World Bank has cautioned that despite the current recession, Nigeria risks sinking deeper into recession in the next three years.
This was stated by the Country Director in Nigeria, Shubham Chaudhuri, in a statement issued after the launch of the latest World Bank Nigeria Development Update (NDU).
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.
It projected that the Nigerian economy could shrink up to four 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, the report stated.
“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.
“In the absence of measures to mitigate the impact of the COVID-19 crisis, the number of poor could increase by 15 to 20 million by 2022.”
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The report, however, advised that “this path could be avoided if progress in the current reforms is sustained and the right mix of policy measures is implemented.
“It takes stock of the recently implemented reforms and proposes policy options to mitigate the impact of COVID-19 and foster a resilient, sustainable, and inclusive recovery.
The latest World Bank NDU projects that the economy could shrink up to four per cent this year, following the twin shocks of COVID-19 and low oil prices.
The pace of recovery next year and beyond, the NDU release said: “remains highly uncertain and subject to the pace of reforms.”
It noted that the pandemic was disproportionately affecting the poor and most vulnerable, women, in particular, adding that 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 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 also highlights the greater transparency in the oil and gas sector and public debt as essential steps for a resilient recovery,” it added.
The NDU recommended policy options in five areas to help mitigate the effects of the crisis and support Nigeria’s recovery.
These include managing the domestic spread of COVID-19 until a vaccine is available for distribution; enhancing macroeconomic management to boost investor confidence; safeguarding and mobilising revenues; re-prioritising public spending to protect critical development expenditures, and supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.
“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,” Chaudhuri added.
World Bank Lead Economist for Nigeria and co-author of the report Marco Hernandez also said: “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.”
Looking ahead, the NDU pointed out five areas that would help mitigate the effects of the crisis and support Nigeria’s recovery.
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They include: managing the domestic spread of COVID-19 until a vaccine is available for distribution; enhancing macroeconomic management to boost investor confidence; safeguarding and mobilising revenues; reprioritising public spending to protect critical development expenditures, and supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.
 cautioned that despite the current recession, Nigeria risks sinking deeper into recession in the next three years.){kind=link}