The International Monetary Fund (IMF) has revealed that Nigeria’s economy is indeed recovering from the substantial trade shock that triggered the 2016 recession.
However, the IMF stressed that the country’s growth is still constrained below the level needed to reduce poverty and improved development outcomes.
According to the information contained in the 2019 IMF Staff Country Report just released and obtained by Nairametrics, persistent structural and policy challenges in Nigeria (such as large infrastructure gap, low revenue mobilisation, and high dependence on hot money) are major factors constraining growth.
The economy is recovering, but the IMF expresses concern
Non-oil sector generating little income – The IMF reported that the non-oil growth sector is picking up, however, revenue generated from non-oil revenue is still low. Also, it further stated that the Nigeria foreign exchange market is still segmented and reserves are still dependent on hot money.
Large infrastructure gap and poor governance are major problems – Similarly, the IMF noted that a combination of factors is contributing to slow growths, negative per capita growth, and weak human development outcomes in Nigeria. Essentially, these factors include large infrastructure gap and governance weaknesses.
The pace of policy reforms still falls short of the ERGP objectives
Nigeria has made effort – According to the report, the IMF acknowledged progress made by Nigeria to reform its foreign exchange market, increase external buffers, tighten monetary policy to reduce inflation, and improve the business climate.
But more effort should be made – However, the IMF stressed that the pace of reforms in Nigeria still falls short of the objectives of Economic growth and Recovery Pan (EGRP). Most affected of EGRP objectives include increasing revenue, reducing unemployment and reforming the power sector.
IMF declared growth outlook challenging and predicts 2.5% growth in 2019
In light of the the current policies, Nigeria economy would grow and hover around 2.5% in 2019, the IMF said.
The International organisation further stated that under the current policies in the medium term, a 2.5% growth implies no progress in per capita growth — as the economy continues to be hampered by insufficient policy adjustment and progress in structural reforms.
The IMF Executive Board assessment
The IMF Executive Directors stressed that despite the economic recovery accompanied by reduced inflation and rising external reserve, the medium-term outlook remains muted, with risks tilted to the downside.
Also, the directors noted that long-standing structural and policy challenges need to be tackled more decisively to reduce vulnerabilities, raise per capita growth, and bring down poverty.
Lastly, the directors urged Nigeria to redouble its reform effort and accelerate the implementation of the ERGP.
Some recommendations for the Nigerian government
The IMF put forward some set of comprehensive and coherent policy actions for the Nigeria economy. According to the organization, most of the recommendations are in line with the ERGP. These include
- Critical actions on a revenue-based fiscal consolidation while increasing social and capital spending
- Maintaining a tight monetary policy with an improved policy framework and a unified market determined the exchange rate.
- Shifting the expenditure mix towards priority areas is critical to achieving the SDGs and diversification.
- Stronger coordination is needed to increase the efficiency of public debt management and improve cash management.
- With inflation still above target, maintaining a tight monetary policy remains appropriate.
- Moving towards a unified market-based exchange rate would support diversification and inclusive growth and reduce vulnerabilities.
- Banking sector resilience should be strengthened and the framework for banking resolution enhanced.
- Supporting economic diversification and SDGs requires improved infrastructure, a better business climate, stronger governance, and addressing gender inequality.
- Efforts should continue to strengthen data quality further, by addressing remaining gaps, notably in national accounts, BOP, and fiscal statistics.
Update: Buhari suspends EFCC boss, Ibrahim Magu from office
The suspension follows the investigation of allegations of gross misconduct against him on Monday.
President Muhammadu Buhari has approved the suspension of the acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, from office. The suspension follows the investigation of allegations of gross misconduct against him on Monday.
According to available information, Magu was suspended to allow for probe into allegations against him.
The EFCC boss appeared before a presidential probe panel headed by retired Justice Ayo Salami, who is investigating the allegations against him.
The latest development is coming a day after he was invited to face the Rtd Justice Ayo Salami led probe panel, to various allegations that had been levelled against him, which borders on misconduct and financial irregularities.
Meanwhile, the Presidency in reaction to the probe of Magu, declared that it shows that nobody under the administration of President Muhammadu Buhari is above scrutiny. A monitored report suggests that the investigation of the EFCC boss was to reinforce that this administration’s commitment to transparency and accountability, adding that the holder of such office must be above suspicion.
A monitored report states that the interrogation of Magu is to give him the opportunity to clear himself of the weighty allegations against him.
The Department of State Services (DSS), yesterday stated that contrary to claims in the media that the EFCC boss had been arrested, he was only invited by a presidential panel that was set up to review the activities of the EFCC.
According to the DSS, he was served the invitation to the panel, while on his way to the Force Headquarters, Abuja for a meeting, so he was neither arrested nor forced to honour the invitation.
The acting Chairman of EFCC appeared before the panel probing allegations of gross misconduct against him on Monday, July 6, 2020.
Reps to investigate alleged illegal withdrawal of $1.05 billion from NLNG account
Gbajabiamila mandated the House to conduct a thorough investigation on activities of the dividends account.
The House of Representatives has concluded plans to investigate the alleged illegal withdrawal of $1.05 billion from Nigeria Liquefied Natural Gas (NLNG) account by the Nigeria National Petroleum Corporation (NNPC) without its knowledge and appropriation.
The decision by the lower chamber is on the heels of a unanimous adoption of a motion by the Minority Leader of the House, Ndudi Elumelu, during plenary session on Tuesday, July 7, 2020.
Going down memory lane, Elumelu recalled that the NLNG was incorporated as a limited liability company in 1989 with the aim of producing liquefied natural gas and natural gas liquids for export purposes which began in 1999.
He pointed out that the NLNG is jointly owned by the Federal Government, represented by the NNPC with a shareholding of 49% and Shell Gas with 25.6%, Total LNG Nigeria Ltd with 15% and ENI International with 10.4%.
The Minority leader said, “The dividends from the NLNG are supposed to be paid into the Consolidated Revenue Funds Account of the Federal Government and to be shared among the three tiers of government.’’
Going further in his motion, Elumelu said, “The NNPC who represents the government of Nigeria on the board of the NLNG had unilaterally without the required consultations with states and the mandatory appropriation from the National Assembly illegally tampered with the funds at the NLNG dividends account to the tune of 1.05 billion dollars thereby violating the nation’s appropriation law.
“There was no transparency in this extra-budgetary spending as only the Group Managing Director and the corporation’s Chief Financial Officer had the knowledge of how the 1.05 billion dollars was spent.’’
‘’There are no records showing the audit and recovery of accrued funds from the NLNG by the Office of the Auditor General of the Federation. Hence the need for a thorough investigation of the activities on the NLNG dividends account.”
In his ruling, the Speaker of the House, Femi Gbajabiamila, mandated the House Committee on Public Account to conduct a thorough investigation on activities that had taken place on the dividends account.
Gbajabiamila mandated the committee to invite the management of the NNPC as well as that of the NLNG in the process and report back to the house in four weeks.
Just In: DSS invites EFCC’s Acting Chairman, Ibrahim Magu for questioning
A 2016 report had indicted Magu of several criminal acts including diversion of recovered loot.
Ibrahim Magu, the Acting Chairman of the Economic and Financial Crimes Commission (EFCC) has been invited by operatives of the Department of State Services (DSS) for questioning.
Nairametrics gathered Magu was invited Monday afternoon by the DSS.
Tony Amokedo, a spokesman for Ibrahim Magu claims Mr. Magu wasn’t arrested as reported in a section of the media, but was invited for questioning by DSS officials. He said Magu was invited for a Panel set up by the Federal Government investigating corruption allegations against Magu.
Also, following earlier reports of Magu’s alleged arrest, the DSS quickly released a statement through its Public Relations Officer, Peter Afunanya, Ph.D, denying the arrest of the chief of Nigeria’s anti-graft agency.
“The Department of State Services (DSS) wishes to inform the public that it did not arrest Ibrahim MAGU, Acting Chairman of the Economic and Financial Crimes Commission (EFCC) as has been reported by sections of the media. The Service, has since, today, 6th July, 2020, been inundated with enquiries over the alleged arrest,” DSS statement read.
Last month, the Attorney-General of the Federation, Mr. Abubakar Malami (SAN), wrote to Buhari, recommending the removal of Magu, accusing him of misconduct, insubordination and diversion of recovered loot.
A 2016 report by the DSS revealed Ibrahim Magu lives a “high-profile lifestyle”. The report revealed Magu lives in a house rented for N40 million at N20 million a year which was paid for by one retired Air Commodore, Umar Mohammed.
Magu is also accused of using private jets belonging to Mohammed and going on trips with bank executives being investigated by the EFCC.
The report also revealed Magu was guilty of withholding EFCC files, obstruction of justice and sabotage by the Nigerian Police Commission in 2010.