By Adedapo Adesanya
Consultancy firm, PricewaterhouseCoopers (PwC), has forecast that recent developments will see Nigeria’s economy grow by 2.8 per cent in 2023 and by 3 per cent in 2024.
In its latest report, it showed that the Nigerian gross domestic product (GDP) would slow, a move that started the first quarter of the year with through to the end and expand at virtually the same rate next year,
“The marginal growth in GDP by 2.5 per cent in Q2 2023 from 2.3 per cent in Q1 2023 was caused by the lingering effect of the cash crunch. PwC projects a 2.8 per cent growth rate for Nigeria in 2023 and 3 per cent in 2024,” the company said.
That marginal projection could be part of the chain reaction from enforcing fiscal reforms in Nigeria, according to the professional services firm.
The forecast from PwC is slightly lower than that of the International Monetary Fund (IMF), which put Nigeria’s GDP growth rate at 2.9 per cent and that of 2024 at 3.3 per cent.
The 2024, as the IMF projected, falls behind the emerging market and developing economies average, but is way ahead of that of Africa’s most industrialised economy South Africa.
The World Bank also expects a 2.9 per cent growth in the country this year.
PwC noted that the manufacturing, Information and Communication Technology (ICT) and finance & insurance sectors together contributed 45 per cent of company income tax and value-added tax in the first quarter, and this is worrying because it means revenue receipt is not broadly spread across the 21 sectors of the economy.
“This may have implications for reaching the targeted tax to GDP of 18 per cent by 2026 and government revenue generation capacity in the short to medium term,” it stated.
The federal government has set a target of a tax-to-GDP ratio of 18 per cent within the next three years.
Nigeria currently has a tax-to-GDP of 10.8 per cent and President Bola Tinubu has vowed to boost this above African peers like Cote d’Ivoire, Cameroon, and Senegal among others, who have between 15 per cent and 16 per cent.
The firm also warned that Nigeria may have to turn to foreign investors even as it claimed it is not considering the option at the moment.
Debt servicing currently gulps 96 per cent of government revenue with the country’s total debt standing at N87.4 trillion as of June. After securitising the Ways & Means credit from the Central Bank of Nigeria (CBN) in June, a devaluation of the Naira created more worries for the country.
Modupe Gbadeyanka