Nigeria Under the World Bank 2024 Global Economic Prospect Report

“If today we don’t invest, we will not be able to develop our human capital. If we are saying that the next Bill Gates will come from Africa, we need to have connectivity.” Makthar Diop, Managing Director, World Bank – IFC In reality, anybody can join the debate on how to fix the complex policy […]

“If today we don’t invest, we will not be able to develop our human capital. If we are saying that the next Bill Gates will come from Africa, we need to have connectivity.”

Makthar Diop, Managing Director, World Bank – IFC

In reality, anybody can join the debate on how to fix the complex policy machinery of our global economy in order to save the future of humanity. But the fears that emanates out of our daily social struggles are still giving rise to issues like unequal access to energy and primary healthcare, a crack in the moral edifice of migration laws, water stress and skewed sanitation pressures, the centrifugal pull by leaders in emerging economies to rethink their monetary policies in a world where the thirst for generative Artificial Intelligence (AI) has temporarily become the last stage of our post-pandemic economic civilization.

The 54th World Economic Forum begins Monday, 15th January few days after the World Bank officially published its 2024 flagship report with a distinctive focus on global economic prospect. Nigeria’s Vice-President, Alhaji Kashim Shettima left for Davos, Switzerland, on Sunday, 14th January to join other global leaders and top brass in economic and foreign policy who will focus on rebuilding trust amid uncertainty and rapid change centered around achieving security and cooperation in a fractured world, creating growth and jobs for a new era, artificial intelligence as a driving force for the economy and society.

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The national economic policy choices President Tinubu is making are all not out of context or unison with global economic policy trend. We cannot live in isolation with other countries from both Global South and Global North standpoint. There is an abstract consensus between the Tinubu Renewed Hope initiative and almost all the drivers and pillars of global macro-economic growth as indicated in the January 2024 Global Economic Prospect Report.

Ipso facto, I submit, that the Tinubu’s Renewed Hope development policies should continue on the path we have chosen as a nation, attracting FDI so as to stimulate divergent plus inclusive economic growth than in pursuing welfarist policies in revenue allocation.

We need to open the Nigeria private sector space in order to do business with the world. Sixty five percent of Chief Economists polled by the World Economic Forum (WEF) Centre for the New Economy and Society expect moderate growth in sub-Saharan Africa this year, compared to 35 percent who expect weak growth.

Nigeria’s growth softened to an estimated 2.9 percent in 2023 partly driven by a disruptive currency demonization policy in the first quarter of 2023, annual oil production increase after a notable decline in previous years. However, the signs are very good for the Tinubu administration to mobilize sufficient effort towards an intra-Africa trade as the report noted that, growth in sub-Saharan Africa (SSA) is expected to accelerate to 3.8 percent in 2024 and firm further to 4.1 percent in 2025 as inflationary pressures fade and financial conditions ease. The case looks more optimistic in other SSA economies excluding South-Africa and Angola, where growth in the region is expected to accelerate from 3.9 percent to 5 percent in 2024 and 5.3 percent in 2025.

Moving forward, the Vice President will be having a high-level meeting with Makhtar Diop, the Managing Director of International Finance Corporation of the World Bank. He will also co-chair the launch of the Private Sector Action Plan for the African Continental Free Trade Area (AfCTA). This is a good start for Nigeria in the 2024 fiscal year. Already, according to the report, global monetary policy tightening is nearing an end with inflation continuing to decline and the share of Emerging Markets and Developing Economies (EMDEs) with the above target inflation falling sharply in recent months. A number of EMDEs Central Banks some of which were the first, globally, to raise rates in 2021 have already cut policy rates and more are expected to do so in the coming months (i.e. February 2024 and beyond).

To promote investment accelerations, the report noted, EMDEs (Nigeria inclusive) need to implement a comprehensive package of policies, tailored to their specific circumstances. The package typically includes fiscal and monetary interventions, structural policies and efforts to improve institutional quality. President Tinubu wasn’t far away from here also, he established an Infrastructure Support Fund for States to invest in critical areas that will create an enabling environment for businesses, he also launched the National Talent Export Programme (NATEP), to create one million service-export jobs over the next 5 years, and make Nigeria a global business outsourcing hub. The National Philanthropy Office (NPO) was established to mobilize $200 million in private investments to support MSMEs in Nigeria.

Looking at the report further on the side of tax and resources mobilization, tax policies according to the World Bank experts, can also be used to improve incentives particularly for investment in the private sectors while expenditure measures can improve fiscal balances include eliminating distortive agriculture and fossil fuel subsidies, which currently account for sizable shares of government expenditures in many Emerging Markets and Developing Economies. Petrol Subsidy was removed by the president at the inception of the government which is a policy reflection of the above statement.

To consolidate the background of the removal, he didn’t fold arms or stand akimbo, he reconstituted the Presidential Enabling Business Environment Council (PEBEC) and signed few Executive Orders aimed at reducing the tax burden on a number of key economic sectors. These now allowed the government to set up a Tax and Fiscal Reforms Committee that is fully at work to deepen the ongoing reforms and reposition the national economy for long-term sustainability.