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Tag: World Bank

  • 42% of jobs lost to COVID-19 – World Bank chief

    42% of jobs lost to COVID-19 – World Bank chief

    ALMOST half of those employed have lost their jobs due to Coronavirus (COVID-19) pandemic, the World Bank has said.

    The bank put the percentage of individuals who were working before March, but now out of employment at 42.

    Its Senior Financial Sector Specialist, Ahmed Rostom, shared the information in a data during a Development Bank of Nigeria (DBN) virtual conference on risk sharing.

    The panellists agreed that credit risk guarantee will provide a safety net for Micro Small and Medium Enterprises (MSMEs) to access credit post COVID-19.

    Speaking on the impact of the pandemic on the local economy, Rostom stated: “42% of individuals who were working before March 2020, especially those working in hospitality and service industry are no longer working.”

    He described the situation as disturbing.

    The panellists agreed that MSME’s are the largest employers of labour as they account for about 84 per cent of jobs in the country.

    “They are important industrialisation agents, and a driving force in the attainment of industrial growth because of their value chain diversification and expansion of industrial production. They contribute nearly half of the country’s GDP at 48 per cent yet less than 5 per cent of MSME’s have access to finance,” they said.

    On her part, the Managing Director of JNC International and a Director at DBN Mrs. Claire Omatseye stressed the importance of risk sharing among all stakeholders.

    According to her, “for MSMEs, risk sharing helps eliminate financial oppression and predatory lending, while also ensuring prosperity is shared equitably. For the government, risk sharing contributes to the realisation of its economic objectives and stabilisation policies”

    Mrs. Omatseye noted that credit guarantees (CGs) will enhances access and improves the quality of Credit to close a gap in the existing market.

    For MSMEs, she explained that credit guarantees “can play a catalytic role to your businesses, reduces 100%-150% collateral cover for loans (in addition using the Movable asset register).”

    With CGs into traditional financing, Mrs. Omatseye said: “It will provide the necessary comfort to financial institutions with the assurance that some portion of the risk is shared (partial risk guaranty).

    This is a viable alternative solution to help creditworthy firms navigate their liquidity challenges brought on by the pandemic induced economic contraction and stabilize their cash flows.

    “Credit Guaranty provides third party credit-risk mitigation to lenders with the aim of increasing access to credit. In the case of a default by the MSME, the lender’s losses on the loans made to MSME are partially absorbed.”

    This reduction in any potential loss that the Credit Guarantee Scheme (CGS) offers, she said, “will incentivise more lenders to provide special purpose financing.

    This will in turn change the existing viscous cycle where we see many SME’s dying before their first birthdays or declaring bankruptcy during COVID-19.”

  • Nigeria about to witness worst form of recession – World Bank

    The World Bank has urged Nigerians to brace for the worst recession since the 1980s.

    According to the global bank, the twin calamities of collapse in oil prices and COVID-19 pandemic are expected to plunge the economy into a severe economic recession.

    The World Bank, in its World Bank Nigeria Development Update (NDU) report, entitled: “Nigeria in times of COVID-19: Laying foundations for a strong recovery,” predicted that the country’s economy would likely contract by 3.2 per cent in the year.

    This is based on the assumption that “the spread of COVID-19 in Nigeria is contained by the third quarter of 2020”.

    The World Bank also warned that “if the spread of the virus becomes more severe, the economy could contract further”.

    It would be recalled that before pandemic broke out, Nigeria’s economy was projected to grow by 2.1 per cent in the year. This means that “the pandemic has led to a reduction in growth by more than five percentage points,” the World Bank report said.

    The Bretton Woods institution noted: “The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus.”

  • COVID-19: Nigeria may go into severe recession – World Bank

    The World Bank says collapse in oil prices coupled with the COVID-19 pandemic is expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s.

    The World Bank made this known in a statement in Abuja on Thursday as part of its latest Nigeria Development Update (NDU).

    The bank said the report indicated that Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery, estimated that the country’s economy would likely contract by 3.2 per cent in 2020.

    It stated that this projection assumed that the spread of COVID-19 in Nigeria would be contained by the third quarter of 2020.

    It however noted that If the spread of the virus became more severe, the economy could contract further, adding that before COVID-19, the Nigerian economy was expected to grow by 2.1 per cent in 2020, which means that the pandemic had led to a reduction in growth by more than five percentage points.

    “The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus.

    “Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.

    “With the drop in oil prices, government revenues are expected to fall from an already low eight per cent of GDP in 2019 to a projected five per cent in 2020.

    “This comes at a time when fiscal resources are urgently needed to contain the COVID-19 outbreak and stimulate the economy.

    “Meanwhile, the pandemic has also led to a fall in private investment due to greater uncertainty, and is expected to reduce remittances to Nigerian households, which in recent years have been larger than the combined amount of foreign direct investment and overseas development assistance,” it explained.

    The statement quoted Shubham Chaudhuri, World Bank Country Director for Nigeria, as saying “while the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery.

    “Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation,”

    The bank noted that the report showed that the human cost of COVID-19 could be high, adding that beyond the loss of life, the COVID-19 shock alone was projected to push about five million more Nigerians into poverty in 2020.

    It stated that before the pandemic, the number of poor Nigerians was expected to increase by about two million largely due to population growth, the number would now increase by seven million – with a poverty rate projected to rise from 40.1 per cent in 2019 to 42.5 per cent in 2020.

    According to World Bank, the report notes that the pandemic is likely to disproportionately affect the poorest and most vulnerable, in particular women.

    “School closures have reduced the food intake of almost seven million children who are enrolled in the national school feeding program.

    Economic activities have been disrupted and women’s livelihoods have been particularly impacted.

    “Over 40 per cent of Nigerians employed in non-farm enterprises reported a loss of income in April-May 2020. In addition, the fall in remittances is likely to affect household consumption because half of Nigerians live in remittance-receiving households, of which about a third are poor.

    “The unprecedented crisis requires an equally unprecedented policy response from the entire Nigerian public sector, in collaboration with the private sector, to save lives, protect livelihoods, and lay the foundations for a strong economic recovery,” said Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the report.

    “Looking ahead, the report discusses policy options in five critical areas that can help Nigeria recover from the COVID-19 crisis, containing the outbreak and preparing for a more severe outbreak, enhancing macroeconomic management to boost investor confidence.

    “Others are safeguarding and mobilizing revenues, reprioritizing public spending to protect critical development expenditures and stimulate economic activity; and protecting poor and vulnerable communities.

    “Besides the assessment of the economic situation, this edition of the Nigeria Development Update discusses the impacts of the 2019 land border closure; the opportunity to promote agribusiness for food security and job creation; and options to leverage emigration, remittances, and the diaspora for development,” the bank stated.

    The Bank said government of Nigeria had already taken important health, fiscal and monetary measures to contain the outbreak, moderate the recessionary pressures and start mitigating the effects of the economic shock.

  • World Bank approves $750m loan to boost power supply in Nigeria

    The World Bank has approved $750 million International Development Association (IDA) credit for Nigeria’s Power Sector Recovery Operation (PSRO), to improve electricity supply.

    The Bank, in a statement in Abuja on Wednesday, said that the would help Nigeria achieve financial and fiscal sustainability and enhance accountability in the power sector.

    It explained that about 47 per cent of Nigerians do not have access to grid electricity and those who had access, faced regular power cuts.

    According to the bank, the economic cost of power shortages in Nigeria is estimated at around $28 billion, which is equivalent to two per cent of Nigeria’s Gross Domestic Product (GDP).

    It stated that getting access to electricity is one of the major constraints for the private sector according to the Ease of Doing Business report.

    It added that improving power sector performance, particularly in the non-oil sectors of manufacturing and services, would be central to unlocking economic growth post COVID-19.

    Shubham Chaudhuri, World Bank Country Director for Nigeria, said “lack of reliable power has stifled economic activity and private investment and job creation.

    ”This is ultimately what is needed to lift 100 million Nigerians out of poverty.

    “The objective of this operation is to help turn around the power sector and set it on a fiscally sustainable path. This is particularly urgent at a time when the government needs all the fiscal resources it can marshal to help protect lives and livelihoods amid the COVID-19 pandemic”.

    The bank said that PSRO would provide results-based financing to support the implementation of the Government’s Power Sector Recovery Programme (PSRP).

    It further explained that the PSRP was a comprehensive programme to restore the power sector’s financial viability, improve service delivery and reduce its fiscal burden.

    “The PSRO is expected to increase annual electricity supplied to the distribution grid, enhance power sector financial viability while reducing annual tariff shortfalls and protecting the poor from the impact of tariff adjustments.

    “This will enable the turnaround of power sector while helping the Federal Government to redirect large fiscal resources from highly regressive tariff shortfall financing towards critical crisis-responsive and pro-poor expenditures. It will also increase public awareness about ongoing power sector reforms and performance.

    “Specifically, the PSRO will ensure that 4,500 mwh/hour of electricity is supplied to the distribution grid by 2022 by strengthening the regulatory, policy and financing framework.

    “It will also enhance the accountability and financial viability of the sector, helping the sector create a track record of sustainable operation necessary for unlocking much needed private investments in the future,” the Bank explained

  • Living standards: Not possible to say poverty decreased in Nigeria from 2009 – NBS

    Living standards: Not possible to say poverty decreased in Nigeria from 2009 – NBS

    It is not possible to say whether poverty increased or decreased in Nigeria between 2009 and 2019, a FAQ on the Nigerian Living Standards Survey (NLSS), following release of the Poverty and Inequality in Nigeria 2019 report by the National Bureau of Statistics (NBS) has revealed.

    TheNewsGuru.com (TNG) reports the NLSS is a household-based survey conducted by the NBS in collaboration with the World Bank, the main objective of which is to collect information on the living conditions of the Nigerian population.

    Conventionally, according to the NBS, the survey is meant to be carried out every 3 – 5 years. The last round of the survey was conducted in 2009/10, making it almost ten years since the last official poverty estimates. The most recent round was conducted in 2018/19, albeit with notable changes in the methodology.

    The NBS has said the NLSS 2018/19 is now the new baseline for tracking the status of poverty in Nigeria, and that given the lag and new changes between the 2009/10 and the 2018/19 survey, it was not possible to say whether poverty increased or decreased in the country.

    “With support from the World Bank, the NBS adopted best practice in the collection and processing of the data.

    “As is often the case, such improvements come at the expense of giving up some degree of comparability with earlier rounds of the survey while achieving high standards in survey practice.

    “Aside from the use of electronic devices for data collection, a 7-day recall for recording household consumption and expenditure was adopted for this round, as opposed to the monthly consumption diary used in previous rounds.

    “In addition, additional efforts were made to measure food quantities in households using non-standard units of measurement, resulting in better quantification of food consumption.

    “All these new changes and improvements, as well as the lag between this round and the last round make it problematic to compare, therefore, a deliberate decision was made to use the 2018/19 round as the new baseline.

    “As such, it is not possible to say whether poverty increased or decreased between 2009/10 and 2018/19, because of the changes made in the survey design and implementation,” the FAQ read.

    Highlighting the relevance of the survey, the NBS stressed that “the results of the NLSS are extremely useful and important for Nigeria and Nigerians. Primarily, the data is useful for policymaking, for research and for holding government at various levels accountable to their promises.

    “It can help targeting government interventions, designing of policy and programs, as well as monitoring the implementation and status of existing ones. The information is also useful to the private sector for business and investment decision making, as well as to development sector operators to guide the operations.

    The next round of the NLSS has been scheduled for 2023, a general election year for the country.

  • Coronavirus: World Bank forecasts historic sharp fall in remittances to Nigeria, others

    The World Bank said remittances will decline sharply by about 23.1 percent to sub-Nigeria and other Saharan African nations this year, due to the economic crisis induced by the COVID-19 pandemic and shutdown.

    Globally, a reduction of 20 per cent has been projected.

    The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers.

    The migrants tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.

    Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.

    Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia (27.5 percent).

    Sub-Saharan Africa will follow with 23.1 percent.

    Remittances to the region totalled $48 billion in 2018 and $57 billion last year.

    South Asia will have a cut of 22.1 percent, the Middle East and North Africa 19.6 percent, Latin America and the Caribbean 19.3 percent, and East Asia and the Pacific 13 percent.

    The large decline in remittances flows in 2020 comes after remittances to LMICs reached a record $554 billion in 2019.

    Even with the decline, remittance flows are expected to become even more important as a source of external financing for LMICs as the fall in foreign direct investment is expected to be larger (more than 35 percent).

    In 2019, remittance flows to LMICs became larger than FDI, an important milestone for monitoring resource flows to developing countries.

    The World Bank estimates that remittances to LMICs will recover next year and rise by 5.6 percent to $470 billion.

  • COVID-19: Osinbajo meets IMF, World Bank representatives

    COVID-19: Osinbajo meets IMF, World Bank representatives

    Vice President Yemi Osinbajo is enlarging the pool of options open to Nigeria in achieving the Buhari Presidency plan to turn the current economic challenges to an opportunity for Nigerians, especially the “Common Man.”

    Today, the VP has met with representatives of the International Monetary Fund and the World Bank as Nigeria continues to improve on its economic stimulus packages for citizens.

    President Muhammadu Buhari has asked the Vice President to chair the Economic Sustainability Committee (ESC) and the Committee has been collaborating with domestic sectors of the Nigerian economy and now the VP is interfacing with international agencies for the purpose of rolling out options as the President has directed.

    In a tweet by Laolu Akande, the spokesperson to the Vice President, the meeting with the agencies just concluded.

    “VP Osinbajo has been busy today holding video-conference-based meetings with IMF and World Bank representatives on how the agencies can collaborate with President Buhari’s forthcoming additional economic stimulus packages.

    “Video shows just concluded meeting with World Bank Nigeria representatives,” he tweeted along with a video of the meeting.

    The Economic Sustainability Committee is a seven-member team chaired by Prof Osinbajo, and the Committee is expected to conclude its report very soon. It was set up as a response to the recent challenges in the economic front resulting from the fall in the prices of oil in the international market as well as the disruptive impact of the pandemic that has disrupted the global economy.

    The committee is made up of Ministers of Finance, Budget and Planning; Industry, Trade and Investment; Labour and Employment; Minister of State Petroleum Resources; CBN Governor; NNPC Group Managing Director and Permanent Secretary, Cabinet Secretariat who serves as secretary of the committee.

    As a result of the way workers were losing jobs in their millions President Muhammadu Buhari inaugurated ESC to seek ways in which Nigerians can keep their jobs.

    The major focus has been on seeking ways to protect jobs and also create new ones after the coronavirus pandemic.

    As recommended by ESC, President Muhammadu Buhari has approved the expansion of the COVID-19 palliatives to accommodate more Nigerians, especially those who rely largely on daily income.

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  • COVID-19: World Bank to deploy $150bn for economic recovery

    COVID-19: World Bank to deploy $150bn for economic recovery

    The World Bank Group President David Malpass in his remarks from the G20 Finance Ministers conference call on the COVID-19 pandemic said these are difficult times for all, especially for the poorest and most vulnerable.

    For the World Bank Group, he said the first goal is to provide prompt support during the crisis, based on a country’s needs.

    He noted that it was vital for governments of countries affected by the pandemic to shorten the time of recovery and create confidence that the recovery can be strong.

    Malpass said the bank is currently restructuring existing projects in 23 countries.

    Many of these projects restructurings, according to him, would be made through the use of contingent emergency response components.

    He said the bank is also preparing projects in 49 countries through a new fast-track facility.

    He said the final decisions on 16 out of these 49 country programmes would be made this week expected this week.

    Beyond the severe health impact from the pandemic, we should expect a major recession of the global economy.

    The World Bank boss said, “We are working to provide a fast response, utilizing all our available instruments.

    “Countries need to move fast to boost health spending, strengthen social safety nets, support the private sector and counter financial-market disruption.

    “Countries will need to implement structural reforms to help shorten the time to recovery and create confidence that the recovery can be strong.

    He added, “For those countries that have excessive regulations, subsidies, licensing regimes, trade protection or litigiousness as obstacles, we will work with them to foster markets, choice and faster growth prospects during the recovery.

    “The resources to address the problems I’ve discussed are substantial. The World Bank Group, including International Finance Corporation and Multilateral Investment Guarantee Agency, could deploy as much as $150bn over the next 15 months.”

  • Coronavirus: IMF, World Bank settle for virtual format for Spring meetings

    The World Bank and the International Monetary Fund (IMF) on Tuesday confirmed that their 2020 Spring Meetings slated for April 17 to April 19 in Washington DC would now hold in “virtual format’’.

    What this means is that instead of delegates converging physically in Washington, they would now link up from their various locations through video, audio and text channels.

    The announcement came in a joint statement signed by President of the World Bank Group, Mr David Malpass, and the Managing Director of IMF, Mrs Kristalina Georgieva.

    Malpass and Georgieva hinged the decision on concerns about the fast-spreading Coronavirus (COVID-19) and the “human tragedy surrounding it’’.

    Held at the World Bank and IMF headquarters in the U.S capital, the spring meetings usually brought together government officials, business leaders, representatives civil society, journalists and observers from around the world.

    “Given growing health concerns related to the virus, the management of the IMF and world bank group and their Executive Boards have agreed to implement a joint plan to adapt the 2020 IMF-World Bank spring meetings to a virtual format.

    “ Our goal is to serve our membership effectively, while ensuring the health and safety of spring meetings participants and staff.

    “We remain fully committed to maintaining a productive dialogue with our stakeholders and will leverage our IT-related and virtual connection capabilities to the fullest, to hold our essential policy consultations with the membership.

    “We will also continue to share IMF and World Bank analyses.

    “With this adapted format, we are confident that our member countries will be able to effectively engage on pressing global economic issues at these spring meetings,” they said.

    Consequently, registration for all categories of participants had been suspended and all previous confirmations cancelled, the IMF said in a mail to intending participants.

    “Official delegates who will participate in the official sessions will receive further instructions from the Secretary and from the office of their Executive Director of the respective institutions,’’ it added.

  • Nigeria debts soar to almost $80bn as World Bank approves fresh $2.2bn loan

    Nigeria debts soar to almost $80bn as World Bank approves fresh $2.2bn loan

    Nigeria’s debt has risen to $80bn as World bank on Tuesday approved nearly $2.2bn loan for the country to invest in six projects, including improving immunization, enabling a stronger business environment for the private sector, expanding the digital economy to promote job creation, and increasing public and private sector capacity on governance and social and environmental safeguards.

    The money for the projects according to reports will come from the International Development Association, the French Development Agency, the European Investment Bank and the federal government of Nigeria.

    According to Shubham Chaudhuri, World Bank Country Director for Nigeria ” The projects focus squarely on delivering better services for Nigerians: ensuring that children are immunized and sleep under mosquito nets; building better roads especially in rural areas, and providing Nigeria’s poorest citizens with a unique identification that will make social safety nets and services more effective.”

    Although the World Bank chiefs tried to focus on the projects rather than the debt and repayment conditions as well as the time it would take to pay back the billions of dollars being borrowed by the Buhari-led government, the new loan pushes Nigeria’s domestic and foreign debt to over $80bn, and comes just a year after the global bank disbursed about $2.4bn to the country.

    Nigeria’s reported domestic debt was already put at $55.6bn and foreign loans at $25bn (a total of $80bn).