By Charles Ike-Okoh
FRI, 11 DEC, 2020-theGBJournal- The World Bank has never been gloomier about Nigeria’s prospect than they were in their latest (December 2020) ‘’Nigeria Development Update,’’ a report that suggests that the Federal Government has not done enough for Nigerians with its policy response to the COVID-19 pandemic given that the rate of economic growth remains below the population growth rate.
The report which highlighted everything wrong with the country and the economy, said among its numerous doom predictions, that the Federal 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.”
What the World Bank sees ahead is even more dire and they illustrate that with the country’s growth projections.
‘’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,’’ the World Bank wrote.
‘’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.’’
This report published Thursday also took stock of the recent reforms implemented by the President Muhammadu Buhari led administration before proposing policy options to both mitigate the impact of COVID-19 and foster a resilient, sustainable, and inclusive recovery.
The Bank said, managing the current crisis while strengthening the institutional and policy framework will require carefully sequenced reforms implemented over the immediate- and near-term and suggested that robust mitigation and recovery policies would be based on five pillars
- Managing the domestic spread of COVID-19 until a vaccine is distributed;
- Enhancing macroeconomic management to boost investor confidence;
- Safeguarding and mobilizing revenues;
- Reprioritizing public spending to protect critical development expenditures; and
- Supporting economic activity and access to services and providing relief for poor and vulnerable communities.
It is within these pillars, that the World Bank identified a set of 8 critical policy options for the short term. It said these measures are expected to have a significant impact on Nigeria’s growth prospects while alleviating the disproportionate income loss of poor and vulnerable households.
The policy options include:
1-Allowing the exchange rate to reflect market fundamentals, which will preserve reserves, increase the naira value of external financing and dollar denominated revenue proceeds, and help boost investor confidence and reduce inflation.
2-Reopening land borders and easing foreign exchange restrictions to limit inflationary pressures and increase the supply of food and staple goods.
3-Mobilizing tax revenues in a way that does not negatively affect investment and growth, including a review of tax concessions, excise taxes, and measures to enhance tax administration.
4-Strengthen the management of monetary policy toward the primary objective of price stability, with more transparent targets and liquidity management mechanisms (e.g., by reducing the use of discretionary Cash Reserve Ratio); and ensuring a clear distinction between public borrowing and liquidity management.
5-Continuing power sector reforms, including bringing electricity tariffs from an 80 to 100 percent cost-reflective level, and implementing regulations to stop arbitrary estimated billing, accelerate mass metering, and enforce payment discipline of the distribution companies, all aimed at improving the financial sustainability of the sector while ensuring that the increases in average tariffs do not adversely impact low-income households.
6-Consolidating the gasoline subsidy reform by publishing detailed guidelines for the market-based gasoline price adjustment mechanism approved in March 2020.
7-Extending the reach of social safety nets, including targeted cash transfers and livelihoods grants for households, and expanding the provision of healthcare and other essential services for the poor and vulnerable.
8-Reducing food insecurity for poor rural households through the distribution of seeds and fertilizers, the provision of agricultural extension services, the use of block grants for purchasing assets and equipment, the upgrading of sanitary infrastructure in markets, and the expanded availability of equipment for smallscale processing and packaging.
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