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Government role in driving economic growth

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By Abiodun Okunloye

GDP dropped to 2.3% in Q1'23 from 3.1% in Q1'22, and agricultural by 0.90%.

The new administration has been advised by the investment banking firm Comercio Partners Limited on policy guidelines, extensive policy reformation and governance in order to accelerate the country’s economic growth. Speaking on the Q1’23 GDP data, Tosin Osunkoya, co-managing partner of Comercio Partners and CEO of the firm’s asset management arm, offered these recommendations. GDP growth slowed to 2.3% in Q1’23 from 3.1% in Q1’22, with the agricultural sector shrinking by 0.90%, in the quarter for the first period in seven years, as reported by the National Bureau of Statistics, NBS.

Moreso, the drop in growth can be linked to a mix of issues, including currency shortage, fluctuations in global oil prices, poor infrastructure, and an unstable business environment plagued with severe interest rate increases from the country’s apex bank. Further concerning is that Nigeria’s agriculture industry had a decline for the first time in almost seven years, as noted by Osunkoya. Agriculture has historically supported millions of Nigerians and boosted the economy. The causes of this decline are cause for great concern. These causes include insecurity, flooding, a lack of intervention funding, misallocated funds, and infrastructure failures.

Policy reforms are needed to tackle Nigeria’s economic difficulties.

Osunkoya stated that the recent GDP report highlights the significance of thorough policy reforms and better governance to tackle Nigeria’s economic difficulties. It is imperative that the new administration establish policies that encourage economic development and investment. This process includes reforming regulations, ensuring consistent policies, fighting corruption, increasing openness, and fortifying institutions. Responding to the President’s goal of 6% GDP growth, he expressed confidence that the new government would be able to meet or exceed this goal if resources were routed appropriately and supported by objective economic policy reforms.

To accomplish this goal, the new government should place a higher emphasis on certain areas, such as the agricultural and service industries. Growth in each of these areas is met with its own set of challenges, but insecurity is one of the most pressing issues that must be addressed. It must utilize all of its power to protect its citizens against acts of terrorism, banditry, and kidnapping. Domestic and foreign investors alike will have more trust as a result of this. A community, economy, and business cannot prosper in an insecure and disordered environment.

Agricultural and business activities need to be enhanced.

In addition, it is of the utmost importance at this juncture to investigate the many forms of assistance made available to farmers by the monetary and fiscal authorities. Improving agricultural output requires having access to modern farming practices, high-quality seeds and fertilizers, and enough irrigation infrastructure, among other things. Farmers should be incentivized by government policies, and those policies should be structured to provide farmers with the strength and information they need to be successful in their endeavours.

As fuel subsidies cannot be sustained any longer, the phase-out of it must be addressed by the government. In order to effectively battle inflation, a rethinking of current monetary policy is essential. As a result of rising inflation, the MPC has increased interest rates by about 700 basis points since April of last year. Because of this, getting financing has become more difficult for manufacturers, which has slowed down business activity. To have a stable economy, credit is crucial since it stimulates production, facilitates investment, and backs up consumer spending.

Economic diversification and sustainable growth need to be achieved.

Lastly, Nigeria can attract domestic and international investments, provided it creates an environment that is secure and predictable for business. This would help the country achieve economic diversification and sustainable growth. To foster business development, the government must prioritize diversification, invest in essential infrastructure, encourage entrepreneurship, and maintain stable interest and currency exchange rates. Nigeria has enormous untapped potential that may be used to better the lives of its people and create inclusive and sustainable economic development if its current setbacks are to be overcome.

Related Link

Comercio Partners: Website

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