economic indicators and the real sector through an industry survey.”
However, he added that the transition to a non-oil economy would not be an easy task as based on a 2016 PwC interview of foreign companies across Nigeria, four concerns stood out as challenges with the business environment. These include corruption, inadequate infrastructure, low skill levels and macroeconomic uncertainty.
“Our survey highlights the exchange rate as one of the top challenges facing industries in recent times. Capital controls, foreign exchange rationing and restrictions on the importation of certain items are measures the Central Bank of Nigeria (CBN) has implemented to preserve the foreign reserves and maintain currency stability.
“Improving tax collection and administration have become imperative for achieving national growth objectives. Nigeria is a low-tax economy compared to its peers and in addition, challenges with arbitrary exemptions and enforcement have further constrained tax receipts." Mr Nevin added.
He noted that Nigeria needed to ensure sustainable fiscal management that was resilient to global oil price cycles. In addition, he pointed out that the framework for tax exemptions should be reviewed and approvals targeted at growth inducing sectors as government improves collection.
Mr Nevin added: “Efficiency in government spending has to improve and there is room for substantial savings in capital outlays and operating expenditure across the three tiers of government. In addition, the government needs to be deliberate about increasing fiscal savings through a higher accretion to the sovereign wealth fund which has investment objectives of diversification and improving long term economic prospects.”
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