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Tag: World Bank

  • Immediate policy action needed to curb long term COVID-19 impact on Nigerians – World Bank

    Immediate policy action needed to curb long term COVID-19 impact on Nigerians – World Bank

    Immediate policy action is needed to curb the long-run impacts of the COVID-19 crisis on the lives and livelihoods of Nigerian households, the World Bank has said in a new report.

    It stated that the pandemic has hit countries with a health and economic shock whose effects would be felt far into the future, and in countries like Nigeria, the pandemic has continued to affect health outcomes, human-capital accumulation, household poverty and coping strategies, as well as labour-market dynamics.

    The report, “COVID-19 in Nigeria: Frontline Data and Pathways for Policy,” shows both the extent of such impacts on Nigerians and promising policy options that could accelerate the nation’s recovery.

    It also draws on innovative sources of high-frequency data, namely, the Nigeria COVID-19 National Longitudinal Phone Survey (NLPS), to inform the choices that Nigerian leaders now face.

    “The COVID-19 crisis has provided a wake-up call to address the long-standing structural challenges that could constrain the government’s ambition to lift 100 million Nigerians out of poverty,” said Shubham Chaudhuri, World Bank Country Director for Nigeria.

    “There is no time like the present for the country to prepare for future climate and conflict shocks and seize the promise of its young population to lay strong foundations for inclusive growth.”

    According to the World Bank, the NLPS represents a successful collaboration between the National Bureau of Statistics (NBS) and the Data Production and Methods team at the global financial institution.

    It was launched in April 2020 – almost immediately after the COVID-19 pandemic began – and has since regularly collected information on key social and economic outcomes, up to 12 times, from households across the country.

    The report, the World Bank explains, shows that the consequences of the COVID-19 pandemic for human capital, livelihoods, and welfare are proving to be severe.

    It stressed that while many schools have reopened across Nigeria, learning that was lost during the COVID-19 crisis needed to be recouped and some children have not returned to school.

  • World Bank cuts aid to Sudan over military coup

    World Bank cuts aid to Sudan over military coup

    The World Bank said Wednesday it has suspended aid to Sudan following the military takeover that deposed the prime minister.

    “I am greatly concerned by recent events in Sudan, and I fear the dramatic impact this can have on the country’s social and economic recovery and development,” World Bank President David Malpass said in a statement.

    It was the latest blow to the impoverished African nation that had just won its way back into good standing with major Washington-based development lenders after years in the wilderness.

    The military on Monday seized Prime Minister Abdalla Hamdok and briefly detained him in the coup that came just over two years into a precarious power-sharing arrangement between the military and civilians after the army ousted longtime autocrat Omar al-Bashir in April 2019.

    The World Bank “paused disbursements in all of its operations in Sudan on Monday and it has stopped processing any new operations as we closely monitor and assess the situation,” Malpass said.

    The United States also suspended aid to the country.

    “We hope that peace and the integrity of the transition process will be restored so that Sudan can restart its path of economic development and can take its rightful place in the international financial community,” Malpass said.

    Sudan had been emerging from decades of stringent US sanctions after Washington removed the country from its state sponsor of terrorism blacklist in December 2020, eliminating a major hurdle to much-needed aid and financial investment.

    The World Bank and IMF in June granted Sudan debt relief under the Heavily Indebted Poor Countries Initiative, cutting the nation’s debt in half to about $28 billion, and the institutions have offered additional help if economic reforms continue

  • Global oil prices won’t decline until 2023 – World Bank

    Global oil prices won’t decline until 2023 – World Bank

    The stunning recent runup in global oil prices could threaten economic growth and is unlikely to retreat until 2023, the World Bank said Thursday.

    Average crude prices are expected to end the year at $70 a barrel, 70 percent higher than in 2020, according to the latest Commodity Markets Outlook.

    That in turn is pushing up other energy prices like natural gas, the report said.

    “The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said World Bank chief economist Ayhan Kose.

    The increases have been “more pronounced than previously projected” and “may complicate policy choices as countries recover from last year’s global recession.”

    Oil prices in recent weeks have surged above $80 a barrel, the highest point in years, as economies reopen following the pandemic shutdowns and amid shipping bottlenecks.

    The World Bank uses an average of Brent, West Texas Intermediate, and Dubai which it said will “remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease.”

    The 2022 average is projected to rise to $74 before falling to $65 in 2023, the World Bank said.

    But the report warns that “additional price spikes may occur in the near-term amid very low inventories and persistent supply bottlenecks.”

  • World Bank raises Nigeria’s growth projection to 2.4% in 2021

    World Bank raises Nigeria’s growth projection to 2.4% in 2021

    The World Bank on Wednesday raised its 2021 economic growth forecast for Nigeria to 2.4 per cent, but said this still falls behind the sub-Saharan growth forecasts of 3.3 percent in 2021 and 3.5 per cent in 2022.

    The World Bank disclosed this in the latest edition of its Africa’s Pulse Report.

    The World Bank said the rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade.

    However, the bank said growth still remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery.

    The Bank stated:”The analysis shows that current speeds of economic recovery in the region are varied, with the three largest economies, Angola, Nigeria, and South Africa, expected to grow by 0.4 per cent, 2.4 percent, 4.6 percent respectively.

    “Excluding South Africa and Nigeria, the rest of SSA is rebounding faster at a growth rate of 3.6 percent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 percent, respectively.

    “Sub-Saharan Africa is set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 per cent in 2021.”

    According to World Bank’ analysis in Pulse Africa, a biannual analysis of the near-term macroeconomic outlook for the region’s growth for 2022 and 2023 will also remain just below four per cent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in SSA.

    However, Chief Economist for Africa at the World Bank, Albert Zeufack, noted that faster access to Covid’19 vaccines would speed up SSA growth in 2022 and 2023.

    He said “Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery.

    “Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023 as more containment measures are lifted, boosting consumption and investment.”

    The Bank projected that the region’s fiscal deficit, at 5.4 per cent of Gross Domestic Product, in 2021, is expected to narrow to 4.5 per cent of GDP in 2022 and three per cent of GDP in 2023 as a result of prudent monetary and fiscal policies as factors.

    A positive trend, according to the report, is that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms.

    It said that several countries have embarked on difficult but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.

  • World Bank names Nigeria among high debt risk nations

    World Bank names Nigeria among high debt risk nations

    The World Bank has listed Nigeria and nine other countries as nations with high-debt risk exposure.

    In a financial statement for the International Development Association (IDA) released on Monday, the World Bank pegged Nigeria at number five with a $11.7b IDA debt stock.

    “As of June 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure,” it explained in the document.

    “IDA’s largest exposure to a single borrowing country, India, was $22 billion as of June 30, 2021. Monitoring these exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”

    India tops the list with an IDA debt stock of $22b. Bangladesh – with $18.1b – is second and followed by Pakistan ($16.4b), and Vietnam with $14.1b.

    Ethiopia, Kenya, Tanzania, Ghana and Uganda complete the top 10 list in that order.

    “IDA faces two types of credit risk: country credit risk and counterparty credit risk,” the World Bank further explained.

    “Country credit risk is the risk of loss due to a country not meeting its contractual obligations, and counterparty credit risk is the risk of loss attributable to a counterparty not honoring its contractual obligations. IDA is exposed to commercial as well as noncommercial counterparty credit risk.”

    As of September 2020, Nigeria had taken a $31.98b worth of loans from the World Bank Group, International Monetary Fund (IMF), African Development Bank (AfDB), according to the Debt Management Office (DMO).

  • Nigeria facing worst unemployment crisis in history – World Bank

    Nigeria facing worst unemployment crisis in history – World Bank

    A report by the World Bank has said Nigeria’s unemployment crisis in recent times is the worst in the nation’s history.

    The report, which raised an alarm over the nation’s rising unemployment situation was published by the World Bank with support from the Korea World Bank Partnership Facility (KWPF) and the Rapid Social Response (RSR) trust funds.

    According to the research paper, the nation’s expanding working-age population combined with scarce domestic employment opportunities is creating high rates of unemployment, particularly for youth.

    This situation has also been worsened by the pressures of the COVID-19 pandemic.

    “Between 2010 and 2020, the unemployment rate rose five-fold, from 6.4 percent in 2010 to 33.3 percent in 2020.

    “The rise in unemployment rates has been particularly acute since the 2015- 2016 economic recession and has further worsened as COVID-19 led to the worst recession in four decades in 2020” the paper read in part.

    The unemployment rate is defined nationally as the percentage of the labour force population who could not find at least 20 hours of work in the reference period, which the paper says was significantly higher for youth (42.5 per cent) compared to non-youth (26.3 per cent).

    It was also discovered that women are particularly vulnerable in Nigeria’s labor market. “Compared to 46.4 percent of the male population who are fully employed, only 40.6 percent of women are fully employed”.

    The share of fully employed came up significantly lower in rural areas compared to urban areas.

    It was the viewpoint of the World Bank Report that the socio-economic challenges facing Nigerians in the last 10 years have led to a tremendous increase in the number of citizens seeking asylum and refugee status in other countries.

    According to the Washington-based institution, the number of international migrants from Nigeria has increased threefold since 1990, growing from 446,806 in 1990 to 1,438,331 in 2019.

    Despite this trend, the share of international migrants as a proportion to Nigeria’s population has remained largely constant, increased slightly from 0.5 per cent in 1990 to 0.7 per cent in 2019.

    In the report titled: ‘Of Roads Less Travelled: Assessing the Potential for Migration to Provide Overseas Jobs for Nigeria’s Youth’, the World Bank further estimated that there were 2.1 million Internally Displaced Persons (IDPs) in Nigeria in 2020 alone.

    The recent rise in irregular migration notwithstanding, the share of international migrants in Nigeria’s population was much lower compared to the shares in Sub-Saharan Africa and globally.

    The World Bank while noting that key sectoral documents such as the National Labor Migration Policy (2014) and National Employment Policy (2017) offer suitable suggestions to leverage managed migration for providing overseas employment opportunities to Nigerian youth, the issue of migration is absent or less salient in the Economic Recovery and Growth Plan (ERGP 2017–2020).

    “With Nigeria receiving more than US$25 billion in remittances in 2019, the absence of migration as a mainstream development tool to provide jobs to the bulging youth population is perplexing,” the transcripts stressed.

    Adding that “the drafting of the new ERGP provides a good opportunity for labor migration to be mainstreamed as one of the key strategies to generate employment for Nigerian job seekers”.

     

  • World Bank projects 5.6% growth for global economy

    World Bank projects 5.6% growth for global economy

    The global economy is expected to grow at 5.6 per cent in 2021, although many emerging market and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.

    The World Bank said this in its June Global Economic Prospects released on Tuesday in Washington D.C., adding that the expected growth was based largely on strong rebounds from a few major economies.

    The 5.6 per cent expected growth, the fastest post-recession pace in 80 years, is an upward review from the 4.1 per cent forecast in January.

    According to the bank, in spite of the recovery, global output will be about two per cent below pre-pandemic projections by the end of the year.

    Also, per capita income losses would not be unwound by 2022 for about two-thirds of emerging market and developing economies.

    It said that among low-income economies, where vaccination had lagged, the effects of the pandemic had reversed poverty reduction gains and aggravated insecurity and other long-standing challenges.

    Among major economies, the United States of America’s growth is projected to reach 6.8 per cent, reflecting large-scale fiscal support and the easing of pandemic restrictions, while growth in other advanced economies is also firming, but to a lesser extent.

    “Among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand.

    “Emerging market and developing economies as a group are forecast to expand by six per cent this year, supported by higher demand and elevated commodity prices.”

    It however, said that the recovery in many countries was being held back by a resurgence of COVID-19 cases and lagging vaccination progress, as well as the withdrawal of policy support in some instances.

    It said that excluding China, the rebound in this group of countries was anticipated to be a more modest 4.4 per cent, while the recovery among emerging market and developing economies was forecast to moderate to 4.7 per cent in 2022.

    Even so, gains in this group of economies are not sufficient to recoup losses experienced during the 2020 recession, and output in 2022 was expected to be 4.1 per cent below pre-pandemic projections,” it said.

    It added that per capita income in many emerging market and developing economies was also expected to remain below pre-pandemic levels and losses were anticipated to worsen deprivations associated with health, education and living standards.

    Major drivers of growth had been expected to lose momentum even before the COVID-19 crisis, and the trend is likely to be amplified by the scarring effects of the pandemic.

    “Growth in low-income economies this year is anticipated to be the slowest in the past 20 years other than 2020, partly reflecting the very slow pace of vaccination.

    “Low-income economies are forecast to expand by 2.9 per cent in 2021 before picking up to 4.7 per cent in 2022.

    “The group’s output level in 2022 is projected to be 4.9 per cent lower than pre-pandemic projections.”

    For Sub-Saharan Africa, regional activity is expected to expand a modest 2.8 per cent in 2021 and 3.3 per cent in 2022.

    According to the report, positive spillovers from strengthening global activity, better international control of COVID-19 and strong domestic activity in agricultural commodity exporters are expected to gradually help lift growth.

    “Nonetheless, the recovery is envisioned to remain fragile, given the legacies of the pandemic and the slow pace of vaccinations in the region.

    “In a region where tens of millions more people are estimated to have slipped into extreme poverty because of COVID-19.

    “Per capita income growth is set to remain feeble, averaging 0.4 per cent a year in 2021-22, reversing only a small part of last year’s loss.

    “Risks to the outlook are tilted to the downside, and include lingering procurement and logistical impediments to vaccinations, further increases in food prices that could worsen food insecurity, rising internal tensions and conflicts, and deeper-than expected long-term damage from the pandemic.”

    In Nigeria, however, growth is projected to resume at a modest rate of 1.8 per cent in 2021 and edge up to 2.1 per cent in 2022, assuming higher oil prices, a gradual implementation of structural reforms in the oil sector and a market-based flexible exchange rate management.

    “The expected pickup is also predicated on continued vaccinations in the second half of 2021 and a gradual relaxation of COVID-related restrictions that will allow activity to improve.

    “Nonetheless, output in Nigeria is not expected to return to its 2019 level until end-2022.”

    David Malpass, the World Bank Group President, said that while there were welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.

    He said that globally coordinated efforts were essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.

    “As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”

    The report said that lowering trade costs such as cumbersome logistics and border procedures could help bolster the recovery among emerging market and developing economies by facilitating trade.

    Indermit Gill, World Bank Group Vice President for Equitable Growth and Financial Institutions, said that linkages through trade and global value chains had been a vital engine of economic advancement for developing economies and lifted many people out of poverty.

    He said that however, at current trends, global trade growth was set to slow down over the next decade.

    “As developing economies recover from the COVID-19 pandemic, cutting trade costs can create an environment conducive to re-engaging in global supply chains and reigniting trade growth.”

    It also said that rising food prices and accelerating aggregate inflation may also compound challenges associated with food insecurity in low-income countries.

    However, policymakers in these countries should ensure that rising inflation rates do not lead to a de-anchoring of inflation expectations and resist subsidies or price controls to avoid putting upward pressure on global food prices.

    Instead, policies focusing on scaling up social safety net programs, improving logistics and climate resilience of local food supply would be more helpful, it added.

  • Nigeria, six others top gas flaring countries for nine consecutive years – World Bank

    Nigeria, six others top gas flaring countries for nine consecutive years – World Bank

    The World Bank says Russia, Iraq, Iran, the United States, Algeria, Venezuela and Nigeria remain the top seven gas flaring countries for nine years running.

    The bank said this on Wednesday in Washington D. C. in its gas flaring satellite data for 2020, compiled by World Bank’s Global Gas Flaring Reduction Partnership (GGFR).

    It added that the satellite was first launched in 2012.

    It said that the seven countries produced 40 per cent of the world’s oil each year, but accounted for roughly two-thirds (65 per cent) of global gas flaring.

    “This trend is indicative of ongoing, though differing challenges facing these countries.

    “For example, the U.S. has thousands of individual flare sites, difficult to connect to a market.

    “However, a few high flaring oil fields in East Siberia in the Russian Federation are extremely remote, lacking the infrastructure to capture and transport the associated gas.”

    The report said that 2020 was an unprecedented year for the oil and gas industry, with oil production declining by eight per cent, while global gas flaring reduced by five per cent.

    It also said that oil production dropped from 82 million barrels per day (mbpd) in 2019 to 76 mbpd in 2020, as global gas flaring reduced from 150 billion cubic meters (bcm) in 2019 to 142 bcm in 2020.

    “Nonetheless, the world still flared enough gas to power sub-Saharan Africa.

    “The U.S. accounts for 70 per cent of the global decline, with gas flaring falling by 32 per cent from 2019 to 2020, due to an eight per cent drop in oil production, combined with new infrastructure to use gas that will otherwise be flared.”

    Mr Demetrios Papathanasiou, Global Director for the Energy and Extractives Global Practice at the World Bank said in the wake of the COVID-19 pandemic, oil-dependent developing countries were feeling the pinch, with constrained revenues and budgets.

    “However, with gas flaring still releasing over 400 million tons of carbon dioxide equivalent emissions each year, now is the time for action.

    “We must forge ahead with plans to dramatically reduce the direct emissions of the oil and gas sector, including from gas flaring.”

    Mr Zubin Bamji, Program Manager of the World Bank’s GGFR Partnership Trust Fund, said awareness of gas flaring as a critical climate and resource management issue was greater than ever before.

    He said that almost 80 governments and oil companies had committed to Zero Routine Flaring within the next decade and some were also joining the global partnership, which was a very positive development.

    According to him, gas flaring reduction projects require significant investment and takes several years to produce results.

    “In the lead-up to the next UN Climate Change conference in Glasgow, we continue to call upon oil-producing country governments and companies to place gas flaring reduction at the center of their climate action plans.

    “To save the world from millions of tons of emissions a year, this 160-year-old industry practice must now come to an end,” he said.

    The report said gas flaring was the burning of natural gas associated with oil extraction which took place due to a range of issues, from market and economic constraints, to a lack of appropriate regulation and political will.

    The practice resulted in a range of pollutants released into the atmosphere, including carbon dioxide, methane and black carbon also known as soot.

    It added that the methane emissions from gas flaring contributed significantly to global warming in the short to medium term, because methane was over 80 times more powerful than carbon dioxide on a 20-year basis.

    The World Bank’s GGFR is a trust fund and partnership of governments, oil companies and multilateral organisations working to end routine gas flaring at oil production sites around the world.

    GGFR, in partnership with the U.S. National Oceanic and Atmospheric Administration (NOAA) and the Colorado School of Mines, had developed global gas flaring estimates based upon observations from two satellites, launched in 2012 and 2017.

    The advanced sensors of these satellites detected the heat emitted by gas flares as infrared emissions at global upstream oil and gas facilities.

  • FG to end fuel, electricity subsidies by mid-2021

    FG to end fuel, electricity subsidies by mid-2021

    Plans by the federal government of Nigeria to end both electricity and fuel subsidies by mid-2021 have been revealed.

    The Nigeria Natural Resource Charter (NNRC) revealed the plans on Sunday quoting an International Monetary Fund (IMF) report.

    According to NNRC, the report followed the conclusion of IMF’s Article IV consultation with Nigeria.

    According to the IMF in the report, FG had promised to see to the end of tariff shortfalls that led to their re-emergence.

    “They expressed strong commitment to prevent fuel subsidies from resurfacing and to fully eliminate electricity tariff shortfalls by mid-2021.

    “They believe that lifeline tariffs and other relief measures are adequate to protect poorer households from increases in electricity prices and highlighted the benefits from higher and more predictable availability,” the report reads.

    Although the Nigerian government had in March 2020 removed petrol subsidy, it however resurfaced following rise in price of crude oil at the international market.

    On September 8, 2020, the Federal Government said its removal of petrol subsidy and the increase in electricity tariff were in agreement with reforms requested by the IMF and the World Bank as it seeks financial assistance of $3.4bn from IMF.

    The President, World Bank, David Malpass had met with the Minister of Finance, Budget and National Planning and the Governor of Mr Godwin Emefiele, on April 8, where the need to eradicate energy subsidies among other issues were discussed.

    “The recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not re-emerge,” the Federal Government told the IMF in the letter of intent dated April 21, 2020.

  • Nigeria exited recession ‘faster than expected’ – World Bank

    Nigeria exited recession ‘faster than expected’ – World Bank

    The World Bank has said that Nigeria moved out of recession faster than its forecasts had predicted.

    “Following a 6.1 percent year-on-year contraction in 2020 Q2, Nigeria’s economy contracted by 3.6 percent in 2020 Q3, and expanded by 0.1 percent in 2020 Q4, moving out of recession faster than expected,” the bank said in its Africa’s Pulse, a biannual analysis of the near-term macroeconomic outlook for the region published in April.

    “For the year, Nigeria’s real GDP is estimated to have contracted by 1.8 percent, a stronger out turn than projected in the October 2020 forecast.”

    Meanwhile, the bank said it expects Nigeria’s economy to grow by 1.4 percent in 2021 as the country continues to recover.

    “Nigeria, South Africa, and Angola, the region’s three largest economies, are expected to return to growth in 2021, partly owing to higher commodity prices, but the recovery will remain sluggish,” the bank.

    The bank added that Nigeria’s economic growth is expected to be slower than other countries in West Africa due to inflation, high unemployment and COVID-19.

    The country’s growth will be “driven by telecommunications services, trade due to the gradual opening of borders, agriculture due to an additional influx of labor, and construction, in a context of higher oil prices and fewer mobility restrictions,” it said.

    “However, consumer spending and business investment are likely to remain subdued in 2021 as double-digit inflation, high unemployment, and the slow rollout of the COVID-19 vaccine weigh on households’ real income and business confidence.

    “Limited fiscal space will also constrain the recovery. Growth is projected to pick up to 2.1 percent in 2022 as rising oil output bolsters exports, and the rollout of the COVID-19 vaccine gathers pace, helping to boost private consumption and fixed investment.

    “Progress on the liberalization of the exchange rate regime could boost private sector activity and support stronger economic growth.”