Nigerian Economy Getting Messier-World Bank

By Elizabeth Chukwuma

The most recent report prepared by a Team of Economists from the World Bank on Nigeria which had painted gory image of the economy appears to have rattled President Muhammadu Buhari, a retired  Army General and his Economic  Management Team, made up of experts  including business monguls like Aliko Dangote, President, Dangote Group of Companies.

Many see the report as an indictment on Hajia Zainab Ahmed, the minister of Finance, Budget and National Planning who many have described as failed minister over his poor Management of the economy as the inflation rate continued to increase. The Nation Bureau of Statistics, NBS, had put the inflation rate as  June 2021, at about 17.75 percent

Haji Ahmed: Minister Of Finance, Budget And National Planning

The World Bank seasoned Economists which had looked at all the sectors of the Nigeria economy through the lenses of unemployment, economic hardship and Migration of Nigerian Youths to other parts of the world had described the country’s present  economic situation as’’ the worst in the global economy’’. The World Bank Economists were particular, about the high level of unemployment in the country, describing as’’ the worst in the nation’s history’’.

The Economic Outlook Report, on Nigeria, titled ‘’Of Roads Less Travelled: Assessing the Potential of economic migration to overseas by Nigerian Youths to seek gainful employment was said to have contained so many points that the government and the people of the most populous African and oil producing country  must ponder over again  to be able to put the economy on the path of growth by the Buhari government. The 99-page document  which had described Nigerians as very vibrant and dynamic set of people  had said that the migration of able bodied Youths  , overseas,  over the last six years have not helped matters.

Aware of the country’s economic challenges between 2015 and now, the Katsina state born Nigerian President and his Economic Management Team, were said to have made efforts to address the various development-related challenges and Prioritize them. The global Bank Report had cited   some of the program and mechanisms that have been imitated by the government and the non-governmental actors to strengthen border controls with the neigbouring West African countries of Republic of Benin, Niger and  the Central African country of Cameroon.

 The report was said to have also revealed the efforts being made by the Nigerian President and his Economic Management Team to raise the people’s awareness against irregular migration to other countries instead of joining hands to rebuild the economy . This is in addition to the prioritization of the execution of job –creation program in order to address the root causes of the Youth Migration.

Giving an example of one such program as the European Trust Fund For Africa, EUTF, which was said to have been Launched in 2015, with the objective of providing a comprehensive migration management support to the African countries including Nigeria, in order   to put a stop to the flow of illegal migration to Europe, United Kingdom, UK, and the North American country of   the United States, US, and the Asian country of China.

 The UETF, was said to have provided more than $4 billion in aid to the African countries, in order to address the various economic challenges facing the Continent.

He Report had revealed that Nigeria, alone, had been supported by the EUTF, to tune of $770million  for Migration –related projects ranging from border –related measures, awreness Campaigns to stop human trafficking and creation of jobs domestically, including for returned Migrants.

The Bank, however, noted in the report that what is still missing in all the programs  being executed  by the Nigerian government to address the economic challenges facing the country  was  the program that were said to have been outlined  in the United Nation’s, UN,  Sustainable Development Goals.

Note that the Objective of the UN, Sustainable Development Goals, according to a CBN , top official,  was  the implementation of policies’’ that would stop  the irregular migration overseas’’ by facilitating orderly, safe , regular and responsible  migration and  mobility of people , including the implantation of  a planned  and a ell-managed  migration policies’’.

Going by the World Bank, report, between 2014 and 2020, an interval of six years, the Nigeria’s working population, grew from 102 million to 122 million, growing at average of rate of three percent per annum. It was also reported  that  that the nation’s active labour force population , grew from  73 million  in 2014 to  90 million in 2018, with the addition of  17.5 million  new entrants into the  active labour force.

The report may have shocked the Nigerian policy makers when it stated that between 2018 and now,   the active Labour force population   has dramatically increased   to 70 million while the Nigerians who are in the working age population but not active in the Labour force increased from 29 million to 52 million.

  The World Bank Economists in their research on Nigeria, had said that the rise in the unemployment rates in the country had been particularly worse between2015 and 2016,   because of the economic recession   but became worst due to the Asian country of China emerged coronavirus, popular, COVID 19, which was said to have led to the worst recession  in four decades in 2020.

Recall that  the Bank had said in June 2020, that the collapse  in oil prices in the international oil  market with the Pandemic had  plunged  the Nigerian economy  into a severe economic  recession , the worst that have never been witnessed in the  country over the last four decades.

Oil, according to a source at the Central Bank of of Nigerian, CBN, given that more than 80 percent of Nigeria’s exports, 30 percent of its Banking sector credit, and 50 percent of the overall government yearly revenue, the Panademic  had affected  it.

, This is because  the country’s oil revenue which had dropped significantly in 2019 to a projected five percent level in 2020 at a time   when the country’s Fiscal resources   needed to contain the COVID 19 outbreak and stimulate the economy was not enough to sustain the  economy and provide the basic infrastructural facilities to the citizenry.

 Particular, the global sickness was said to have resulted   in the fall in private investment in the country due to   greater uncertainty, which was said to have further reduced remittances abroad to Nigerian households. The remittances, according to informed sources, are larger than the combined amount of foreign direct investment, FID, and Oversea Development assistance.

This may have informed why the Nigerian government over the years have resorted to borrowing from the Local Banks and Multi-lateral Financial institutions to finance basic infrastructural facilities like roads and provision of electricity and which analysts had said has further put the  economy in a mess. As at December 31, 2020, reports from the Debt Management Office, DMO, shows that the country’s debt profile has hit N31 trillion. Indeed, the debt has continued to grow in lips and bounds as the Nigerian President has continued to approach other rich economies and multilateral Financial Institutions for loan.

Lawan: Senate President

 Only recently, the Ahmad Lawan, led Senate, gave approval to the retired Army General request to borrow $8.3 billion, external loan. The Lawmakers were said to have also approved a separate Euro 490 million, request by the Nigerian President.  

It is on record that the Nigerian government was currently owing  the World Bank, AfDB, French Development Agency,  Islamic Development Bank, China Exim Bank, China Development Bank, European Investment Bank, European ECA, KfW, AFC, Indian EXIM  Bank and  International Bank for Agricultural Fund  Development, billions of dollars.

Despite the huge debts owed the Multi-lateral Financial Institutions, a ministry of Finance, Budget and Natioal Planning source had informed The Value News that the financial institutions are also expected to fund the $8.3 billion Euro and Euro 490 million, loan that had been approved by the Senate for the government this year.

 For the  $8.3 billion , loan, $2.9 billion  is expected to be sourced from the China EXIM Bank, $2.5 billion, from  the Industrial Commercial Bank of China, $2.0 billion , from  the European ECA/KfW/IPEX/AFC, $796 from the World Bank, AfDB, 104.2 million, IFAD, $60million and $20 million, from the Africa Growing Together Fund.  It was gathered that the he government have already opened talks with the Multi-lateral Financial institutions for the dollar Component of the loan.

There are indications that the Buhari led APC, government may still seek the approval of the Senate to borrow more external loans. The Nigerian President was said to have requested the Lawmakers last May to allow it borrow $36.8 billion to execute basic projects in the country but that was how far he could go. He was said to have proposed to borrow the  chunk of the loan, $26.8billion from the various Multi-lateral financial institutions , across the world, including China that have  been giving Nigerian Loan , whenever approached..

Many believe that the Multi-lateral financial institutions could advance the Nigerian government the loand whenever approached because it has never defaulted in servicing the Loans as at when due. Take for instance, in the first quarter, of this 2021, the government was said to have spent N1.02 trillion on both domestic and foreign debt servicing  alone, compared to N757.7 billion, spent the same period last year.      

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