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World Bank worries over Nigeria’s macroeconomic management

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Multilateral lender, the World Bank is worried about Nigeria’s macroeconomic management, and has asked for structural changes to enhance financial management and tax collection, among other reforms.

The bank maintained that Nigeria “needed enabling business environment to attract investment and foster sustainable economic growth” amid its current economic reality.

This position was made in the Bank’s Country Policy and Institutional Assessment (CPIA) for 2022, which gave Nigeria 3.2 out of a possible 40 points, matching its score from the 2021 assessment. The CPIA, which is an annual diagnostic tool for Sub-Saharan African nations qualifying for funding from the International Development Association (IDA), is used throughout Africa.

In its highlights on the country’s performance, the World Bank stated: “Overall macroeconomic management weakened due to an inconsistent monetary policy framework which did not effectively curb inflation, as well as the absence of a more predictable, transparent, and flexible exchange rate management system, which was a deterrent to private investment.

“The weak fiscal position is exacerbated by low revenue generation, and limited progress in diversifying the economy away from oil dependency, contributing to a high debt service-to-revenue ratio”.

Some experts have argued that the recent petrol subsidy and the foreign exchange (FX) management reforms have the potential to lay the groundwork for sustained growth, addressing long-standing macroeconomic imbalances.

According to the World Bank, Nigeria’s highest-performing cluster was Policy for Social Inclusion and Equity with 3.5 points, while its lowest-performing cluster was Public Sector Management and Institutions with 2.8 points.

On the scoring trend, the World Bank said: “Despite global economic challenges, more countries in Sub-Saharan Africa saw improvements in their overall CPIA scores compared to the previous year. In Western and Central Africa (AFW), the overall score increased for eight countries— Benin, Cape Verde, Côte d’Ivoire, The Gambia, Guinea, Guinea-Bissau, the Republic of Congo, and Togo.

“The overall score increased for four countries in Eastern and Southern Africa (AFE)— Burundi, the Democratic Republic of Congo, Mozambique, and Zambia. In contrast, the overall score decreased for eight countries—Chad,   the Comoros, Eritrea, Ethiopia, Ghana, Malawi, São Tomé and Príncipe, and Sudan”.

Nigeria can take advantage of the no-subsidy regime and FX float to implement a comprehensive reform package that includes a variety of complementary fiscal, monetary, trade, and structural policy measures.

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Despite protests, TotalEnergies gets South Africa’s approval for offshore drilling

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After turning down an appeal from more than a dozen people and lobbying organisations, South Africa’s environment ministry has approved TotalEnergies’ plans to drill for natural gas and oil offshore.

There have been a string of lawsuits seeking to stop energy companies from exploring new offshore discoveries at the foot of Africa, with a specific appeal to stop TotalEnergies from drilling in Blocks 5/6/7 off the coast of Cape Town.

The area in question is 10,000 square kilometres in size and is located offshore roughly between Cape Town and Cape Agulhas. It is 170 kilometres from the coast at its farthest point and 60 kilometres from the coast at its closest point. The water depth ranges from 700 metres to 3,200 metres.

Natural gas and crude oil production are quite limited in South Africa, and consequently, the bulk of South Africa’s crude oil is imported, as the country largely counts on its large coal resources.

The request is for the ministry to revoke the environmental authorization given to the French energy company by the Department of Mineral Resources and Energy in April, citing issues like marine noise, oil spills, climate change, and inadequate public consultation. But environment minister, Barbara Creecy on Monday dismissed the concerns in a 144-page ruling.

“I am therefore satisfied that the impacts of noise and light have been adequately assessed and mitigated to ensure low impacts on the receiving environment. As such this ground of appeal is dismissed,” Creecy said in the ruling.

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Nigeria sets $5bn investment target for its startups

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Nigeria’s Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani, has revealed a plan to increase investments into the country’s tech start-ups to $5 billion within five years.

Tijani, on Monday in a policy document titled, ‘Accelerating our Collective Prosperity through Technical Efficiency: A Strategic Plan for the Federal Ministry of Communications, Innovation & Digital Economy,’ announced the target.

Describing how the ministry would measure if its plan was working, Tijani said, “Increase capital raised by Nigerian tech startups 50 per cent year-on-year from ~$1bn/yr in 2022 to $5bn/yr in 2027.”

The minister emphasised that a strong digital economy required innovation, entrepreneurship, and access to capital in the current global technology landscape. According to him, the ministry’s main goal in this regard will be to promote the development and sustainability of startups, with a focus on those coming up with ground-breaking solutions for important economic sectors.

Tijani said, “Recognising the critical role of patient capital in the growth of startups, we are committed to increasing the local availability of patient capital. We intend to create an environment for startups to raise the funding they require to thrive locally and promote the domiciliation of startups within our nation.”

According to Tijani, “Digital transformation and innovation are fast becoming a catalyst for economic progress,” and the “intersection of a strong digital economy and our innovative and youthful population presents us with a unique opportunity to chart a course towards prosperity, inclusion, and global relevance.”

In his remarks on AI, the minister said that over the next 20 years, the technology would usher in a new era of technological and economic change. Tijani emphasised that Nigeria needed to develop a comprehensive national strategy to utilise AI’s potential responsibly and inclusively.

He said, “The implementation of the strategy amongst other things is expected to elevate Nigeria as a top 10 location for AI model training and talents globally. In addition, we will position Nigeria as a global leader in accelerating inclusivity in AI dataset.”

According to Africa: The Big Deal, Nigerian startups raised $1.2 billion in 2022 despite a funding shortage, while a Briter Bridges report says African startups raised $5.4 billion in 2022.

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