IMF/World Bank Meetings: Nigeria’s productivity hinges on improved electricity supply – W’Bank

…As IMF urges measures to cushion reform pains

…CBN eyes $1bn remittances

The World Bank says Nigeria must ramp up its electricity supply to support manufacturers’ efforts to industrialise the economy.

Ndame Diop, World Bank country director for Nigeria, said this in an interview with Arise TV on the sidelines of the IMF/World Bank Annual Meetings in Washington DC, the United States.

Diop said electricity supply is a big constraint for human capital in Nigeria, noting that the Nigerian economy will not be able to grow at its potential without improvement in electricity supply.

“At the micro level, the firms will struggle to increase their productivity to expand. For the smaller ones, we will see all their margins eaten by cost of electricity or high cost of electricity. So, it’s absolutely critical,” he said.

He said the solution is energy mix, stressing that Nigeria cannot industrialise without regular and reliable power supply.

“So, it is absolutely critical to do those reforms that are relatively well known and the World Bank has programmes supporting the reforms in the power sector

“You really have to fix the distribution companies, and you have to make sure that the discos are economically viable and are able to pay their bills. You have to really make sure that they invest in metering to identify consumers and to really collect enough to be able to pay their bills,” he noted.

Read also:What the World Bank Chief Economist failed to say about reforms in Nigeria

IMF urges measures to cushion reforms effects

On its part, the International Monetary Fund (IMF) expressed concern over Nigeria’s implementation of social measures intended to cushion the adverse effects of petrol subsidy removal and the unification of the foreign exchange rate.

According to the IMF, these efforts are unfolding too slowly, leaving Nigerian citizens struggling with high living costs as the economy grapples with inflation and other fallouts of the reforms.

“We welcome those reforms, while also recognising that they have entailed quite a lot of internal adjustment costs,” said Abebe Aemro Selassie, director of the IMF’s African Department, at a press conference in Washington, D.C. last week.

“A better job can be done by rolling out social protection, particularly for the most vulnerable,” he stated in response to a BusinessDay question.

Acknowledging the impact on the reforms on everyday Nigerians, he added, “The immediate effect of reforms always causes dislocation. We have absolutely, absolutely no doubt that conditions at the moment are extremely difficult. Food price shocks in recent years have been quite acute, and now rising fuel prices are adding pressure on other essential goods.”

CBN eyes $1bn monthly remittance flows

Meanwhile, Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said diaspora remittances stood at $250 million in April 2024 and increased to $600 million as of September 2024.

He also expressed optimism that with ongoing engagement with the diaspora, in addition to various products offered by that the banking industry, the CBN will be able to ramp up monthly in remittance inflows to $1 billion.

“Through engagement with the diaspora, we believe we’ll be able to move accordingly, and again, rising from that engagement, we put our target on increasing the inflows, the remittance inflows, to $1 billion and I am confident that we will get there monthly,” he said.

He further said that consultations and discussions had been going on since February 2023 to remove Nigeria from the gray list of the Financial Action Task Force (FATF).

FATF is the global body established in 1995 to lead global action to combat money laundering, terrorism, and proliferation financing.

The organisation had greylisted the country due to a rise in capital inflows and deficiencies in combating money laundering, terrorism, and arms financing.

“I would like to emphasise that we are consulting at the highest levels to remove Nigeria from FAFT grey lists, a key topic in our recent engagement,” he said.