The World Bank (WB) has predicted that Nigeria’s current recession might last for three years unless the current reforms are sustained and the right mix of policy measures is implemented.
In a report titled: “Rising to the Challenge: Nigeria’s COVID response” and released by World Bank Nigeria Development Update (NDU), the international financial agency noted that the “average Nigerian could see a reversal of decades of economic growth and the country could enter its deepest recession since the 1980s”.
Shubham Chaudhuri, World Bank Country Director for Nigeria said; “Nigeria is at a critical historical juncture, with a choice to make.
He said further that: “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.”
It added; “The pace of recovery in 2021 and beyond remains highly uncertain and subject to the pace of reforms.
“Pandemic is 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.”
Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the report also said;
“Food insecurity has increased substantially and economic precarity is on the rise because unemployed workers have migrated to the low-productivity agricultural sector.
“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.”
The NDU which acknowledged measures taken by the government since April, including the efforts to harmonize 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, also discussed policy options in five areas that would 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 mobilizing revenues; reprioritizing public spending to protect critical development expenditures, and supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.