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World Bank report states that Nigeria faces worst recession in 40 years

The report estimates that Nigeria’s economy would likely contract by 3.2% in 2020.

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world bank, Events in the economy and outlook for 2020

The Nigerian economy is expected to plunge into severe economic recession, the worst in almost 4o years due to the collapse of oil prices and the outbreak of the coronavirus disease, according to the latest World Bank Nigeria Development Update (NDU).  

This was disclosed in a report released by the World Bank, titled,“Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery. The report estimates that Nigeria’s economy would likely contract by 3.2% in 2020, with the assumption that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020. However, if the spread of the virus becomes more severe, the economy could contract further. 

It should be noted that the Nigerian economy was expected to grow by 2.1% in 2020 before the COVID-19 pandemic, which means that the pandemic has led to a reduction in growth by more than 5%.  

READ MORE: Covid-19: Tinubu asks FG to print more naira notes, outlines economic measures

According to the report, The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus. Oil represents more than 80% of Nigeria’s exports, 30% of its banking-sector credit, and 50% of the overall government revenue. With the drop in oil prices, government revenues are expected to fall from an already low 8% of GDP in 2019 to a projected 5% in 2020.’’  

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The drop in government revenue is coming at a time when financial resources are urgently needed to contain the COVID-19 outbreak and stimulate the economy. The pandemic has also led to a drop in private investment due to greater uncertainty, and is expected to reduce remittances to Nigerian households, which in recent years have been larger than the combined amount of foreign direct investment and overseas development assistance. 

In his contribution, the World Bank Country Director for Nigeria, Shubham Chaudhuri said, “While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery. Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation,” 

READ ALSO: IMF expects Nigeria’s GDP to shrink by 5.4% in 2020

The pandemic is projected to push about 5 million more Nigerians into poverty in 2020. When this is added to the number of poor Nigerians who are expected to increase by about 2 million largely due to population growth, the number would now increase by 7 million – with a poverty rate projected to rise from 40.1% in 2019 to 42.5% in 2020. 

The World Bank Lead Economist for Nigeria, Marco Hernandez said, “The unprecedented crisis requires an equally unprecedented policy response from the entire Nigerian public sector, in collaboration with the private sector, to save lives, protect livelihoods, and lay the foundations for a strong economic recovery.” 

The Federal Government has already taken some important health, fiscal and monetary measures to contain the outbreak, moderate the recessionary pressures and start mitigating the effects of the economic shock. Looking ahead, the report discusses policy options in five critical areas that can help Nigeria recover from the COVID-19 crisis:  

(1) containing the outbreak and preparing for a more severe outbreak;  

(2) enhancing macroeconomic management to boost investor confidence;  

(3) safeguarding and mobilizing revenues;  

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(4) reprioritizing public spending to protect critical development expenditures and stimulate economic activity; and  

(5) protecting poor and vulnerable communities. 

 

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Economy & Politics

Godwin Obaseki wins Edo State governorship election

Incumbent governor, Godwin Obaseki emerged winner in the Edo State gubernatorial election.

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Oil theft gulped $1.35 billion in first six months - Obaseki 

Independent National Electoral Commission(INEC) has declared Godwin Obaseki the winner of the Edo State gubernatorial election today.

Mr. Obaseki will return as the Governor of the state for a second term.

The results were declared by INEC on Sunday afternoon after the results were counted from all LGA’s on Saturday.

Obaseki had 307,955 votes, which was enough to be declared a clear winner over Ize-Iyamu’s 223,619 votes.

Obaseki took to his Twitter handle to thank the people of Edo State for their votes. He stated,

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“Words fail me in saluting our teeming supporters who displayed immense courage in the face of threats, intimidation and brutalization. The collective will of Edo people made it possible for us to triumph over godfatherism. Congratulations to all Edo people. This is our victory!”

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WTO: Okonjo-Iweala still in contention as 3 candidates depart race for DG

Okonjo-Iweala and the remaining 4 other candidates hope to succeed the current DG, Mr Roberto Azevêdo.

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Ngozi Okonjo Iweala, World Bank, Davos, World Economic Forum, WTO accepts nomination of Okonjo-Iweala as DG despite opposition from Egypt

Three candidates running for the post of the Director-General of the World Trade Organisation have fallen out of the race after failing to secure enough votes in the first rounds of voting, leaving only 5 candidates left, including Nigeria’s Ngozi Okonjo-Iweala.

This was disclosed by Bloomberg on Thursday, before the meeting on Friday. The Candidates that are out of the race are Jesus Seade (Mexico), Tudor Ulianovschi (Moldova), and Hamid Mamdouh (Egypt). The candidates were not able to secure the support needed for the first round of 3 rounds of voting.

READ: China’s Covid-19 vaccine may be ready for general public in November 2020

Dr. Ngozi Okonjo Iweal joins 4 other candidates for the next round of voting. The candidates are; Liam Fox (UK), Amina Chawahir Mohamed Jibril (Kenya), Yoo Myung-hee ( South Korea), and Mohammad Maziad Al-Tuwaijri ( Saudi Arabia).

Ngozi Okonjo-Iweala disclosed last month some of her plans for the Organization if made President. Nairametrics reported she noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.

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READ: Soybean Futures reach 2-year high, following U.S sales to China 

On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

Well, this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

She added she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

READ: Amaechi pleads with NASS to halt questioning of loan agreement with China

You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members,’’ she said.

Okonjo-Iweala and the 4 other candidates will present themselves to the members of the global trade body for the later stages of voting in the hopes of securing the highest number of votes to succeed the current DG, Mr. Roberto Azevêdo.

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Economy & Politics

FG to establish a new anti-corruption agency

Malami disclosed that the new anti-corruption agency would be called Proceeds of Crime Recovery and Management Agency.

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FG to establish a new anti-corruption agency, P&ID, FG, malami, $9bn fine is a scam - Federal Government , UPDATED: P&ID operations shut down, assets forfeited by court order

The Federal Government has approved the establishment of a new anti-corruption agency that will have the responsibility of properly managing and coordinating all assets seized domestically or returned from abroad, following anti-corruption probes.

The disclosure was made by the Attorney General and Minister for Justice, Abubakar Malami, while briefing state house correspondents after the Federal Executive Council (FEC) meeting on Wednesday, September 16, 2020.

Malami explained that the recovered assets had been scattered across several agencies and that better coordination would encourage international/overall coordination in recovering more looted assets.

Nigeria has repatriated well over $300 million of looted funds this year alone and seized about $40 million worth of jewellery belonging to the former Minister for Petroleum, Diezani Allison-Madueke. This is in addition to the seized ill-gotten properties and real estate.

(READ MORE: Nigeria Customs Service to distribute N3.2 billion worth of food items)

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The Attorney General said that this new initiative would create a one-stop-shop for managing seized assets in an open and accountable way. He called the plan the next level of transparency and said the agency could also give the Ministry of Finance, Budget, and National Planning a budget for recovered assets.

He disclosed that the new anti-corruption agency, which would be called Proceeds of Crime Recovery and Management Agency, is to be saddled with the responsibility of managing the assets that constitute the proceeds of crime in the country. He said that the FEC had approved the transmission of a bill, ‘Proceeds of Crime Recovery and Management Agency Bill,’ to the National Assembly.

READ: OmiseGO, fastest growing altcoin, up 49% in past 24 hours

Malami noted that setting up an agency like this had become quite imperative in a bid to consolidate on the gains achieved so far in the government’s war against corruption.

The fight against corruption in the country has not been an easy one, as even a US senator, Chuck Grassley, earlier this year, raised concerns about the return of money due to worries over whether there were proper safeguards to prevent further misappropriation or relooting of those recovered funds.

READ: Exclusive: Best bank in Nigeria judging by the numbers 

The Economic and Financial Crime Commission (EFCC), which currently has the responsibility of managing its recovered or seized assets, has been bedevilled by a lot of controversies recently, following the accusation and subsequent suspension of its Ag. Chairman, Ibrahim Magu.

This follows the Minister of Justice’s accusation of the agency for diversion of funds that had been recovered during corruption investigations.

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