The World Bank gave the warning in its Nigeria Economic Update launched in Abuja.
An estimated 100 million Nigerians currently live on less than US$1.90 per day. Close to 80 percent of poor households are in northern Nigeria, while employment creation and income gains have been concentrated in central and southern Nigeria.
“Economic and demographic projections highlight the urgent need for reform,” the bank noted.
Population growth is estimated at 2.6 percent, outpacing economic growth in a context of weak job creation, while per capita incomes are falling.
“The ‘cost of inaction’ is significant. Under a business-as-usual scenario, where Nigeria maintains the current pace of growth and employment levels, by 2030 the number of Nigerians living in extreme poverty could increase by more than 30 million, and Nigeria could account for 25 percent of world’s extremely poor population,” the bank stated.
In the report, the bank noted that building reform momentum is essential to mitigate risks and promote faster, more inclusive, and sustainable growth that improves living standards and reduces poverty.
Robust growth and job creation will require strengthening macroeconomic management while increasing fiscal revenues to attenuate the impact of oil-sector fluctuations and advance much-needed investments in human capital and infrastructure, it said.
This edition of the Nigeria Economic Update (NEU) discusses selected reform areas, including leveraging trade integration to harness the benefits of the Africa Continental Free Trade Area; improving basic education financing to improve human capital outcomes; monitoring the impact of conflict on household’s welfare to protect the poor and vulnerable; and leveraging digital technologies to diversify the economy and create jobs for young workers. Reforms in these and other areas would enable Nigeria to strengthen its macroeconomic resilience and promote private sector resilience.
The report titled “Jumpstarting Inclusive Growth: Unlocking the Productive Potential of Nigeria’s People and Resource Endowment” notes that Nigeria’s labour force is growing rapidly, as over 5 million Nigerians entered the labour market in 2018, resulting in 4.9 million more unemployed people in the last year.
According to the report, between the first quarter of 2017 and the first quarter of 2018, 10 states saw some positive job creation, but the number of new jobs was not enough to absorb the new entrants into the labour force. The situation improved by the third quarter of 2018 as four states (Lagos, Rivers, Enugu, and Ondo) created more jobs than the entrants to the labour market, and as a result reduced unemployment.
Marco Hernandez, World Bank lead economist, speaking at the launch of the update in Abuja, stressed that Nigeria’s economy has remained vulnerable to external and domestic risks with the absence of structural reforms. This is as the economy is confronted by the sharper-than-expected slowdown in the global economy as well geopolitical and trade tensions.
“Domestically, the main risk is associated with the degree of predictability of macroeconomic policies, the pace of structural reforms, and the country’s security situation. The economy’s sensitivity to volatile oil markets is a major cause of uncertainty and a disincentive to long-term investment,” Hernandez said.
Hernandez said that though the economy has recorded growth, it is not as fast as expected as it cannot meet the need of the nation’s population, emphasising the need for the government to help the private sector to create job.
“Building reform momentum is essential to mitigate risks and promote faster, more inclusive and sustainable growth that improves living standards and reduces poverty,” Hernandez said. “Robust growth and job creation will require strengthening macroeconomic management while increasing fiscal revenues to attenuate the impact of oil-sector fluctuations and advance much-needed investments in human capital and infrastructure.”
He further said the productivity gap between Nigeria and comparator countries reflects both its lower relative stocks of physical and human capital and the inefficiency with which inputs (capital and labour) are transformed into outputs.
Shubham Chaudhuri, World Bank country director for Nigeria, in his remark said the report is aimed at promoting ways to boost the productivity and resilience of the Nigerian economy, as well as increasing productivity which is vital to support robust growth and job creation in the country.
“Building on recent efforts, going forward we recommend actions in priority areas, including increasing fiscal revenues and improving the quality of spending to manage oil-sector volatility, investing in much-needed human capital and infrastructure, and improving the business climate to unlock private investment and tackle Nigeria’s jobs challenge,” Chaudhuri said.
“Leveraging trade integration to harness the benefits of the Africa Continental Free Trade Area; improving the efficiency of spending in education; monitoring the impact of conflict to protect the poor and vulnerable; and leveraging digital technologies to diversify the economy and create jobs for young workers are ways to boost productivity and resilience in the economy,” he said.
Chaudhuri said while Nigeria has achieved considerable progress in boosting income levels and living standards, it has not yet managed to reach a convergence path with advanced economies.
He stressed the urgent need to create jobs by effectively maximising the available resources, human capital and infrastructure as well as ensure environment conducive for entrepreneurs and investors thereby unlocking the private sector financing.
Tunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS), said the report points to the need for collaboration among the state and federal governments regardless of the constituted independent nature of states.
”Nigeria has been the first market in Africa as it is a consumer economy, but we need to change this narrative and take advantage of our resources, both capital, land and human resources to create the economy we desire,” Fowler said. “The Federal Government cannot do it alone. If we have more cooperation among the federal and state governments, we would achieve more growth in the nearest future.”
Abubakar Atiku Bagudu, governor of Kebbi State, said the report which speaks to the need to ensure inclusive growth in Nigeria brings out the quantum of challenges in the country and the need to mobilise and make effective use of its resources.
“It is important for the government to promote policies that will reward the hard work of our hardworking men and women in the various sectors. This will deliver value to everyone,” he said.
Bagudu said that crisis and insurgencies recorded across the country have to do with lack of inclusion, adding that the government as well as all development bodies should promote programmes that would boost inclusion across the country.
Source: businessdayng
