BY BLAISE UDUNZE
When the Central Bank of Nigeria (CBN) just lately declared that the nation was on the right track to turning into a $1 trillion economic system via ongoing banking reforms, the assertion was met with cautious optimism. To many, it gave the impression of a long-awaited promise of prosperity as a declaration that Nigeria’s {economic} renewal is lastly underway. But behind the projection lies a important query, if banking reforms alone drive the sort of broad-based, sustainable development required to make Nigeria a trillion-dollar economic system?
The fact, in response to a number of consultants and {economic} knowledge, is that banking reforms although mandatory are inadequate. The construction of the Nigerian economic system continues to be too fragile, the true sector too weak, and the coverage framework too inconsistent to maintain such lofty development. Without focused reforms that strengthen manufacturing, business, and exports, the trillion-dollar dream dangers remaining what one economist aptly described as a “mirage.”
Tilewa Adebajo, Chief Executive Officer of CFG Advisory, didn’t mince phrases when he addressed the topic on ARISE NEWS earlier this yr. “We said Nigeria already has the potential of a $1 trillion economy. But $1 trillion economy is a mirage. We shouldn’t go there again,” he stated. “If you do not have your policies in place, you cannot reach that $1 trillion economy.”
Adebajo’s warning strikes on the coronary heart of the matter, saying potential isn’t efficiency. Nigeria has ample human and pure assets, however poor coverage implementation, weak governance, and chronic inflation proceed to choke productiveness and funding.
According to Adebajo, reforms alone can’t drive development. “Reforms on themselves cannot be the solution or answer to growing the economy,” he defined. For him, the CBN’s concentrate on {financial} sector restructuring should be complemented by microeconomic options reminiscent of job creation, poverty alleviation, and social intervention insurance policies that ease the hardship of abnormal Nigerians.
“There has to now be a human face,” he emphasised. Economic transformation, he argues, should not solely be about GDP numbers however about bettering the standard of life for tens of millions trapped in poverty.
While the CBN’s recapitalisation directive goals to strengthen the banking system and entice overseas capital, many business gamers insist that banking energy is meaningless with out productive retailers for credit score. The Group Managing Director of UBA Plc, Oliver Alawuba, made this clear on the Annual Conference of the Finance Correspondents Association of Nigeria (FICAN).
He said that attaining the $1 trillion economic system goal “requires not just incremental growth, but structural shifts in how we approach banking, financial innovation, and sectoral development.”
For Alawuba, the true sector in agriculture, manufacturing, and providers should change into the true engine of development.
“A vibrant real sector will drive employment, foster innovation, and strengthen the overall economy by reducing dependency on the oil sector,” he stated.
Recapitalization alone, he famous, “is not enough; it must be followed by focused lending to strategic areas that promise the highest economic returns.”
This sentiment displays a broader consensus amongst economists that credit score should circulation to the place worth is created. Yet, Nigerian banks usually want the consolation of investing in risk-free authorities securities over financing industrial or agricultural growth. The result’s a {financial} system that thrives on paper income however contributes little to actual {economic} output.
Indeed, Nigeria’s actual sector has remained beneath stress for years. Manufacturing’s share of GDP nonetheless hovers round 10 to 12 %, hampered by erratic energy provide, excessive logistics prices, and dependence on imported inputs. Agriculture, using over one-third of the inhabitants, stays largely subsistence-based and technologically backward. Small and Medium Enterprises (SMEs), which make up 90 % of companies and contribute 48 % of GDP, proceed to battle with restricted entry to reasonably priced, long-term credit score.
Alawuba means that that is the place the banking recapitalisation drive should meet fintech innovation. By creating merchandise particularly tailor-made to SMEs reminiscent of versatile mortgage packages, digital lending instruments, and market entry platforms which banks can unlock exponential development. He argues that the way forward for Nigeria’s economic system is determined by “the strategic alignment of policy, investment, technology, and, most importantly, our collective will to innovate and grow.”
However, attaining this alignment requires greater than financial engineering; it calls for a whole rethink of fiscal and industrial coverage. As Isa Omagu of the Bank of Industry (BoI) defined throughout the identical discussion board, “The economy stands on both the monetary and fiscal sides; we need both sides to work together.” While the financial facet stabilizes costs, fiscal authorities should “come in on the issue of governance.” Nigeria’s largest {economic} downside, he stated, is straightforward: “We are not producing enough, and we cannot continue to consume imported goods and expect the economy to be robust.”
Omagu’s assertion underscores the nation’s most urgent contradiction as a consumption-driven economic system that produces little of what it consumes. He referred to as for deeper funding in agriculture, infrastructure, and providers to reduce importation and cut back stress on the overseas trade market. “We cannot achieve a $1 trillion economy without focusing or boosting our production capacity,” he warned.
The Deputy Director of the Banking Examination Department on the Nigeria Deposit Insurance Corporation (NDIC), Emeka Udechukwu, echoed the same concern. He warned that “without a vibrant real sector, the economy might not grow fast enough to hit the $1 trillion target.” He argued that whereas the CBN’s loan-to-deposit ratio coverage was designed to compel banks to lend extra to the productive sector, “fundamental infrastructural deficits” and coverage inconsistencies have undermined its influence. “If there is challenge in the real sector of any economy, that economy is already challenged,” he stated. “We have to go back to the real sector and do what we are supposed to do.”
This prognosis aligns with what many analysts have lengthy argued that Nigeria’s {economic} downside isn’t lack of cash however lack of manufacturing. Trillions of naira flow into throughout the {financial} system, but they not often translate into new factories, expanded farms, or exportable items. A $1 trillion GDP projection, due to this fact, might mirror forex devaluation or statistical rebasing greater than real productiveness good points.
The nation’s overreliance on oil additional complicates the trail to sustainable development. Data from the National Bureau of Statistics (NBS) exhibits that within the final quarter of 2023, crude oil accounted for over 81 % of complete exports, whereas non-oil exports amounted to simply round N1 trillion. Even although non-oil exports grew by 38.5 % in early 2024, their worth stays meagre for an economic system looking for diversification.
Nigeria’s non-oil export base together with manufactured items, agricultural merchandise, and providers stays underdeveloped. Experts argue that to flee this entice, Nigeria should be taught from Asian success tales like Singapore and Vietnam, the place industrialization, export-oriented manufacturing, and human capital funding remodeled poor economies into international opponents.
Singapore, as an illustration, transitioned from excessive unemployment and poor infrastructure within the Nineteen Sixties to one of many world’s richest nations via huge funding in schooling, manufacturing, and know-how. Its prime exports at this time embody built-in circuits and equipment merchandise that drive international industries. Similarly, Vietnam developed from an agrarian, war-torn economic system to a producing hub exporting electronics, textiles, and footwear value over $370 billion in 2022. Nigeria, in contrast, has watched its GDP fall from $400 billion in 2013 to round $250 billion by 2023.
Both international locations show that industrialization, not {financial} hypothesis, drives long-term development. As Uchenna Uzo, a advertising professor at Lagos Business School, put it, “Manufacturing and local production are the key things that can set Nigeria apart.” He added that Nigeria can even entice diaspora funding if it builds the proper infrastructure and coverage stability.
The lesson is obvious; a trillion-dollar economic system can’t be decreed from financial coverage statements or achieved via banking reforms alone. It should be earned via manufacturing, worth addition, and innovation. Nigeria’s manufacturing base should broaden, its agricultural productiveness should rise, and its infrastructure reminiscent of energy, transport, and logistics should be modernized.
Banking reforms ought to due to this fact function an enabler, not a substitute, for actual sector growth. The CBN’s recapitalization drive, whereas commendable, should be tied to sectoral targets. Banks that broaden credit score to manufacturing, agriculture, or export-oriented companies ought to get pleasure from regulatory incentives, whereas speculative investments in non-productive belongings needs to be discouraged.
Equally vital is the necessity to tame inflation and stabilize the forex. As Adebajo famous, Nigeria can solely maintain GDP development of 8-10 % if inflation is saved under 12 %. Persistent inflation erodes buying energy, deters funding, and undermines long-term planning. Without macroeconomic stability, even the best-intentioned reforms will falter.
Furthermore, there should be a coordinated industrial coverage that aligns financial, fiscal, and commerce aims. For occasion, whereas the CBN seeks to strengthen the naira, the fiscal authorities should concurrently assist native producers via tax incentives, infrastructure funding, and export facilitation. Import restrictions, when mandatory, needs to be strategically designed to guard rising industries with out stifling competitors.
Nigeria’s SME ecosystem additionally deserves focused assist. As the Bank of Industry’s Omagu and UBA’s Alawuba each emphasised, SMEs are the spine of employment and innovation. Yet, they’re usually probably the most credit-starved. Government-backed credit score ensures, enterprise funds, and fintech-driven micro-lending might bridge this hole, serving to small enterprises change into the inspiration of Nigeria’s industrial base.
Equally, agricultural transformation should transfer past subsistence farming to agro-industrialisation reminiscent of processing, packaging, and exporting value-added merchandise moderately than uncooked supplies. This strategy is not going to solely improve farmers’ incomes but additionally create jobs and cut back stress on overseas trade demand. A concentrate on worth chain growth from farm to manufacturing unit to market will be sure that the advantages of development attain abnormal residents.
At a time when 133 million Nigerians are multidimensionally poor, in response to NBS knowledge, the urgency for actual sector reforms can’t be overstated. An economic system that relies upon overwhelmingly on oil exports, consumes greater than it produces, and imports most of its important items can’t declare to be on the trail to a trillion {dollars} in any significant sense.
The authorities’s projection of attaining a $1 trillion economic system by 2030 might nonetheless be attainable however provided that the nation embarks on deep structural reforms. These embody guaranteeing dependable energy provide, revamping transport infrastructure, tackling corruption that inflates challenge prices, and bettering governance and coverage consistency.
Nigeria should additionally make investments aggressively in schooling and expertise growth, following the instance of nations like Singapore, which turned human capital into its biggest {economic} asset. A younger, expert inhabitants can drive innovation, entrepreneurship, and technological adoption which is the true levers of contemporary {economic} energy.
The street to a trillion-dollar economic system is not going to be paved by steadiness sheets and banking reforms alone. It can be constructed by factories, farms, and entrepreneurs. It will rely on a nation’s skill to provide, innovate, and commerce competitively. It would require a deliberate shift from coverage bulletins to coverage execution, the place authorities actions translate into measurable outcomes for residents.
Nigeria’s trillion-dollar dream is achievable, however not on the present trajectory. Without revitalizing the true sector, guaranteeing macroeconomic stability, and investing in folks and manufacturing, the CBN’s optimism dangers sounding like rhetoric indifferent from actuality. Banking reforms might stabilize the system, however solely actual sector reforms can maintain development.
In the tip, Nigeria’s {economic} future is not going to be decided in banking halls however within the fields, factories, and workshops the place actual worth is created. The trillion-dollar economic system is not going to come from {financial} statements, it should come from the sweat of productive Nigerians who, if correctly empowered, can rework potential into prosperity.
Blaise, a journalist and PR skilled writes from Lagos, might be reached by way of: blaise.udunze@gmail.com
