Nigeria's $1.5 billion facility would be placed before the World Bank Board for approval, next week, the Country Director (CD) for Nigeria, Mr. Shubham Chaudhuri, revealed , yesterday.
He said during a webinar on the latest Nigeria Development Update (NDU) that the facility was prepared to assist states in the tackling COVID-19 and to address governance issues.
According to the CD, Nigeria was on a fiscal cliff requiring courageous and urgent policy measures by the leaders to avoid the nation from falling so badly as to equal the 1980s' experience, by 2022.
The report "Rising to the Challenge: Nigeria's COVID response" took stock on the recently implemented reforms and proposed policy options to mitigate the impact of COVID-19 and foster a resilient, sustainable, and inclusive recovery.
Said Chaudhuri, World Bank Country Director for Nigeria, "Nigeria is at a critical historical juncture, with a choice to make.
"Nigeria can choose to break decisively from business-as-usual, and rise to its considerable potential by sustaining the bold reforms that have been taken thus far and going even further and with an even greater sense of urgency to promote faster and more inclusive economic growth."
According to the NDU, "Nigeria is at a critical historical juncture. While there is a lot of uncertainty about when the pandemic will end, it is clear that Nigeria faces an unprecedented crisis that requires an equally unprecedented policy response.
"Realizing the government's ambition of lifting 100 million Nigerians out of poverty by 2030 would be challenging even under normal circumstances.
"The onset 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.
"Growth projections help illustrate this point. 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. But that is not all. In fact, 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 noted the rising prices of food, saying, "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."
The bank said that extreme poverty rate would rise with the number of poor likely to increase by 15 to 20 million by 2022, unless urgent measures were put in place to check the deteriorating economic situation in the country.
It said, "In the absence of measures to mitigate the impact of the crisis, the number of poor could increase by 15 to 20 million by 2022. Food insecurity has increased substantially and economic precarity is on the rise because unemployed workers have migrated to the low-productivity agricultural sector.
"The NDU acknowledges measures taken by the government since April, including the efforts to harmonize exchange rates, introduce a market-based pricing mechanism for gasoline, adjust electricity tariffs to more cost-reflective levels, and reduce non-essential expenditures and redirect resources towards the COVID-19 response. It also highlights the greater transparency in the oil and gas sector and public debt as essential steps for a resilient recovery."
Mr. Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the report, said while making his presentation, "Nigeria can build on its reform momentum to contain the spread of COVID-19, stimulate the economy, and enable the private sector to be the engine of growth and job creation. It can also redirect public spending from subsidies that benefit the rich towards investments in Nigeria's people and youth in particular, and lay foundations for a strong recovery to help make progress towards lifting 100 million people out of poverty," said
Policy options that would help mitigate the effects of the crisis and support Nigeria's recovery, according to the report included: managing the domestic spread of COVID-19 until a vaccine is available for distribution; enhancing macroeconomic management to boost investor confidence; safeguarding and mobilizing revenues; reprioritizing public spending to protect critical development expenditures; and providing relief for poor and vulnerable communities.
Vanguard News Nigeria