The World Bank (WB) has forecast that the current recession in Nigeria will last for three years unless the current reforms are continued and the right policy mix is put in place.
The international financial agency noted in a study titled “Rising to the Challenge: Nigeria’s COVID response” published by the World Bank Nigeria Development Update (NDU) on Thursday, December 10 that the “average Nigerian could see decades of economic growth reversed and the country could enter its deepest recession since the 1980s.”
Shubham Chaudhuri, World Bank Country Director for Nigeria said;
Nigeria, with a choice to make, is at a key historical juncture.
He further stated that: Nigeria should decide to break decisively from business as usual and increase its considerable potential by upholding the bold reforms that have been undertaken to date and moving even further, with an even greater sense of urgency, to encourage faster and more inclusive economic development.
The study projected that “after the twin shocks of COVID-19 and low oil prices, the economy could shrink by up to 4 percent in 2020.”
In 2021 and beyond the rate of recovery remains highly unpredictable and subject to the pace of change.
The pandemic affects the poor and the most vulnerable, especially women, disproportionately.
The number of poor people could increase by 15 to 20 million by 2022 in the absence of measures to mitigate the impact of the crisis.
Marco Hernandez, Nigeria’s World Bank Lead Economist and co-author of the paper, also stated:
Food insecurity has risen dramatically, and economic precariousness is growing as unemployed workers have moved to the low-productivity agricultural sector.
In order to contain the spread of COVID-19, stimulate the economy, and enable the private sector to be the engine of growth and job creation, Nigeria should build upon its reform momentum.
It could also redirect public spending from subsidies that help the wealthy 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.
In recognition of steps taken by the government since April, including efforts to harmonize exchange rates, the implementation of a market-based gasoline pricing system, the adjustment of electricity tariffs to more cost-reflective levels, and the reduction of non-essential spending and the redirection of resources to the COVID-19 response, the NDU also addressed policy options in five areas that would help to reduce non-essential spending and the redirection of resources to the COVID-19 response.
These include controlling the domestic spread of COVID-19 before a vaccine is available for distribution; strengthening macroeconomic management to improve investor confidence; safeguarding and mobilizing revenues; reprioritizing public expenditure to protect vital development spending; and supporting economic activity and access to basic services and providing relief to poor and vulnerable communities