As a share of its 2018 GDP, Nigeria’s COVID-19 stimulus either as aid, grants, guarantees, CBN’s monetary liquidity injection, and interest rate is less than that of Brazil, Angola, Mexico, Russia, South Africa, Ethiopia, Ghana, Kenya, Senegal, and Uganda, the Washington-based lender said in its recent Nigeria Development Update (NDU) report.
“Nigeria’s fiscal and monetary policy response has been modest by the standards of comparable countries, making it harder for the country to avoid recession,” the World Bank said in the report titled ‘Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery’.
Prepared by a World Bank team led by Gloria Joseph-Raji (senior economist), Steve Loris GuiDiby (economist), and Marco Hernandez (lead economist), the NDU report published twice a year assessed recent economic and social developments and prospects in Nigeria and placed them in a longer-term and global context.
The Nigerian economy is expected to contract in 2020 by at least 3 percent due to the twin hits of COVID-19 and collapsing global oil price which have graced Africa’s largest economy with low growth, high unemployment, and high poverty rate.
“These challenges reflect longstanding shortfalls in human capital, infrastructure and public services, women’s economic inclusion, the business environment, access to finance, and governance, as the government recognized in its Economic Recovery and Growth Plan 2017‒20,” the World Bank said.
To address the impact of COVID-19 on Nigeria’s economy, meanwhile, the Federal Government recently released an Economic Sustainability Plan produced by a committee led by Vice President Yemi Osinbajo.
Some of the projections in the 76-page report from the committee include the fact that Nigeria could earn about N88.4 billion monthly revenue as proceeds from crude oil if the price per barrel is at an average of $30 over the rest of the year and with the assumption that the Nigerian National Petroleum Corporation (NNPC) reduces Joint Venture operating costs by 20 percent.
But despite Nigeria’s planned COVID-19 policy stimulus, the World Bank expects a poor economic performance for Africa’s largest economy in 2020.
“Because its fiscal space is limited and its external buffers depleted, Nigeria’s fiscal and monetary policy response has been modest by the standards of comparable peers,” it said.
The June edition of the Nigeria Development Update, however, provides policy options that Nigerian policymakers may consider to mitigate the impacts of COVID-19 and lay the foundation for a strong recovery.
These policy options are organised in the five areas cited by the World Bank: Containing the COVID-19 outbreak and preparing to deal with a more severe outbreak, enhancing macroeconomic management to boost investor confidence, safeguarding and mobilising revenues, reprioritising public spending to protect critical development expenditures, and lastly, supporting economic activity and providing relief for poor and vulnerable communities.
