Tinubu’s 10% GDP growth rate: What are the chances?

As with previous general elections in Nigeria, Nigerians witnessed another round of promises made by the different candidates who contested the 2023 presidential election, especially those who were at the forefront of the race. 

Dataphyte, in a two-part report, captured some of these promises made by the four leading candidates in their manifestos (contained here and here).

One of the promises made by the candidates of the All Progressives Congress (APC), who eventually won the highly contested election, is to grow Nigeria’s Gross Domestic Product (GDP) by 10% annually.

Source: TINUBU’S MANIFESTO: RENEWED HOPE (2023)

This 10% projection is captured on page 13 of Bola Tinubu’s manifesto.

During his inaugural speech on May 29, 2023, Tinubu said that his administration is targeting at least a 6% annual GDP growth rate which will be achieved through budgetary reforms aimed at stimulating the real sector of the economy.

“On the economy, we target a GDP of not less than six percent growth,” he promised.

Whether at 10% or 6%, experts have expressed concerns about the possibility of this promise. 

BudgIT, in its review of the policy document of Tinubu, described the proposed 10% GDP growth as not practicable. 

“While 10% proposed GDP growth is theoretically doable, however, the practicability of achieving that looking at Nigeria’s economic fundamentals is very slim based on the projections for inflation and GDP growth rate in Nigeria’s MTEF 2023-2025”, BudgIT said. 

KPMG, one of the Big Four accounting firms that offer accounting, audit, and business advising services to companies worldwide, on the other hand, said the 6% GDP growth rate by Tinubu during his inaugural speech will be difficult to achieve. 

Yemi Kale, a Partner and Chief Economist at KPMG Nigeria, said what is more feasible for Tinubu’s administration is a 4.-4.5% GDP growth. He said that the 4-4.5% growth will only be feasible with the right policies in place and consistent macroeconomic reforms. 

“An average GDP growth rate of between 4-4.5% at the best is more feasible in the next 4 years. Even this will require the country to get its policies right and keep consistent faith with macroeconomic reforms,” Yemi Kale noted.

In addition to what these experts have said about the practicality of this ambitious goal by Tinubu to increase Nigeria’s GDP growth rate by 10% annually or 6% on average in the next 4 years, what does historical data say about Nigeria’s GDP growth rate, particularly from 1999?

What does Nigeria’s historical data say about a 10% annual growth rate?

Since 1999, Nigeria’s annual GDP growth has only surpassed 10% once, which was in 2002. 

The 15.33% all-time high growth rate that was recorded under Olusegun Obasanjo’s administration was attributed largely to private sector reforms in telecommunication, banking, and pension administration that were embarked upon by the administration.

Since then, such a feat has not been recorded. The next highest growth rate after then was in 2004 (9.25%), still under Obasanjo’s administration. 

Between 2005 and 2009, GDP growth hovered between 6-8.04%. 

Since 2010, the growth rate has been below 6%, except on two occasions under the Goodluck Jonathan administration when it grew above 6%. In fact, under the 8 years of Buhari, the country’s GDP growth rate never hit 4%. This could be described as the worst period as far as GDP growth is concerned. Even a negative growth was recorded twice, indicating periods of recession (in 2016 and 2020).

From this trend data, a 10% annual growth rate is unlikely to happen, especially with the performance of the last 9 years, coupled with factors like inadequate infrastructure, inflation, and others, which constrain the country’s economic growth.

Moreover, the average GDP growth record under the former administration was just 1.1%, a sharp decline from what the two preceding administrations recorded.  

Average GDP growth rate under Obasanjo, Yar’Adua/Jonathan, and Buhari administrations

Source: KPMG Nigeria

Is Tinubu’s promised GDP growth rate feasible in Sub-Saharan Africa? 

Also, to still examine the possibility of a 10% GDP annual growth rate, Dataphyte  analysed the GDP growth rate of Sub-Saharan African countries.

Sub-Saharan African countries are those countries in Africa that lie south of the Sahara Desert. Nigeria is one of these countries. 

Data from World Bank, especially in recent years, indicates that Tinubu’s proposed 10% annual GDP growth is only theoretically doable and not likely feasible.

First, from 1999 to 2021, there was never a time the annual GDP growth of Sub-Saharan African countries hit 10%. The highest growth rate the region recorded was in 2004, which coincidently was also the time Nigeria recorded its second-highest GDP growth in the period under review.

Secondly, since 2014 the GDP growth of the region has fluctuated between 1-3%, with a noteworthy increase only recorded in 2021. This was after negative growth in 2020, which was attributed to the decline in economic activity in the region and disruption in the global economy as a result of the coronavirus pandemic.

Economic growth in the region declined to 3.6% in 2022 from 4.20% in 2021. The World Bank projected a further decline this year. 

This projection, according to the World Bank, is as a result of the persistent sluggishness of the global economy, high inflation rates, and challenging global and domestic financial conditions amid high levels of debt.

The indication of this is that the possibility of a 10% annual GDP growth, as proposed by Tinubu in his manifesto, is unlikely.

Is a 10% growth rate common in Lower Middle-Income Countries?

An analysis of the data for lower middle income suggests the same. 

Lower middle-income economies are those countries with a Gross National Income (GNI) per capita between $1,036 and $4,045. Nigeria’s GNI per capita as of 2021 was $2,333. Thus, it is classified as a lower middle-income economy.

The GDP growth rate of the lower-middle-income countries since 1999 also shows that Tinubu’s 10% projection is only an ambitious plan because the economies of these countries classified as lower-middle income have never hit a 10%.  

The highest growth rate recorded was 6.61% in 2010. Since then, the growth rate has fluctuated between 3-5.82%. It is, however, worth highlighting that in 2021, the growth hit almost 6% after a negative growth in 2020.

From the analysis of Nigeria’s GDP growth historical data, Sub-Saharan African countries, and lower-middle-income economies’ GDP growth rate data, it appears that the 10% proposed growth rate by Tinubu may not be attainable. 

However, the Nigerian economy, according to KPMG is expected to see a strong year-on-year growth but not up to the promised growth rate by President Tinubu as stated in his manifesto or during his inaugural speech on May 29.

Moreover, the economic growth rate the International Monetary Fund (IMF) projected for Nigeria this year and 2024 is 3.2% and 3.0%, respectively. This is contained in its report titled “World Economic Outlook: A Rocky Recovery (2023 Apr).