KPMG Nigeria: Tinubu’s target of 6% annual GDP growth not feasible

June 9, 2023 2:41 pm

KPMG says Nigeria may not be able to achieve 6 percent average gross domestic product (GDP) growth rate in four years.

In his inaugural speech on May 29, President Bola Tinubu set a target to increase the GDP growth rate of the country by 6 percent on average in the next 4 years through budgetary reforms aimed at stimulating the real sector of the economy.

KPMG, in a flashnote titled ‘Prospect for Attaining 6% Average Growth Rate in 4 years’, and released on Friday, said the target “might be difficult to attain” within the timeframe set by the president.

“For example, the consensus analysts is a GDP growth in 2023 of between 2.7-3.2%. Thus, if we assume a GDP growth of 3% in the first year, the economy will then have to grow by an average of 7% for the subsequent 3 years and moving growth from a forecasted 3% in 2023 to at least 7% in 2024 and afterwards seems overly ambitious,” the firm said.

KPMG said attaining a 6 percent real GDP growth on average from 2023 to 2026 means growing the value of real GDP from N74.6 trillion in 2022 to N92.5tn by 2026, representing an increase of N17 trillion in 4 years.

The professional services firm explained that within 12 years (2010 and 2022), real GDP grew by about N17 trillion which will have to be replicated in just 4 years and within a much more challenging macroenvironment that cuts across the fiscal, monetary, external, and real sectors.

KPMG, however, said that while the 6 percent target is unlikely to be achieved, the best possible GDP growth rate to be achieved within the next 4 years would be between 4 to 4.5 percent.

“In conclusion, while we expect stronger year on year growth over the next few years, we are of the opinion that there is very limited space to attain a 6% average real growth rate in 4 years or an increase in real GDP by N17trillion,” KPMG in Nigeria said.

“We are of the opinion that an average GDP growth rate of between 4-4.5% at the best is more feasible in the next 4 years.

“Even this will require the country to get its policies right and keep consistent faith with macroeconomic reforms.”