Nigeria’s Recession Could Last Up To 2023

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The World Bank (WB) has predicted three years of economic
recession for Nigeria except economic reforms are sustained.

“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,” the latest World Bank
Nigeria Development Update (NDU) released on Thursday said.

The Bank argues “that this path could be avoided if progress in
the current reforms is sustained and the right mix of policy
measures is implemented.”

The report, titled: “Rising to the Challenge: Nigeria’s COVID
response”, takes 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.

“Nigeria is at a critical historical juncture, with a choice to
make”, said Shubham Chaudhuri, World Bank Country Director for
Nigeria.

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 latest World Bank NDU also projected that “the economy could
shrink up to 4 percent 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 noted that the “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.”

“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,”
said Marco Hernandez, World Bank Lead Economist for Nigeria and
co-author of the report.

The NDU 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.

It also highlighted the greater transparency in the oil and gas
sector and public debt as essential steps for a resilient
recovery.

Looking ahead, the NDU discussed policy options in five areas
that would help mitigate the effects of the crisis and support
Nigeria’s recovery; 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.