Nigeria’s economy could decline by 4% – World Bank

The World Bank has projected that the Nigerian economy could shrink up to four per cent in 2020 due to the twin shocks of COVID-19 and low oil prices.

The Bank made this known during the virtual presentation of the latest Nigeria Development Update (NDU) by the multilateral institution where it also predicted that in the next three years, an average Nigerian could see a reversal of decades of economic growth and the country could enter its deepest recession since the 1980s.

The report titled: “Rising to the Challenge: Nigeria’s COVID response,” took stock on the recently implemented reforms and proposes policy options to mitigate the impact of COVID-19 and foster a resilient, sustainable and inclusive recovery.

World Bank Country Director in Nigeria Shubham Chaudhuri, at the event said the $1.5 billion loan request from Nigeria would be tabled next week before the World Bank Board for approval.

Nigeria is requesting for the $1.5 billion facility to mitigate the impact of low oil prices and the decimation of the economy by the corona virus pandemic.

For any country to access World Bank loan, a number of conditions are usually given. In the case of Nigeria, the World Bank is demanding a set of reforms.

These reforms include: unification of the naira and removal of fuel subsidy as conditions to be met before Nigeria can access the$1.5 billion facility.

By withholding the $1.5 billion loan, Nigeria will be confronted with a huge revenue gap that would make it difficult to finance the revised ?10.8 trillion 2020 national budget.

In recent weeks, the value of the naira has come under pressure because of dollar scarcity.

Shubham said: “We recognise how much Nigeria has done. There needs to be a little bit more. The outset of the COVID-19 crisis has made the task much more challenging and urgent because of the severity of the economic downturn and the decline in fiscal resources.

“By 2023, in our baseline scenario, Nigeria’s GDP per capita is expected to be roughly similar to that of 2010. This means that Nigeria would lose 14 years in per capita incomes.

“By contrast, if we compare Nigeria with the average of middle-income economies worldwide, we find that other countries are expected to lose around 7 years.

“In other words, while COVID-19 will hit incomes across all countries, Nigeria is expected to suffer twice as much.

“Because Nigeria’s growth has been uneven and volatile, once we adjust for inflation, we find that for Nigeria going back to 2010 is equivalent to going back to the 1980s.”

The World Bank Country director further explained that “before COVID-19, rising food prices were already putting pressure on inflation due to insecurity in the North, conflicts between farmers and herders in the middle belt, and Nigeria’s closure of land borders since August 2019. Then, on top of these, pandemic related disruptions in value chains and production processes further increased inflation.”