The World Bank has faulted the optimism of the Nigerian government over a likely economic recovery from the ongoing current state of recession noting that the country’s economic recovery remains fragile with a high degree of risk.
In its bi-annual Economic Update released on Friday, the Bank maintained its forecast that Nigeria could return to positive economic growth in 2017, adding, however, that the recovery is fragile due to the risks associated with the nation’s oil sector.
“Growth is forecast to return into positive territory in 2017, largely on the back of recovery in the oil sector as the government intensifies efforts to restore peace and stability in the Niger Delta, improve its Joint Venture (JV) relationships with international oil companies while strong growth in the agricultural sector continues. However, given the risks associated with the oil sector, recovery is fraught with a high degree of fragility and risks; notably from future shocks to the oil price or further unrest in the Niger Delta, which is not yet fully stabilized, as well as from the incomplete implementation of new JV cash call arrangements.”
“Nigeria can build on the oil-driven economic recovery anticipated for it in 2017 by strengthening its macroeconomic policy framework and implementing the structural reforms needed to diversify the economy and break out of a boom and bust cycle.”
Rachid Benmessaoud, the World Bank Country Director for Nigeria had while speaking on the Economic Recovery and Growth Plan, ERGP of the government, noted that “if implemented successfully, the ERGP would lead to expanded transportation infrastructure, the increased reliability of supply of power by restoring financial viability to the power sector, an improved business environment, improved educational attainment, strengthened public institutions, and improved transparency and anti-corruption.”
The World Bank economic update on Nigeria also noted disclosed that oil has continued to dominate its growth pattern but the volatility of oil-dependent growth imposes welfare costs, which impede progress in social and economic development.
The World Bank Report further underscored the importance of sound macroeconomic management and stability for growth, while confirming that inflation, government consumption, and currency misalignment (over-valuation) are negatively correlated with growth.
It would be recalled that Kemi Adeosun, Nigeria’s Minister of Finance had while addressing a town hall meeting in Abuja stated that the country’s economy was coming out of the economic recession.
“Nigeria is coming out of recession; we are beginning to see the signs and we will come out to become stronger.”
Godwin Emefiele, the governor of the Central Bank of Nigeria has expressed similar optimism last month before the Senate.
“We are very much optimistic that by the end of the second quarter or latest third quarter of this year, we should be out of recession.” He said..