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    Friday, October 23, 2020

    Civil Unrest Hurting Nigeria’s Outlook, IMF Warns

    The International Monetary Fund (IMF) yesterday expressed concern about the civil unrest in Lagos and some other parts of Nigeria, following the shooting of some #EndSARS protesters Lekki Tollgate on Tuesday night.

    Responding to THISDAY's question during a media briefing on the ‘Africa Regional Economic Outlook,’ at the ongoing Annual Meetings of the IMF/World Bank in Washington DC, the Director of IMF’s African Department, Mr. Abebe Aemro Selassie, said the civil unrest in Lagos, which contributes significantly to Nigeria’s overall Gross Domestic Product (GDP), could have a negative consequence on the economy.

    He called for timely resolution of the crisis to prevent the economy, which is still reeling from the effects of the COVID-19 pandemic, from slipping further into a tailspin.

    Selassie said: “Are we concerned? We are always concerned when we see protests, particularly ones that are difficult like the one in Nigeria at the moment, but also anywhere in the world, and we hope that there would be a satisfactory resolution there.”

    Speaking on the support the multilateral institution granted the West African country earlier this year, he said it was to cushion the effects of the pandemic and the economic crisis that has unfolded due to COVID-19.

    According to him, the pandemic led to a massive decline in tax revenues in Nigeria, even when there was a compelling need for governments to spend resources on health, education and other critical sectors of the economy.

    “And I think the government has committed to both providing us with an explanation of what the resources have been used for and audits of how it has been used in due course and we look forward to that in the coming months.

    “Economic conditions in Nigeria for the last four years have been very difficult and the decline in oil prices in 2015/2016 and growth has been anaemic and there has been a lot of pressure on standards of living so there has been dislocation and as always when you have this kind of economic difficulty social protests are not uncommon,” he added.

    He called for reforms as a lasting solution to averting future unrests.

    He said: “That is why it is on the record we have been saying how critical it is to get all of the policies to facilitate stronger economic growth in Nigeria and for the government to do more to raise revenues from non-oil resources to be able to invest in health and education which will allow people to be more successful and getting jobs but also improve the economy’s potential.

    “So, the development agenda of Nigeria has to be more vigorous so that millions of jobs that the country needs can be created and I think that agenda remains very pressing.

    “On growth projections in Nigeria, these protests happened just after the period we accumulated the data for making the growth projections of this economic outlook, and much would depend really on how these protests evolve because Lagos is, of course, a very important economic hub and contributes quite a bit of economic activities to overall Nigeria activities. So, if this persists and are showing a significant effect on economic data, we would internalise them in due course.”

    He urged Nigeria and other African countries to ensure judicious utilisation of loans in order to avert plunging into a debt crisis.

    “Overall, the debt issue, in terms of the money we have been providing this year, the core function of IMF is that when countries no longer have access to the usual form of financing that they have, development financing or private market financing, the IMF steps forward.

    “That is why the IMF exists to help countries and sovereigns in distress while they are correcting their economies to go back to normal forms of financing. So, financing we have been providing is critical and an important lifeline. What we are asking countries to do is show that these resources are being used to save lives and livelihoods.

    “Overall, the region is projected to contract by three per cent in 2020, the worst outlook on record. Tourism-dependent economies faced the largest impact, while commodity-exporting countries have also been hit hard. Growth in more diversified economies will slow significantly, but in many cases will still be positive in 2020.

    “Looking forward, regional growth is forecast at 3.1 per cent in 2021. This is a smaller expansion than expected in much of the rest of the world, partly reflecting Sub-Saharan Africa’s relatively limited policy space within which to sustain a fiscal expansion. Key drivers of next year’s growth will include an improvement in exports and commodity prices as the world economy recovers, along with a recovery in both private consumption and investment.

    “The current outlook is subject to greater-than-usual uncertainty with regard to the persistence of the COVID-19 shock, the availability of external financial support, and the development of an effective, affordable, and trusted vaccine.”

    He added that Sub-Saharan Africa could face a financing gap that could necessitate an additional fiscal adjustment in the continent.

    “If private financial inflows remain below their pre-crisis levels and even taking into account existing commitments from international financial institutions and official bilateral creditors Sub-Saharan Africa could face a gap in the order of $290 billion over 2020 to 2023.

    “This is important, as a higher financing gap could force countries to adopt a more abrupt fiscal adjustment, which in turn would result in a weaker recovery.

    “Countries must also play their part, governance reforms will not only improve trust in the rule of law and improve business conditions, but also encourage external support.

    “Despite the lingering effects of the crisis, the potential of the region and the resourcefulness of its people remain intact, and tapping this potential will be vital if the region is to find its way back to a path of sustainable and inclusive development. In this context, the need for transformative reforms to promote resilience, lift medium-term growth and create the millions of jobs needed to absorb new entrants into labour markets is more urgent than ever. Priority reforms are in the areas of revenue mobilisation, digitalisation, trade integration, competition, transparency and governance, and climate change mitigation,” he stated.

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