Thursday, October 20, 2016 9:30am / PwC
With GDP in market exchange rate (MER) terms at $490 billion in 2015 , Nigeria ranked as Africa's largest economy and could be the 9th largest global economy by 2050 according to PwC estimates. Prior to the recent decline in the price of crude oil, Nigeria enjoyed strong economic growth at a CAGR of 5.3%, post-rebasing. However, this growth did not translate into social development as high poverty and inequality levels persist.
Our previous report, which estimates the impact of corruption on the Nigerian economy, identifies a low standard of living and widening inequality as some of the mechanisms through which corruption impacts the economy. In addition, based on a GDP projection of $1.45 trillion in 2030, the report estimates that Nigeria's GDP could be $530 billion higher if corruption is reduced to levels comparable to Malaysia . Thus, effective policies aimed at reducing corruption will be critical to achieving Nigeria's GDP potential.
However, this report argues that national policies should be guided not only by improvements in GDP but also a broader measure of development for which we use the Human Development Index (HDI). Whilst the HDI is a composite measure of development based on an assessment of education, life expectancy and income per capita indicators, this research draws on a more direct and measurable approach to tracking improvements in human development. Using quantitative analysis, academic reviews and country case studies, we identify three critical levers that need to be improved to enable Nigeria reach its socio-economic targets which we measure by a high human development status. These levers are:
· Improving the ease of doing business
· Enhancing labour productivity
· Reducing the overall level of corruption perception
Thus, we conclude that progress across these three levers could result in a significant improvement in Nigeria's HDI score, reaching 0.73 (2014: 0.51), thereby attaining a “high human development” status by 2030.Specifically, we target Nigeria improves:
♦ Ease of doing business ranking through a higher Distance to Frontier (DTF)7 score of 61 in 2030 (2015: 45)
♦ Labour productivity to $12.05/hr in 2030 (2015: $3.61/hr)
♦ CPI score to 34 in 2030 (2015: 26)
Translating economic growth into real improvements in the lives of the average citizen poses a real challenge for policy makers. Tracking progress across these levers has the potential to boost the attention on HDI as a priority on the public agenda. An analysis of these three levers can identify areas requiring policy attention and specific strategies targeted at improving overall well-being can be formulated. PwC will commence the publication of annual monitoring reports on the performance of these three identified levers with policy suggestions for each category.
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