The World Bank says COVID-19 has caused the worst recession in Nigeria in the last four decades.
Sustaining and deepening policy reform momentum will critically reduce the impact of COVID-19 on the Nigerian economy, the World Bank has said.
The COVID-19 pandemic has impacted all economies around the world, causing the worst recession in Nigeria in the last four decades.
In its latest Nigeria Development Update (NDU) report titled “Rising to the Challenge: Nigeria’s COVID response”, the World Bank said to avoid reversal of decades of economic growth, Nigeria needs to sustain the progress of its current reforms and implement the right mix of policy measures.
The report took stock of the recently implemented reforms and proposed policy options to mitigate the impact of COVID-19 and foster a resilient, sustainable, and inclusive recovery.
According to a statement in Abuja on Thursday, the Bank’s Country Director for Nigeria, Shubham Chaudhuri, said “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.”
The report projected that the economy could shrink up to 4 per cent in 2020 following the twin shocks of COVID-19 and low oil prices. The pace of recovery in 2021 and beyond remains highly uncertain and subject to the pace of reforms.
It said the pandemic was disproportionately affecting the poor and most vulnerable, women in particular.
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.
It also acknowledged measures taken by the government since April, including the efforts to harmonise 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 highlighted the greater transparency in the oil and gas sector and public debt as essential steps for a resilient recovery.
“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 Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the report.
Looking ahead, the NDU discussed policy options in five areas that would help mitigate the effects of the crisis and support Nigeria’s recovery: (1) managing the domestic spread of COVID-19 until a vaccine is available for distribution; (2) enhancing macroeconomic management to boost investor confidence; (3) safeguarding and mobilizing revenues; (4) reprioritizing public spending to protect critical development expenditures; and (5) supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.