Nigeria’s economy in a state of instability – World Bank
The World Bank recently revealed that Nigeria’s economy is very insecure and subject to factors outside of its control.
The bank noted in its draft report for State Action on Business Enabling Reforms, that Nigeria’s economic ability to attract domestic and foreign investment is declining and the country’s welfare is worsening despite the economic recovery from the recession.
An extract from the report reads: “Although Nigeria’s economy in 2021-2022 recovered from recession induced by the COVID-19 pandemic and lower oil prices, growing by 3.6% in 2021 with an expected growth of 3.2% in 2022, welfare has continued to deteriorate.
The country’s economic outlook remains uncertain and threatened by many issues including the impact of the 2022 Russian invasion of Ukraine on the global economy, lower-than-expected oil production due to technical inefficiencies; heightened insecurity; higher uncertainty on policy direction arising from the upcoming February 2023 general elections; and worsening fiscal risks related to the PMS subsidy deductions.
“Besides, Nigeria’s ability to attract domestic and foreign investment is low and declining compared to its peers. Private sector investment’s contribution to growth has declined due to macroeconomic and financial policies constraining exports and foreign investment.”
The World Bank also stressed that the country needs to be more flexible and transparent with its foreign exchange management regime, accelerate revenue-based fiscal consolidation, strengthened expenditure and debt management, and improved its business-enabling environment.
A National Bureau of Statistics report revealed that 32 states failed to attract foreign capital in the second quarter of 2022.
Cumulative capital inflows totaled $1.54bn. Lagos ($1.05bn) attracted the most capital in the period under review, followed by Abuja at $453.95m, Anambra at $24.71m, Kogi at $2m, and Ekiti at $500,000. In the first quarter, only six states attracted a total of $1.57bn as capital importation.
The states included Abuja, Anambra, Katsina, Lagos, Oyo, and Plateau.
