The World Bank has said the number of Nigerians living in extreme poverty may increase by more than 30 million by 2030 and the country will be home to 25 per cent of the world’s destitute people if the government fails to revive economic growth and create jobs.
It warned that the country could slide back into recession if crude prices fell by 25 per cent to $50 a barrel.
The international oil benchmark, Brent crude, traded around $61 per barrel on Monday.
The bank gave the warning in its 2019 Nigeria Economic Update Report, which was released on Monday.
It said, “Economic and demographic projections highlight the urgent need for reform.
“With population growth (estimated at 2.6 per cent) outpacing economic growth in a context of weak job creation, per capita income is falling. Today, an estimated 100 million Nigerians live on less than $1.90 per day.
“Close to 80 per cent of poor households are in northern Nigeria, while employment creation and income gains have been concentrated on central and southern Nigeria.”
According to the report, Nigeria’s economy is expected to grow by 2.1 per cent in 2020 and 2021, compared to an annual population growth rate of 2.6 per cent.
It noted that Nigeria’s economy was recovering gradually from the 2016 recession, with growth projected to pick up from 1.9 per cent in 2018 to two per cent in 2019.
The World Bank, however, warned that the projected growth outlook “is vulnerable to external and domestic risks, including geopolitical and trade tensions that may affect inflows of private investment.”
“Nigeria has the opportunity to advance reforms to mitigate these risks amid growing public demand for greater economic opportunities,” it said.
The World Bank urged President Muhammadu Buhari to increase domestic revenue, remove trade restrictions and improve the predictability of economic policy.
It also advised the Nigerian government to remove expensive fuel subsidies and reduce lending to targeted sectors “that crowd out banks.”
Failure to take actions would see more Nigerians falling into extreme poverty, the bank warned.
“The cost of inaction is significant. Under a business-as-usual scenario, where Nigeria maintains the current pace of growth and employment levels, by 2030, the number of Nigerians living in extreme poverty could increase by more than 30 million,” the bank said.
About 50 per cent of Nigeria’s almost 200 million people live in poverty, according to the World Bank.
Last year, Nigeria overtook India as the country with the highest number of people in extreme poverty.
A report by the Brookings Institution said data from the World Poverty Clock showed that Nigeria had over 87 million people living in poverty.
The World Bank report, titled ‘Jumpstarting Inclusive Growth: Unlocking the Productive Potential of Nigeria’s People and Resource Endowments’, showed that Nigeria created about 450,000 new (net) jobs in 2018, partially offsetting the loss of 700,000 jobs in the previous year.
“Nigeria’s labour force is growing rapidly, and in 2018, over five million Nigerians entered the labour market, resulting in 4.9 million more unemployed people in the last year,” it said.
The report stated that “positive news are emerging from some states that are creating enough jobs to keep up with the growth of their labour forces.”
It said, “In the year following the recession (between the first quarter of 2017 and the first quarter of 2018), 10 states saw some positive job creation, but the number of new jobs was not enough to absorb the new entrants into the labour force.
“The situation improved by the third quarter of 2018, as four states (Lagos, Rivers, Enugu, and Ondo) created more jobs than the entrants to the labour market, and as a result, these states reduced unemployment.”
According to the report, the signing of the Africa Continental Free Trade Area agreement shows that Nigeria is now more willing to become a driver of continental growth and integration.
The World Bank Country Director for Nigeria, Shubham Chaudhuri, said, “Reforms would help achieve faster, more inclusive, and sustained growth with jobs.
“Building on recent efforts, going forward, we recommend actions in priority areas, such as increasing fiscal revenues and improving the quality of spending to manage oil-sector volatility, investing in much-needed human capital and infrastructure, and improving the business climate to unlock private investment and tackle Nigeria’s jobs challenge.
“Investing in people and removing barriers that make it difficult for new firms to compete and grow will encourage entrepreneurship and innovation, spur job growth, and ultimately reduce poverty.”
Shedding its value in Quarter 3 in response to its perennially strong import culture, which far outpaces its exports, is high, a financial pundit has observed. In the second quarter, Nigeria posted a current account deficit in the sum of $2.9 billion and there are worries among industry experts that the development could recur in Q3, with the implication that government might be compelled to modify the exchange rate lower to suit the sentiments of foreign investors.
Lukman Otunuga, a research analyst with the financial planner, FXTM, gave the outlook while noting that the Central Bank of Nigeria (CBN) might be similarly strained to offer palliatives to the current inflationary pressures on the economy.
“While a deficit is not necessarily bad, it does suggest that a country’s liabilities exceed its foreign assets. Given how Nigeria imports more than it exports, there is a risk of the nation experiencing another deficit in Q3 – an outcome that could prompt foreign investors to call for Naira devaluation.”
“There will be a strong focus on the interest rate decision on Tuesday (today). Given how inflationary pressures are making an unwelcome return, the CBN may think twice before cutting interest rates from 13.5 per cent. Should the CBN governor adopt a cautious tone and express concerns over the Nigerian economy, investors may re-evaluate the possibility of monetary policy easing during the first half of 2020,” Mr Otunuga noted.
Nigeria’s Capital importation figure for Q3 2019, released earlier this week, put the value of capital importation into the country during the period at $5.368 million, representing a 7.78% plunge from the amount posted at Q2. However, it was an 87.99% increase over the amount posted in the corresponding period of 2018. Generally, the contraction in the size of Nigeria’s capital importation on quarter on quarter basis as detailed above is a timely indication that the nation is increasingly losing its appeal as investment hub among foreign investors.
According to Said Adejumobi, Director for Southern Africa (SRO SA), Economic Commission for Africa (ECA), the blue economy can be a site of economic production, which through its value chain process, can link small, medium and big production firms and thereby promote the alleviation of poverty, reducing inequality and ensuring better living standards for the people of our region.
Adejumobi said this on Monday at a high-level policy dialogue on the “The Blue Economy, Climate Change and Environmental Sustainability” in Windhoek, Namibia.
Mr Adejumobi stressed that the dialogue is focusing on the potential threats and dangers to the blue economy sector from climate change and environmental challenges. “If the blue economy is to serve as a viable mechanism for powering our industrialization process, the threats to the realization of such goal need to be urgently addressed”, he added.
Adejumobi further emphasised the importance of oceans which are at the heart of the planet, covering over two-thirds of the earth’s surface, being home to over 80 per cent of life on the earth, supplying nearly half of the oxygen we breathe, and serving as the largest carbon sink on the planet by regulating the earth’s climate through absorbing carbon dioxide that we produce.
“A recent report by the World Wildlife Fund estimated that the value of key ocean assets to be US$24 trillion, which is indeed a conservative estimate; the actual value is likely to be much higher because many key ecosystem services are difficult to quantify, with an annual value of goods and services estimated at US$2.5 trillion,” he added.
Adejumobi further observed that the blue economy is Africa’s “hidden treasure”, which if well and sustainably tapped, can make a difference in Africa’s economic transformation and development. “In realization of the immense benefits of the blue economy, sustainable development goal (SDG) 14 commits member States to conserve and sustainably use the oceans, seas and maritime resources for purposes of development”, he said.
Speaking at the same event, Namibia’s United Nations Development Programme (UNDP) Resident Representative, Ms Alka Bhatia noted that the desired outcome of a blue economy is to achieve “improved human well-being and social equity, while significantly reducing environmental risks and ecological shortages – an outcome which is at the center of UNDP’s work in Namibia, and globally.”
Ms. Bhatia further highlighted that Namibia’s fisheries is the third largest income earner and contributes about 15 per cent of total exports, “about 16,800 people were directly employed in the fisheries sector as per estimates in 2017,” she added.
It was Ms. Bhatia’s considered view that the blue economy concept moves nations away from the business as usual “brown” development model where the oceans are for free resource extraction and waste dumping, – “the concept allows us to internalize costs in economic calculations,” she emphasised.
The two-day policy dialogue offers a great opportunity for stakeholders to share ideas and opportunities, raise awareness on climate change and environmental stewardship, create innovative new partnerships and work together towards effectively addressing climate-related changes in order to realize the full potential of the blue economy.
A quarterly survey report titled Inflation Attitudes Survey Report for Q3 2019 released by the Central Bank of Nigeria (CBN) has shown that Nigerians would rather have a lower interest rates than lower inflation.
The Survey report which was released on Tuesday, measured Households’ perception/expectations of price changes in the past one year/next one year, Households’ perception/expectations of interest rate changes in the past one year/next one year, Households’ opinions on the impact of interest rate changes in households and on the Nigerian economy, Households’ perception of the impact of interest rate changes on prices in the short and medium-term, and Households’ assessment of CBN’s role in controlling inflation.
The survey was conducted in 2,070 households that were randomly selected across Nigeria, with a response rate of 98.3%.
When respondents were asked what would happen to the Nigerian economy if prices started to rise faster than they are now, 52.9% believed that economy will grow weaker, 6.4% said it will grow stronger, while 19.5% thinks there will be little difference. 21.2% did not respond.
This suggests that Nigerians prefer stability in prices. This supported the notion that inflation constrains economic growth.
On price changes over the next one, majority of the respondents think inflation will rise by 2.7%.
The survey showed that 47.6% of the surveyed households knew nothing about interest rates.
Out of the remaining 52.4%, 28.2% believed interest had risen in the last 12 months.
On expected change on interest rates for bank loans and savings, 21.4% think rates will rise, while 14.7% believed that rates will fall. However, 63.9% of the respondents were indifferent or had no idea.
On whether if it would be best for the economy if interest rates fall or rise, 37.9% indicated that a fall in interest rates will favour the economy. 6.5% opted for a rise in rates, 14.6% were indifferent. However, a large percentage (40.6%) had no idea.
This indicates that while some Nigerians would prefer a fall in interest rate, the majority have no idea on interest rates.
Interest rates vs inflation
When asked whether they will prefer a high-interest rate or high inflation, 33.7% preferred a rise in prices (high inflation), 22.5% preferred higher interest rates, while 43.4% had no idea.
This suggests, when given a trade-off, Nigerians will prefer higher interest rates to higher inflation. This is also suggestive of support for bank’s price stability objective.
Governor Udom Emmanuel has presented a budget proposal of N597, 800billion for the 2020 fiscal year to Akwa Ibom State House of Assembly.
A breakdown of the budget estimate as presented at the chambers of the state assembly in Uyo on Wednesday indicates that capital expenditure has N369, 642b, recurrent expenditure is estimated to take N111,225b, while N116,933 has been estimated for consolidated revenue fund charges.
The 2020 budget which indicates a shortfall from the 2019 budget with its approved provision of N672,985, is according to the governor,predicated on an oil benchmark of $55 per barrel at a production rate of N2.18 million barrels per day, and with an estimated exchange rate of 305/USS, in line with the national budget benchmark projection.
Mr Emmanuel said the 2020 budget christened “A budget of industralization for poverty alleviation Phase II” has a total projected revenue estimated of N381,556b as against the approved provision of N374,758b for 2019.
A breakdown of this further indicates that Internally Generated Revenue (IGR) -N52.556 billion, Statutory Allocation – N 52.000 billion,.Derivation Fund -N255.000 billion, Retained Revenue from Parastatals -N2.000 billion, Value Added Tax (VAT) -N 20.000 billion, total.- N381.556 billion
Emmanuel said the 2020 budget is further anchored on his Eight-Point policy thrust which rests squarely on his initial Five-Point Agenda that shaped his First Term in office to wit; Job Creation, Poverty Alleviation, Wealth Creation, Economic and Political Inclusion, and Infrastructural Consolidation and Expansion for continuous transformation of the State into an industrialized entity.”
“We are committed to complete all our ongoing projects and other star projects in our completion agenda”, he assured.
The Speaker, Akwa Ibom State House of Assembly, Mr Aniekan Bassey applauded governor Udom Emmanuel for the purposeful implementation of the 2019 budget and pledged to ensure a speedy consideration and passage of the 2020 appropriation budget.
He however charged the various Ministries, Departments and Agencies (MDGs) to ensure they provide all the necessary supporting budget data and stick to the time table that will be announced by the house for their appearance.
On his part, the leader of the state Assembly Udo Kierian Akpan said the Governor has been able to bring about accountability in governance and promised that he and his colleagues will continue to support his efforts in service.
President Cyril Ramaphosa has vowed to rebuild South Africans’ confidence in the economy, based not merely on hope or expectation of change, but on concrete things.
South Africans want concrete things that can make a difference in the economy and real actions that “move the needle,” the president said in his first weekly message “From the Desk of the President,” a new platform through which the president said, “I will discuss some of the issues that interest and concern South Africans, and talk about the work we are doing in government to tackle these issues.”
After a decade of low growth and deepening poverty, people are looking for signs of progress in tackling the many challenges confronting the country, the president said.
This year the economy will record growth lower than expected, with the government’s finances being stretched and several industries looking at retrenching workers, he said. South Africa’s GDP growth forecast for 2019 has been revised by the National Treasury to 1.5 percent, from an estimated 1.7 percent in 2018. “Much of the confidence that the country had 20 months ago has dissipated as the reality of the problems we face became clearer,” he added.
The important issue is that the government should move in a determined way to effect change while remaining irrevocably committed to rooting out state capture, corruption and malfeasance, Ramaphosa said. South Africans want to change the narrative of doubt to a narrative of opportunity not through clever spin, but through action, he added. As part of efforts to rebuild confidence, funds have been redirected to stimulate economic activity in areas where the majority of South Africans live, Ramaphosa said.
These include finance to support black commercial farmers, the revitalization of industrial parks in townships and the establishment of a Township Economy Fund.The government is also increasing the value of goods and services it procures from small business and cooperatives, Ramaphosa said.Much work is underway to improve the ease and reduce the cost of doing business, as are efforts to restructure state-owned enterprises and ensure that they perform better in meeting the country’s needs, the president said.
South Africa is taking firm action to grow the economy and create jobs, he said.Building on the stimulus and recovery plan, the government will finalize a clear economic growth strategy within the next few weeks, the president promised.”I am certain that with the active involvement of all sectors of society, this will be achieved,” Ramaphosa said.
Nigeria’s Gross Domestic Product (GDP) declined by 0.16 per cent in the second quarter of 2019, the National Bureau of Statistics (NBS) said on Tuesday.
The NBS also revealed that the GDP grew by 1.94 per cent in real terms within the same period.
According to the report, if compared to the second quarter of 2018, which recorded a growth of 1.50 per cent, the growth observed in Q2 2019 indicates an increase of 0.44 per cent.
However, when compared to 2.10 per cent recorded in the first quarter of 2019, the Q2 2019 real growth rate indicates a decline of 0.16 per cent.
“During the quarter, aggregate GDP stood at N34,944,151.61 million in nominal terms, an increase of 13.83% over the performance in the second quarter of 2018 and 9.8% over the preceding quarter,” the report noted.
The NBS said that the performance observed in Q2 2019 follows an equally strong first-quarter performance, and was likely aided by stability in oil output as well as the successful political transition.
Overall, a total of 15 activities grew faster in Q2 2019 relative to last year, while 13 activities had higher growth rates relative to the preceding quarter.
On a half-year basis, real growth in the first half of 2019 stood at 2.02 per cent, higher than in 2018 which was 1.69 per cent.
Further analysis on the quarter on quarter shows that the real GDP increased by 2.85 per cent compared to a decline of –13.69 per cent in the preceding period.