World Bank Archives — Business Bells

Business Bells

Tag: World Bank

  • Nigeria’s Inflation Rate May Be Among World’s Highest In 2022 – World Bank

    Nigeria’s Inflation Rate May Be Among World’s Highest In 2022 – World Bank

     

    The World Bank has said Nigeria may have one of the highest inflation rates globally in 2022, with increasing prices diminishing the welfare of Nigerian households.

     

    According to the World Bank, Nigeria is projected to have one of the highest inflation rates globally and the seventh highest among Sub-Saharan African countries in 2022.

     

    “In 2022, Nigeria is expected to have one of the highest inflation rates in the world and the seventh highest in Sub-Saharan Africa,” it said.

     

    The bank said this in the November edition of its Nigeria Development Update.

     

    According to the global financial institution, high inflation hampers the country’s attempt to achieve economic recovery and erodes the purchasing power of most vulnerable households.

     

    The document read in part, “High inflation is frustrating Nigeria’s economic recovery and eroding the purchasing power of the most vulnerable households. In the absence of measures to contain inflation, rising prices will continue to diminish the welfare of Nigerian households.”

     

    The bank further highlighted the adverse effects of inflation on Nigeria, which include pushing eight million Nigerians into poverty, and the possible disruption of consumption, investment and saving decisions, among other consequences.

     

    “If inflation had been closer to the CBN’s goal of nine per cent in 2021, the average Nigeria’s consumption would have been 15 per cent higher, and eight million Nigerians would have not fallen into poverty.

     

    “If double-digit inflation persists during 2022-2023, rising prices will distort consumption, investment, and saving decisions of the government, households, and firms, with adverse ramifications for long-term borrowing and lending.

     

    “Over time, the disproportionate impact of inflation on lower-income households and those working in sectors with low savings (e.g, agriculture) will exacerbate inequality. Ultimately, inflation will not only negatively affect incomes, but also economic productivity and job creation, further constraining the recovery,” the bank said.

     

    The Washington, United States-based institution also disclosed that over two years, an increase in food prices accounted for about 70 per cent of the annual increase in the rate of inflation.

     

    It also said that inflationary pressures were trigged by multiple demand and supply shocks.

     

    The document read in part, “Inflationary pressures are being generated by multiple demand and supply shocks. Supply shocks arising from disruption of supply chains linked to COVID-19 and associated containment measures have eased, but security issues, border closures, and limited access to markets continue to fuel inflation.

     

    “The current mix of monetary, fiscal, foreign exchange, and trade policies also plays a prominent role as a driver of inflation. Trade and FX restrictions, including the closure of land borders starting in August 2019, have increased prices for food and consumer goods, and imports of over 40 goods, including many staple foods, are currently ineligible for FX through formal windows.

     

    “Nigeria’s exchange-rate management has resulted in the rise of parallel rates, which are closely linked to food-price dynamics. Unable to access FX through the official exchange-rate window, businesses seek FX on the parallel market and other alternative sources.

     

    “The parallel rate influences their business decisions, and fluctuations in the parallel rate pass through to market prices for goods and services. Moreover, monetary policy has not prioritized controlling inflation, and the monetary financing of fiscal deficit undermines the effectiveness of policies to contain demand-side inflationary pressures.”

  • Nigeria Ranks Among Nations With High Debt Risk –World Bank

    Nigeria Ranks Among Nations With High Debt Risk –World Bank

     

    The World Bank has listed Nigeria and nine other countries as nations with high-debt risk exposure.

     

    In a financial statement for the International Development Association (IDA) released on Monday, the World Bank pegged Nigeria at number five with a $11.7b IDA debt stock.

     

    “As of June 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure,” it explained in the document.

     

    “IDA’s largest exposure to a single borrowing country, India, was $22 billion as of June 30, 2021. Monitoring these exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”

     

    India tops the list with an IDA debt stock of $22b. Bangladesh – with $18.1b – is second and followed by Pakistan ($16.4b), and Vietnam with $14.1b.

     

    Ethiopia, Kenya, Tanzania, Ghana and Uganda complete the top 10 list in that order.

     

    “IDA faces two types of credit risk: country credit risk and counterparty credit risk,” the World Bank further explained.

     

    “Country credit risk is the risk of loss due to a country not meeting its contractual obligations, and counterparty credit risk is the risk of loss attributable to a counterparty not honoring its contractual obligations. IDA is exposed to commercial as well as noncommercial counterparty credit risk.”

     

    As of September 2020, Nigeria had taken a $31.98b worth of loans from the World Bank Group, International Monetary Fund (IMF), African Development Bank (AfDB), according to the Debt Management Office (DMO).

     

  • Remittances To Nigeria Drop By 28% – World Bank

    Remittances To Nigeria Drop By 28% – World Bank

     

    Remittance inflow to Nigeria dropped by 28 per cent in 2020 due to the COVID-19 pandemic, the World Bank has said.

     

    The bank added that remittance flows fell for sub-Saharan Africa by 12.5 per cent, according to its Migration and Development Brief 33 Phase 11 entitled: “COVID-19 Crisis Through a Migration Lens’’ published on Thursday.

     

    The report said the decline in remittance flows to Nigeria was largely responsible for the fall in remittance flows to sub-Saharan Africa.

     

    “The decline in flows to sub-Saharan Africa was almost entirely due to a 28 per cent decline in remittance flows to Nigeria.

     

    “Excluding flows to Nigeria, remittances to sub-Saharan Africa increased by 2.3 per cent, demonstrating resilience,’’ the report stated.

     

    According to the report, the relatively strong performance of remittance flows during the COVID-19 crisis has also highlighted the importance of timely availability of data.

     

    It stated that given its growing significance as a source of external financing for low and middle-income countries, there was need for better collection of data on remittances.

     

    It emphasised that there was need for better collection of data on remittances, in terms of frequency, timely reporting, and granularity by corridor and channel.

     

    With global growth expected to rebound further in 2021 and 2022, remittance flows to low and middle- income countries are expected to increase by 2.6 per cent to $553bn in 2021 and by 2.2 per cent to $565bn in 2022.

     

    The report stated that global average cost of sending $200 remained high at 6.5 per cent in the fourth quarter of 2020, more than double the Sustainable Development Goals (SDGs) target of three per cent.

     

    It stated that sub-Saharan Africa continued to have the highest average cost (8.2 per cent) adding that supporting the remittance infrastructure and keeping remittances flowing includes efforts to lower fees.

     

    The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.

     

    “As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

     

    “Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants,” he said.

  • FG, World Bank Begin Process To Rebase Nigeria’s GDP

    FG, World Bank Begin Process To Rebase Nigeria’s GDP

    The Federal Government, in collaboration with the World Bank, has commenced the process to rebase Nigeria’s Gross Domestic Product.

     

    Experts describe GDP as the final value of the goods and services that are produced within a nation’s geographic boundaries during a specified period of time, normally within a year.

     

    The growth rate of nation’s GDP is an important indicator of the economic performance of the country.

     

    Also, rebasing of GDP entails the replacement of the old base year used for compiling the GDP with a new, more recent, base year for computing the constant price estimates.

     

    This is necessary because of the changes in relative prices and the structure of the economy over time.

     

    In its bid to rebase Nigeria’s GDP, the National Bureau of Statistics announced on Wednesday that following the successful completion of listing of establishments, a component of National Business Sample Census, the NBS commenced National Business Sample Survey, otherwise known as the survey of establishments.

     

    It said the NBSS was also a component of NBSC which involves in-depth study of sampled establishments based on the sectors identified in business sample census.

     

    The bureau’s spokesperson, Ichedi Sunday, said in a statement issued in Abuja that ‘the objectives of the National Business Sample Survey include to rebase the Gross National Product from 2010 to 2018/2019’.

     

    The objective also includes ‘to provide sectorial data at national and state levels, determine the structure of the Nigerian economy, determine the sectors that drive the Nigerian economy and those that require government intervention to improve them’.

     

    Others, he said, were to serve as a benchmark for subsequent commercial and industrial sector statistics surveys.

     

    According to the bureau, the survey covers the 36 states of the federation, including the Federal Capital Territory.

     

    It said, “In all, 17 sectors of the Nigerian economy will be covered during the survey exercise. Already, data collection on the survey by NBS staff has commenced with lodgments of questionnaires in the selected establishments.

     

    “NBS appeals to the selected establishments to provide the necessary information for the survey as their participation is germane for the successful completion of the survey exercise.”

     

    The NBS last rebased the country’s GDP in April 2014, as it announced changes to the way it calculated GDP, changing the calculation to more accurately reflect current prices and market structure.

     

    At the time, the overall estimate of the nation’s economy size increased significantly as the estimate of total GDP of Nigeria increased from N42.4tn ($270bn) to N80.2tn ($510bn), an 89 per cent increase.

     

    Analysts explain that GDP rebasing enhances planning and investment decisions, as the performance of government in revenue collection, capital spending, among others, are made clearer.