A country’s GDP is the total monetary value of all the finished goods and services produced within its borders in a specific period of time.
The N10.2tn increase in the GDP is part of the proposals by the Federal Government in the Medium Term Expenditure Framework that will be submitted to the National Assembly in October this year.
The MTEF provides the basis for annual budget planning and it consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including the government financial obligations in the medium term.
The document, prepared by the Federal Ministry of Budget and National Planning, also sets out the underlying assumptions for these projections, providing an evaluation and analysis of the previous budget and presenting an overview of consolidated debt and potential fiscal risks.
Investigations by our correspondent revealed that the Federal Government would be placing its assumption on the projected recovery in the GDP growth expected to happen after this year’s economic slowdown.
It was gathered that going forward, the strategy of the Federal Government was to drive economic growth largely from activities such as agriculture, solid minerals, building and housing.
It was revealed that an export-led growth that would be anchored on the diversification of the productive base of the economy would be pursued in order to stimulate economic development.
In order to achieve this growth, the Minister of Budget and National Planning, Senator Udo Udoma, said that the Federal Government would “need some game changers” to stimulate economic growth.
Some of them are to increase the level of support for the rapid development of the Small and Medium Enterprises through adequate funding; provision of agricultural input subsidy for farmers; and encouragement of private sector participation in production and marketing.
Other measures to stimulate growth are the encouragement of foreign construction companies to patronise local producers of inputs as well as to subcontract certain projects to small indigenous construction firms.
There are also plans for massive development of infrastructure that would support the growth of critical sectors of the economy.
The minister said while state governments had been encouraged to focus their spending on priority areas that would increase productivity and job creation in their states, the private sector must assist in stimulating growth.
He said, “The management of the national economy is not the responsibility of the Federal Government and state governments alone. The private sector has a critical role to play as the engine of development. Government intends to engage extensively the private sector to explain our policies and establish what other bottlenecks we need to remove to stimulate investment in Nigeria.
“We are committed to reviving the economy and take advantage of the opportunities to invest in agriculture, solid minerals, manufacturing and generating foreign exchange by exporting goods and services.”
Commenting on whether the proposed increase of N10.2tn in the GDP was feasible in view of the current economic realities, financial analysts described the target as ambitious but achievable.
A former Managing Director, Unity Bank Plc, Mr. Muhammed Rislanudeen, told our correspondent in a telephone interview that the first thing the government should do to restart the economy was to fully implement the capital component of the 2016 budget.
Rislanudeen, who is also the Managing Director, Safmur Investments Limited, said, “It is a very tall, ambitious policy but achievable and the best way to approach it is by full implementation of the 2016 capital budget as a means of reflating and jump-starting the economy thereby pushing it towards self-sustained growth and steering it away from stagnation and recession.
“With a negative first quarter GDP growth rate of -0.36 per cent, we may not start seeing full recovery until the last quarter of the year. There must also be full synchronisation of both fiscal and monetary policies to ensure growth , income and employment enhancing sectors are supported by direct intervention funds at a single digit interest rate while sustaining the liberalised foreign exchange market.”
Also, the Head, Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke, said that the GDP target for 2017 was realistic, especially when considered within the assumptions that oil price was expected to rise, coupled with the strategies to boost local production.
Uche, an associate professor of finance, said, “I think the target is realistic, especially when taken in the context of baseline assumptions of $42.5 per barrel and 2.2 million barrels per day in 2017. I reckon the envisaged growth next year will come more from the non-oil sectors such as agriculture, construction and services.
“Since oil revenue is critical to drive investments in these sectors, it is important that the oil production disruptions in the Niger-Delta be addressed quickly. Another crucial issue is ensuring significant improvements in electricity supply to help grow the agriculture, manufacturing and the services sectors.”
He said while it was imperative to aim at the GDP growth, it was more important for the growth in the GDP to be made more inclusive.
“The Ministry of Budget and National Planning will do well to make this issue a part of the consultations for the MTEF 2017-2019,” he said.