Following a detailed assessment, the International Monetary Fund (IMF) has said Nigeria is experiencing stalled per-capita growth, high poverty levels and significant food insecurity amid efforts by President Bola Tinubu’s administration to implement crucial structural reforms.
This was part of the conclusion of the IMF’s Executive Board Post Financing Assessment (PFA) which endorsed the staff appraisal, confirming Nigeria’s adequate capacity to repay the fund a $3.4bn loan approved in 2020, but pointed out several areas needing urgent attention.
According to the statement from the IMF: “Like many other countries, Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.
“Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space.”
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Economic outlook, challenges
The IMF also noted that despite exiting the COVID-19-induced recession swiftly, Nigeria’s economic growth had been sluggish, barely keeping pace with the population’s growth.
The reliance on the hydrocarbon economy has been a significant drag on overall growth. Security concerns, especially in the Northern region, have severely impacted agriculture and food security, with 25 million Nigerians (13 per cent of the population) currently facing food insecurity.
The poverty rate stood at 37 per cent in 2022, underscoring the severity of the economic challenges.
The IMF projected a slight improvement in growth to 2.9 per cent for 2023 and three per cent in 2024, contingent on better hydrocarbon sector performance and control over oil theft.
The IMF’s Executive Board acknowledged the strong start by the new administration in addressing deep-rooted structural issues. The focus on price stability, fiscal responsibility and revenue mobilisation was commended.
However, Nigeria’s battle against a difficult external environment, low reserves and limited fiscal space remains daunting.
The IMF underscored the importance of monetary tightening and fiscal adjustments to restore macroeconomic stability.
The government’s ambition to digitise and improve revenue collection is seen as crucial for enhancing public service delivery and ensuring fiscal sustainability.
Moreover, the IMF advised on the complete phase out of fuel and electricity subsidies, which are costly and inefficient, advocating for targeted support to the most vulnerable populations through social transfers.
As Nigeria navigates through these challenging times, the IMF’s assessment and recommendations offer a roadmap for sustainable growth and stability.
The emphasis on comprehensive reforms, fiscal discipline, and targeted support for the vulnerable underscores the complex balancing act required to address Nigeria’s economic dilemmas.