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Nigeria’s economy slipping, says World Bank
The World Bank has said that the Nigerian economy has been slipping since 1995 and this continued till 2018 .
The bank , in its latest report on the regional economy titled , ‘ Africa ’ s Pulse ’ , released the taxonomy of growth performance in sub- Saharan Africa , which focused on the macroeconomic and financial features that led to growth resilience on the continent .
According to the bank , the taxonomy is used to help identify the factors that are correlated with success or failure in economic growth performance in sub-Saharan Africa , with emphasis on macroeconomic and financial variables.
The analysis , it said , involved a series of macroeconomic variables for 44 sub-Saharan African countries from 1995 to 2018 .
The key elements that determined the positions of each of the 44 sub- Saharan economies in the taxonomy , the World Bank said , included the level of income per capita of the countries ; structural transformation , as captured by sectoral value – added share and sectoral employment share ; and capital flows.
Others are level and composition of public sector indebtedness , as captured by the general government gross debt and its currency composition, and the outstanding external public debt .
The last of the indicators has to do with governance vis – a – vis government effectiveness , regulatory quality , control of corruption , voice and accountability , political stability , and absence of violence and rule of law .
According to the World Bank , the taxonomy compares the average annual GDP growth rates during 1995 – 2008 and 2015 – 2018 against predetermined thresholds .
It also categorised growth performance into five groups : falling behind , slipping , stuck in the middle, improved , and established. The five groups were further reclassified into three groups : Top tercile , middle tercile and bottom tercile .
The Bretton Wood institution said , “ If a country’ s economic performance declined from 1995 – 2008 to 2015 – 18 , the country is categorised in the bottom tercile , which includes ‘ falling behind ’ and ‘ slipping. ’ If a country’ s growth rate remained invariant over time , between 3 . 5 and 5 . 4 per cent in both periods , it is categorised in the middle tercile ( or stuck in the middle) . If a country’ s economic performance improved from 1995 – 2008 to 2015 – 18 , with the growth of more than 5 . 4 per cent per year , the country is categorised in the top tercile , which includes the ‘ improved ’ and ‘ established’ groups . ”
Based on the above classification, the Nigerian economy was categorised alongside 18 other sub- Saharan African economies as slipping having recorded declined economic performance between 1995 and 2018 .
The World Bank said , “ The bottom tercile consists of 19 countries : Angola , Burundi, Botswana , the Republic of Congo , the Comoros , Gabon , Equatorial Guinea , Liberia , Lesotho , Mauritania, Malawi , Namibia , Nigeria , Sierra Leone, Eswatini , Chad , South Africa , Zambia , and Zimbabwe . These countries did not show any progress in their economic performance from 1995 – 2008 to 2015 – 18 . For instance , their median economic growth rate decelerated , from 5 . 4 per cent per year in 1995 – 2008 to 1 . 2 per cent per year in 2015 – 18 . ”
The bottom performing economies , according to the World Bank , produce almost 60 per cent of the region ’ s total GDP , emphasising that the three largest countries in the region — Nigeria , South Africa , and Angola — and many commodity exporters are in this group .
Burkina Faso , Côte d ’ Ivoire , Ethiopia , Ghana , Guinea , Guinea – Bissau , Kenya, Mali, Rwanda , Senegal , and Tanzania made the top tercile .
The middle tercile countries are Benin , the Central African Republic , Cameroon , the
Democratic Republic of Congo , Cabo Verde , The Gambia , Madagascar , Mozambique , Mauritius , Niger, Sudan , São Tomé and Príncipe , Togo , and Uganda .
The World Bank also cut its growth forecast for sub- Saharan Africa this year to 2 . 8 per cent from an initial 3 . 3 per cent .
The commodity price slump of 2015 cut short a decade of rapid growth for the region , and the bank said growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.
The bank ’ s 2019 forecast means economic growth will lag population growth for the fourth year in a row and it will remain stuck below three per cent , which it slipped to in 2015 .
“ The slower – than – expected overall growth reflects ongoing global uncertainty , but increasingly comes from domestic macroeconomic instability including poorly managed debt , inflation and deficits , ” the bank said .
The Bretton Wood institution equally cut Nigeria’ s growth forecast by 0 . 1 per cent .
It said , “ Growth in Nigeria is projected to rise from 1 . 9 per cent in 2018 to 2 . 1 per cent in 2019 ( 0 . 1 percentage point lower than last October ’ s forecast ) .
“ This modest expansion reflects stagnant oil production , as regulatory uncertainty limits investment in the oil sector , while non – oil economic activity is held back by high inflation , policy distortions, and infrastructure constraints .
“ Growth is projected to rise slightly to 2 . 2 per cent in 2020 and reach 2 . 4 per cent in 2021 , as improving financing conditions help boost investment .
“ In Nigeria, although the manufacturing and non – manufacturing PMIs remained above the neutral 50 – point mark — which denotes expansion — they fell further in February , due to weaker rises in output and new sales orders across firms .
“ Household consumption in Nigeria has remained subdued , while multiple exchange rates , foreign exchange restrictions , low private sector credit growth, and infrastructure constraints have continued to weigh on private investment. ”
The Chief Economist for Africa at the bank , Albert Zeufack , said the region could boost annual growth by about nearly two percentage points if it harnessed Information Technology more effectively .
“ This is a game- changer for Africa , ” he added .
However , the spokesperson for the Central Bank of Nigeria, Mr Isaac Okorafor , said the CBN under the current governor , Mr Godwin Emefiele , had shown so much ingenuity in managing the economy .
“ You know the crisis that we have faced in the past three years . The bank has shown ingenuity in managing the situation and ensuring that everything is stable . ”
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