VenturesNow

World Bank worries over Nigeria’s macroeconomic management

Published

8 months ago

September 13, 2023

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.

Related Topics:Featured Macro economics Nigeria World Bank

Click to comment

VenturesNow

Nigeria offers oil majors faster exit if …

Published

5 seconds ago

May 4, 2024

Ifeoluwa Dada

Oil-rich West African country, Nigeria, has offered major oil companies, such as Exxon Mobil and Shell, that planned to leave the country’s onshore oil an offer for quicker exit approval on the ground that they take responsibility for spills rather than wait for authorities to apportion blame.

The regulator tt a meeting with the companies in Abuja, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) chief Gbenga Komolafe offered a short-term option with faster approval if the companies commit to cleaning up spills and compensating communities.

To concentrate on deepwater drilling, Exxon, Shell, TotalEnergies, and Eni have all attempted to withdraw from Nigeria’s oil-rich Niger Delta in recent years, claiming security issues including theft and sabotage. Regulatory obstacles have, however, caused their exits to be postponed.

“We have the undertaking here. The consent here though fixed for June, could be much shorter,” he said.

“If you agree to take that option, you sign the undertaking knowing that there are obligations to be fulfilled,” Komolafe said.

The second long-term alternative might push back the final approval until August by requiring NURPC to identify and assign all liabilities first. In order to safeguard the environment, local populations, and the long-term viability of the assets, NURPC is attempting to strike a compromise between expediting the exit for oil majors.

According to them, the corporations are considering their alternatives and will reply shortly. Meanwhile, some observers say the accelerated option could cost oil majors millions of dollars for cleanups and reparations.

“The risk with option 1 is the transferor will continue to take responsibility for the asset until the process is completed while option 2 puts them at the mercy of the regulator since they waived their right to deemed approval,” said Ayodele Oni, energy lawyer at Lagos-based Bloomfield law firm.

Following the majors’ withdrawal, 26 onshore blocks with a combined estimated reserve of 13.76 billion barrels of oil, 2.70 billion barrels of condensate, and roughly 90,717 billion cubic feet of gas are up for grabs, according to NUPRC.

“We aim to ensure that the companies that take over these blocks have the necessary financial resources and possess the technical expertise required to responsibly manage the blocks throughout their lifecycle under good asset stewardship practices,” Komolafe said.

VenturesNow

Nigeria’s Security Exchange chief to meet foreign, local crypto exchanges, others over crypto regulation

Published

13 mins ago

May 4, 2024

Ifeoluwa Dada

On Monday, local and international cryptocurrency exchanges will meet with Dr. Emomotimi Agama, the recently appointed Director General of the Securities and Exchange Commission, to deliberate and reach a consensus regarding the current state of cryptocurrency in Nigeria.

The Nigerian Blockchain Industry Coordinating Committee called the meeting to discuss pertinent issues and outline a forward-thinking plan for cryptocurrency regulations.

The meeting is open to all operators of digital asset exchanges, wallet providers, other virtual asset service providers (VASPs), and pertinent industry associations and bodies in order to address pertinent issues and map out a progressive path for cryptocurrency regulations in Nigeria.

The associations include the Blockchain Nigeria User Group (BNUG), the Cryptographic Development Initiative in Nigeria (CDIN), the Digital Currency Consortium (DCC) and the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).

Uwakwe expressed hope that the meeting could spark the right kind of change that would favour all crypto stakeholders in Nigeria and internationally.

“Everyone’s presence and insights are invaluable as we collectively navigate the regulatory terrain and strive toward fostering an environment conducive to innovation and growth within the blockchain and cryptocurrency sector,” he said.

Nigeria has since initiated investigations into the use of cryptocurrencies in the nation and taken actions that run counter to its December 2023 decision to lift a ban on them.

The Central Bank of Nigeria blocked local cryptocurrency users’ access to the websites of numerous cryptocurrency exchanges, including Binance, OctaFX, and others in February.

Additionally, the SEC of Nigeria suggested changing the regulations governing platforms that provide cryptocurrency services. It suggested raising the registration fee for cryptocurrency exchanges from N30 million ($18,620) to N150 million ($93,000).