KPMG executive on the challenges ahead for Nigeria's economy

06 March 2020 2 min. read
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At the latest Nigerian-South Africa Chamber of Commerce (NACC) breakfast meeting, Associate Director for Strategy & Economics at management consultancy KPMG Nigeria Olusegun Zaccheaus has listed seven challenges for Nigeria’s economic growth over the next decade. 

Nigeria is the largest economy in Africa, and is touted as one of the drivers of economic growth for the continent. While the country is home to a thriving business environment, attracting significant foreign investment, it has a number of hurdles to cross before it can reach its economic potential. Zaccheaus has listed some of these.

For starters, Nigeria is heavily dependent on a number of factors. The country depends on foreign economies in a number of fundamental areas, be it for revenues, foreign investments, deficit funding or capital flows. Nigeria is also heavily dependent on oil prices, which makes it susceptible to turbulence in the global economy.

KPMG executive on the challenges ahead for Nigeria's economy

Debt is the second major barrier, and current targets when it comes to revenues are likely to drive this further up. The third challenge is the Central Bank’s prioritisation of the Naira’s value, which is beneficial in some economic scenarios, but has also led to depletion of the country’s external reserves.

Zaccheaus’ characterisation of the current Nigerian policy environment as colatile, uncertain, complex and ambiguous posts the fourth issue for the country, as its lack of stability and focus comes in the way of consolidated economic progress. The uncertainty, according to Zaccheaus, hinders decision-making.

Nigeria suffers from low productivity in its business environment, which is the fifth issue laid down by Zaccheaus. Productivity is steadily below the GDP line, and appears to be deteriorating. Low consumption power, which results from low productivity among other factors, is the sixth challenge for Nigeria going forth.

A lack of financial inclusion and income inequality has long been an issue for Nigeria, as pointed out by KPMG in the past. This scenario only appears to be getting worse. The last issue identified by Zaccheaus is in the socio-economic sphere, which encompasses issues of unemployment, corruption and low levels of education.