ECONOMY

Glimmers of positivity for Nigeria’s battered economy, World Bank says

By our African Marketing Confederation News Team | 2024

Reforms are creating robust activity in some parts of the service sector, oil output is stable and forex market is improving – report.

Nigeria’s struggling economy is beginning to show positive results from the economic reforms being implemented by President Bola Tinubu, the World Bank said last week.

 

This provides a glimmer of positivity for the country’s consumers and business community, beset by a range of issues including high inflation, lack of market confidence, reduced spending on FMCG goods, and a shortage of forex.

Nigeria’s consumers have been under long-term pressure. Photo: Flickr

As a result, many multinational companies have withdrawn from the country or reigned in their local investment. 

 

Alex Sienaert, World Bank Lead Economist for Nigeria, said in a presentation in Abuja to launch the bank’s Nigeria Development Update Report, titled ‘Staying the Course: Progress Amid Pressing Challenges’, that the country’s fiscal deficit (the difference between total revenue and total expenditure of a government) has reduced from 6.2% of GDP in the first half of last year, to 4.4% in the first half of this year. 

 

The reforms are creating “robust” activity in some areas of the service sector, the oil sector output has stabilised and there are improvements in the foreign exchange market. 

 

“Foreign exchange reserves – a buffer against external shocks – have risen from US$32.9-billion at the end of 2023 to more than $38.8-billion by mid-October 2024. However, inflation remains high, and inched up again in September 2024, mainly due to the most recent gasoline price increases and recent floods,” the World Bank report states. 

 

Given these promising results, the report argues that the new direction of macro-economic policies should be sustained, including the Central Bank of Nigeria’s tight monetary policy stance.  

 

Address long-standing structural constraints 

 

“Complementing them with measures to address long-standing structural constraints will enable faster progress in the fight against inflation, and spur the investment, growth and jobs which Nigeria urgently needs,” the World Bank says in a press release. 

 

In addition, the report explains that previous distortionary and unsustainable policies were hindering Nigeria from achieving its “immense potential”.  

 

Monetary and foreign exchange policies, including multiple exchange rates, were distortive and did not maintain price stability. Revenue collection was hampered by one of the lowest tax-to-GDP ratios globally (3.2% of GDP in 2022), while a large share of oil revenues was absorbed by a costly fuel subsidy.  

 

“The Central Bank initiated major foreign exchange policy reforms that resulted in a unified, better regulated, and market-reflective official exchange rate and the government has now moved towards market-based pricing of gasoline to address the enormous fiscal cost of subsidised pricing,” the report notes. 

 

Comments Ndiame Diop, World Bank Country Director for Nigeria: “Going forward, it will be important to consolidate the improving fiscal outlook and scale up the support for the poorest households to cope with purchasing power losses and hardships, while expanding opportunities for growth and productive jobs, especially for young Nigerians, is most urgent and crucial.”

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    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
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    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

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