The World Bank has announced that Nigeria and other countries in Sub-Saharan Africa (SSA) will suffer increased poverty, higher debt, food insecurity, lower per capita income and other economic crises in 2023.
This is even as the global crisis, rising rates and inflation have stalled global economic growth with some countries billed to enter recession, World Bank President, David Malpass, said in a statement on Wednesday.
For Africa’s three largest economies (Nigeria, Angola and South Africa), the bank projected growth of 2.9 per cent, 2.8 per cent and 1.4 per cent respectively.
However, the figure is lower than the projections by the federal government in the 2023 budget.
The Finance Minister, Zainab Ahmed, last week during the public presentation of the N21.8 trillion budget for 2023, said Nigeria projects a 3.75 per cent growth this year in terms of the Gross Domestic Product (GDP).
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But the World Bank in its Nigeria Development Update (NDU) said the country’s economic growth was projected to decelerate to 2.9 per cent in 2023 and remain at that pace in 2024.
It stated that the retarded growth projection was due to slow economic growth in the third quarter of 2022 because of weak performance in critical areas of the economy.
The bank said policy uncertainty, sustained high inflation, and rising incidence of violence were anticipated to temper growth.
“Growth in agriculture is expected to soften because of the damage from last year’s floods,” it said.
It further said high borrowing costs, lower energy prices, a sluggish growth of oil production and a subdued activity in the non-oil sectors could weaken the nation’s fiscal position.
The organisation said that the nation had to make hard choices or face a worse economic downturn in the months and years ahead.
The World Bank further projected the global economy to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024, adding that the sharp downturn in growth was expected to be widespread, with forecasts in 2023 revised down for 95 per cent of advanced economies and nearly 70 per cent of emerging market and developing economies.
It said the slowed global growth rides on the back of elevated inflation, higher interest rates, reduced investment and disruptions caused by Russia’s invasion of Ukraine.
“Growth in advanced economies is projected to slow from 2.5 per cent in 2022 to 0.5 per cent in 2023; excluding China, growth in emerging market and developing economies is expected to decelerate from 3.8 percent in 2022 to 2.7 per cent in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions and other domestic headwinds,” the bank said.
Projections reflect realities on ground – Experts
The Managing Director/Chief Economist, Analysts’Data Services and Resources (ADSR) Limited, Dr Afolabi Olowookere, said the World Bank’s latest projection didn’t come as a surprise because they had earlier indicated that half of the world would be in a recession.
“So the way it works is that if your major trading partners are projected to have a negative growth, that will also have an impact on you but probably not as severe as your partner.
“The reasons locally are not far- fetched. We have an election coming and so, new leaders would emerge who will take some time to settle. The continuous provision for fuel subsidy will also impact how much is available to spend on growth enhancing sectors, so that is also a factor.
“But also importantly, the magnanimity of the winner of the presidential election, the indication to work with everyone and have an inclusive government is very important because each of the major contenders and the dark horses have very huge followings and we cannot discountenance their support.”
Olowookere said even the current 3.7 per cent projection of the federal government was hovering below the 5 per cent anticipated by the National Development Plan.
An Economist, Prof. Uche Uwaleke, said the projection was a clear indication that Nigeria must do more this year to boost revenue and remove economic bottlenecks, especially the fuel subsidy if it wanted to experience any sort of growth.
“The elephant in the room seems to be the issue of fuel subsidy, which the 2023 budget has only accommodated up till June. How the new administration navigates the challenges that will come with its removal lie at the heart of macroeconomic stability in the second half of 2023.
“It goes without saying that negative investors’ sentiment on the part of both domestic and foreign investors will prevail if fuel subsidy removal is made possible.
“This is why the government should begin in earnest to engage relevant stakeholders, effectively communicate to the public as well as agree compensation measures with organised labour with a view to ameliorating its direct impact and unintended consequences,” he added.
By Sunday Michael Ogwu & Philip Shimnom Clement
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