Nigeria’s economy to grow by 1.1% in 2021 – World Bank
The World Bank expects growth in Nigeria to resume at 1.1% in 2021 but fears the rebound could be affected by lower oil production due to quotas.
The World Bank has forecasted that the global economy is set to rebound by 4% in 2021, while Nigeria’s economy is expected to resume at 1.1%.
The World Bank released this on Monday in its January 2021 Global Economic Prospects. The World Bank said:
- “The global economy is expected to expand 4% in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms.”
The World Bank urged that administrators needed to focus on improving business environments, and increase labour and product market as the pandemic had severely affected the global economy.
World Bank Group President, David Malpass, said:
- “While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges — in public health, debt management, budget policies, central banking and structural reforms — as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth.
- “To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labour and product market flexibility, and strengthen transparency and governance.”
The World Bank added that the 2020 economic fallout was slightly less severe than previously projected, citing shallower contractions in advanced economies and a more robust recovery in China. However, disruptions to activity in emerging economies were “more acute than expected.”
The World Bank added that Nigeria’s economy was estimated to have contracted 4.1% in 2020, as the effects of the pandemic impacted economic activities in all sectors, even across the region.
- “In South Africa, where economic activity was on weak footing before COVID-19, output is estimated to have fallen 7.8% last year. The country suffered the most severe outbreak of the pandemic in the region and underwent strict lockdowns that brought the economy to a standstill.”
The World Bank said oil exporters in the region grappled with sharply lower prices, however, contractions in agricultural commodity exporters were less steep.
- “Growth in the region is forecast to rebound moderately to 2.7% in 2021.”
The World Bank said it expected growth in Nigeria to resume at 1.1% in 2021, citing that Nigeria’s economic rebound would be affected by lower oil production due to quotas.
- “Growth in Nigeria is expected to resume at 1.1% in 2021. Activity is nevertheless anticipated to be dampened by low oil prices, OPEC quotas, falling public investment due to weak government revenues, constrained private investment due to firm failures, and subdued foreign investor confidence.
- “In South Africa, growth is expected to rebound to 3.3% in 2021. An expectation of weak growth momentum reflects the lingering effects of the pandemic and the likelihood that some mitigation measures will need to remain in place.”
What you should know
- Nigeria’s Gross Domestic Product (GDP) in real terms declined by -3.62% (year-on-year) in Q3 2020, thereby marking a full-blown recession and second consecutive contraction from -6.10% recorded in the previous quarter, Q2 2020.
- The Federal Government of Nigeria stated that the latest recession in the country would be short-lived, as it expected Nigeria to return to positive growth soon unlike during the 2016 recession.
Ghana Elections: I look forward to working with President Akufo-Addo – Buhari
President Buhari has sent a congratulatory message to the President of Ghana as he emerges the winner of the just concluded election.
President Muhammadu Buhari has congratulated the President of Ghana, Nana Akufo-Addo, on his reelection and says he looks forward to working with him.
The President disclosed via a social media statement on Thursday evening that Akufo-Addo’s election victory signifies the progress constitutional democracy has made in the region
President Buhari’s statement
- “I congratulate President Akufo-Addo on his re-election for a second term in office. I also commend the people of Ghana on the successful conclusion of the presidential and parliamentary elections – further proof that constitutional democracy has come to stay in West Africa.
- “Nigeria and Ghana share close historical and cultural ties, and I look forward to working with President Akufo-Addo to realise our shared goals of peace, security and prosperity for our citizens and for the entire ECOWAS community.
- “On behalf of the government and people of Nigeria, I wish President Akufo-Addo a successful new tenure, and peace and stability in his country, as well as improved relations between our two countries.“
What you should know
- It was reported earlier that Ghanaian President, Nana Akufo-Addo, was re-elected on Wednesday. Akufo-Addo secured 6.73 million votes, which was 51.6% of the total votes, while his rival in the election, former President John Mahama of the National Democratic Congress, secured 47.4% of the votes, in a tightly contested election.
- Ghana’s main opposition party in the just concluded elections, National Democratic Congress announced that it will contest the results of the elections announced by Ghana’s Electoral Commission Head, Jean Mensa on Wednesday.
Sustaining and deepening policy reforms key to faster recovery, says World Bank
The World Bank has called on the Nigerian government to deepen and sustain its policy measures in tackling COVID-19 related crisis.
A new World Bank report on Nigeria’s response to Covid-19 has called for the sustenance and deepening of policy reforms, which is critical to mitigating the impact of the pandemic in Nigeria.
The report titled: “Rising to the Challenge: Nigeria’s COVID response” was presented during the latest World Bank Nigeria Development Update (NDU), held on Thursday.
Following double shocks from COVID-19 and low oil prices, the latest World Bank NDU projects that the economy could shrink up to 4 percent in 2020. The pace of recovery in 2021 and beyond remains highly uncertain and subject to the pace of reforms.
In general, the report expressed both optimism and pessimism over Nigeria’s future, stressing that due to the pandemic, the number of poor people in the country by 2022 is likely to hit between 15-20 million. However, on the positive side, the report stated that if the current reforms are sustained and the right mix of policy measures is implemented, the path might be avoided.
In addition, the report highlighted policy options in five areas that would help to curb the impact of the COVID-19 crisis in Nigeria and accelerate recovery;
- Managing the domestic spread of COVID-19 until a vaccine is available for distribution.
- Enhancing macroeconomic management to boost investor’s confidence.
- Safeguarding and mobilizing revenues.
- Reprioritizing public spending to protect critical development expenditure.
- Supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.
What they are saying
- Driving home his point on the right policy mix as a panacea for recovery, the World Bank Country Director for Nigeria, ShubhamChaudhuri said:
- “Nigeria is at a critical historical juncture, with a choice to make. Nigeria can choose to break decisively from business-as-usual, and rise to its considerable potential by sustaining the bold reforms that have been taken thus far and going even further and with an even greater sense of urgency to promote faster and more inclusive economic growth.”
Corroborating earlier assertion by the Director, the World Bank Lead Economist for Nigeria and co-author of the report, Marco Hernandez, remarked that:
- “Nigeria can build on its reform momentum to contain the spread of COVID-19, stimulate the economy, and enable the private sector to be the engine of growth and job creation. It can also redirect public spending from subsidies that benefit the rich towards investments in Nigeria’s people and youth in particular, and lay foundations for a strong recovery to help make progress towards lifting 100 million people out of poverty.’’
What you should know
The report highlighted measures taken by the government since April to include; harmonization of exchange rates, introduction of a market-based pricing mechanism for gasoline, adjusting electricity tariffs to more cost-reflective levels, reduction of non-essential expenditures and redirecting resources towards the COVID-19 response.
- It also highlights greater transparency in the oil and gas sector and public debt as essential steps for a resilient recovery.
Private sector to drive global economic recovery in 2021 – IFC Boss
The IFC Boss has said that the private sector participation is vital for global economy to recover and remain resilient in 2021 and beyond.
The Interim MD and COO of the International Finance Corporation (IFC), the private sector arm of World Bank, Stephanie von Friedeburg, has statedthat for the global economy to achieve the desired recovery and remain resilient in 2021 and beyond, the private sector participation is very important.
She made this disclosure at the special year-end edition of The Development Podcast, featuring her and the President of the World Bank, David Malpass, where she shared her thoughts on some critical events that happened in year 2020 and reflected on key priorities that would drive the global economy towards a resilient recovery in 2021.
According to Stephanie von Friedeburg, “I think the private sector is probably more important now than we’ve ever been in helping the global economy kick-start growth, as we emerge from this pandemic. And I say that because I’m sure we’ll come to this later, but we know there’s just limited fiscal space in our countries of operation and especially in the poorest countries in the world.
“Governments don’t have the capacity to continue to create the economic growth and the jobs that are needed for the citizens in those countries. And so the private sector can and must play a super important role. But even before the crisis, we knew that in those poorest countries, finding ways for the private sector to intervene was extremely difficult.”
What IFC is doing to reinvigorate the private sector participation
According to IFC Boss, Stephanie von Friedeburg:
- “During the COVID crisis, IFC, from its private-sector strategy perspective, adopted 3-pronged approach i.e. relief, restructuring and refinancing, which is considered desirable for building a more robust and resilient economy, as the fortunes of most businesses dramatically nose-dived over the course of the last year.
- “IFC is helping their countries of operation as well as the private sector hospitals/clinics figure out on how to get the equipment and supplies they might need by creating a global health platform – an innovative and interactive platform that links up private sector companies in both developed and developing worlds, to transact businesses.
- “IFC created country private sector diagnostics and country strategies with which they use to have conversations with their bank colleagues in finding out the key sectors in a particular economy where there are impediments or obstacles for the private sector to invest.
- “In view of the estimated decrease of $950 billion from domestic private investment and foreign direct investment in emerging markets this year, IFC is working towards getting the right policy and regulation and creating projects that will attract the money back to countries of operation fast enough to reach its goal by 2030.
- “Using the IFC 3.0 strategy, IFC intends to connect with its bank colleagues towards getting the right policy and regulation in place, so that the private sector enterprises can build and share infrastructures, such as mobile towers, internet backbones, open access networks, power, etc that would, to a large extent, reduce their cost of operations.
- “IFC 3.0 is designed to say, “How can we, IFC, partner with our World Bank colleagues, partner with other MDBs and get the right policy and regulatory environments in place to incense private sector investment? So we call it the cascade. But in essence saying if the private sector can invest and can build something out, use the private sector to do that and use your limited fiscal space as a government only in those places where the private sector can’t play. And then partnering with that is really us.”
What you should know
- The private sector is the engine of growth in any country.
- Successful private sector enterprises drive growth, create jobs, and pay the taxes that finance services and investments.
- In developing countries, the private sector generates 90% of jobs, funds 60% of all investments and provides more than 80% of government revenues.