Afrinvest asserts that Nigeria needs to expand its economic activities beyond the banking sector in order to realize a $1 trillion economy.


The Federal Government has received advice that in order for the country to reach the projected $1tn economy, it must expand beyond the banking sector.

This recommendation was made by Chioke Ike, the Group Managing Director of Afrinvest, during the launch of its 2024 Banking Sector Report titled 'Recapitalisation: Catalyst for a $1 Trillion Economy?'.

The central bank, prior to announcing the new capital requirements for banks, mentioned that banks must become stronger and more stable to support the $1tn economy forecasted by President Bola Tinubu.

Chioke stressed that while the recapitalisation process would boost banks' ability to serve the broader economy, increase lending capacity, attract foreign investments, and enhance risk management, the banking sector alone cannot propel economic growth.

He stated, "To achieve a $1tn economy, Nigeria must expand beyond the banking sector. Every facet of the economy must progress in tandem."

Chioke also underscored the importance of human capital development, pointing to Mexico, Indonesia, and Turkey as examples of countries with higher GDP per capita and human capital indices.

"Nigeria must invest in its people to achieve similar growth. Prioritizing human capital development is essential to reaching a $1tn economy. The macroeconomic landscape is challenging, with a potential national strike on the horizon.

Nevertheless, the necessary data is available to effectively manage the economy, but politicians must take heed and exhibit the discipline to remain humble."

John Onoja, the Acting Director of Financial Policy and Regulations, representing CBN Governor Olayemi Cardoso, affirmed the central bank's dedication to achieving the $1 trillion economy goal. "We are pleased that the current administration has established this target, and we are committed to facilitating its realization," he stated.

He emphasized that the CBN is collaborating closely with banks to assess their capital strategies and ensure a successful implementation, working alongside entities such as the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, the Nigerian Exchange, and the National Assembly.

In a related discussion, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, underscored the necessity for fiscal discipline, revenue enhancement, and competitiveness.

"Nigeria is a nation with limited resources, operating on a budget of less than $40 billion, which includes supplementary budgets for all 36 states and 774 local governments. Our revenue falls short of even half that figure," Oyedele remarked, emphasizing the critical need for reform.

To realize a $1 trillion economy, Oyedele highlighted the significance of a robust banking sector, a functional capital market, and stable policies.

He stated, "We can boost revenue by optimizing government assets, reforming state-owned enterprises such as NNPC Limited, and leveraging solid minerals and natural resources." His objective is to elevate Nigeria’s revenue-to-GDP ratio to 30 percent within the next two to three years. He also advocated for fostering prosperity by eliminating taxes on capital, investment, production, poverty alleviation, and agricultural seeds.

Oyedele pointed out that Nigeria's over 60 official taxes and levies are less favorable compared to South Africa's singular personal income tax, which generates more revenue than all Nigerian taxes combined. "Through these reforms, we can enhance revenue collection and progress towards a $1 trillion economy," Oyedele concluded.