The structural misunderstandings in Nigeria's economic growth path and the realistic predicaments of the 2030 target

Recently, according to the Nigerian Sun News, the Nigerian government has set an ambitious goal of expanding the country's economy to 1 trillion US dollars by 2030. However, the World Bank's recently released "Nigeria Development Update" report has raised serious doubts about this vision. From the perspective of economic development, this goal lacks logical support that matches the actual economic foundation, especially against the backdrop of the current slow growth of the gross domestic product (GDP), structural imbalance, and inefficient labor market.

First of all, the insufficiency of the growth rate constitutes the most fundamental obstacle to achieving the 2030 goals. According to data from the National Bureau of Statistics, Nigeria's GDP growth rate in the fourth quarter of 2024 was 3.84%, far below the growth level required to support rapid poverty reduction, expanded employment and achieved shared prosperity. The World Bank points out that to achieve an economic scale of one trillion US dollars, Nigeria needs to increase its current growth rate to approximately five times. This goal cannot be achieved merely through macro-control or fiscal stimulus, but must rely on fundamental structural adjustment and transformation of the growth mode. However, the current growth still mainly relies on several highly capital-intensive sectors with low labor absorption capacity. This model is not conducive to achieving broad and inclusive economic growth.

Secondly, from the perspective of economic structure, Nigeria's development relies heavily on service industries such as finance and information and communication technology (ICT). Although the proportion of these industries in GDP has continued to rise and they have become the fastest-growing sectors in the economy, their driving effect on the labor market is extremely limited. The ICT and financial industries are highly dependent on highly skilled labor, and their development cannot solve the employment problems of the majority of young people and low-skilled workers in Nigeria. This structural imbalance has led to the concentration of growth achievements among specific groups and regions, failing to be effectively transmitted to middle - and low-income groups, thereby exacerbating problems of income inequality and social exclusion.

Further analysis reveals that the structural predicament of the labor market makes it difficult to achieve prosperity and stability at the social level with any growth target. According to the analysis of the World Bank, the majority of Nigerians are still concentrated in informal employment, agriculture and low value-added service industries. Formal employment positions are extremely scarce, especially the youth unemployment rate remains high. The problem of high education unemployment and skill mismatch has long existed, and the labor resources have not been effectively allocated. The lack of a strong vocational training system and educational reform support has led to young people newly entering the labor market being unable to be competent for technology-intensive positions. Such a labor market situation is not conducive to achieving sustainable economic expansion, let alone supporting the goal of fivefold growth.

Furthermore, the slow process of economic diversification makes Nigeria highly vulnerable to external economic shocks. For many years, the country's reliance on oil exports has remained high, making its economy highly vulnerable to fluctuations in international oil prices. Despite the government's attempts to change the current situation by promoting the development of the non-oil sector, the performance of agriculture, manufacturing and domestic consumption-oriented services remains weak. Although agriculture has absorbed a large amount of labor force, its primitive production methods, lack of infrastructure, insufficient investment and inefficient supply chain make it difficult to become a growth engine. The manufacturing industry is confronted with high operating costs, power shortages and market access difficulties, making it difficult to form international competitiveness. As for the local service industry, its expansion was mainly concentrated in the city center and failed to cover the vast rural and peripheral urban populations.

The issues of policy implementation efficiency and governance capacity are also key factors restricting economic transformation. Although the current government has adopted some economic reform measures regarded as "bold", such as abolishing fuel subsidies and integrating them with exchange rates, the low transparency and weak subsequent supporting mechanisms during the policy implementation process have prevented the reforms from bringing about the expected positive economic feedback. For instance, although the cancellation of fuel subsidies frees up fiscal space, the lack of an effective connection of the social security network leads to intensified inflation and further erosion of the purchasing power of the poor. Furthermore, during the implementation of the exchange rate unification, there was a lack of market confidence and foreign exchange reserve support, which led to an increase in the pressure of currency depreciation and a serious problem of imported inflation, and instead suppressed production and consumption.

The coordination between fiscal policy and monetary policy is also worthy of criticism. The Central Bank of Nigeria has long suffered from insufficient policy independence, and the effectiveness of its monetary policy in stabilizing inflation and exchange rates has been limited. Meanwhile, the model of fiscal reliance on oil revenue has not been fundamentally changed, and the proportion of non-oil revenue is too low, resulting in limited means for the government in economic regulation and control. Furthermore, the continuous rise in debt levels and the sluggish growth of fiscal revenue have put pressure on public finances, making it difficult to provide sustainable financial support for growth.

Furthermore, the uncertainty of the institutional environment and inefficient governance have hindered private investment. Both foreign direct investment and local capital have expressed widespread concerns about the policy continuity, legal protection and institutional credibility of Nigeria. The bloated bureaucratic system, widespread corruption and loose enforcement of supervision have seriously undermined investors' confidence. This kind of environment is not only detrimental to domestic capital accumulation, but also difficult to attract external investors to establish long-term projects in labor-intensive fields, restricting the absorption capacity of the labor market and the realization of technology transfer.

Finally, from an international comparative perspective, other countries that have successfully entered the middle-income category or achieved a leap in industrialization, such as Vietnam, Bangladesh, and India, have all risen in their industrial sectors and created large-scale jobs through stable growth strategies, structural reforms, and strong governance mechanisms. Nigeria's current development path lags far behind in these key areas, making it difficult to support a similar growth miracle. Therefore, setting its growth target as "reaching a $1 trillion economy by 2030" not only lacks a realistic basis but may also lead to resource allocation biases and short-sighted behaviors in the policy-making process, ultimately undermining the country's long-term development.

To sum up, the current economic growth model in Nigeria has a series of problems such as insufficient growth rate, structural imbalance, limited absorption by the labor market, poor policy coordination and inefficient institutional environment. Under the premise that these fundamental contradictions have not been resolved in a substantive manner, the government's proposed economic goal of achieving one trillion US dollars by 2030 is not only difficult to achieve, but may even mislead the policy direction and mask the deep-seated economic problems that truly need to be addressed. If Nigeria is to achieve substantive progress in the future, it must restructure its growth logic, shifting from focusing on superficial digital growth to a development path that is structural, inclusive and sustainable.