The World Bank on Wednesday projected that Nigeria’s GDP growth would hover slightly below 2% in 2018, largely driven by non-oil industry and services.
The latest projection was reported in the the World Bank Nigeria’s bi-annual Economic Update titled Investing in Human Capital for Nigeria’s Future
Specifically, the report stated that, Nigeria, like many other countries, had underinvested in human capital and remained very low compared to other countries.
The bank pointed out that in recognition that bold actions were required to address years of underinvestment in human capital, the Government of Nigeria had established a Human Capital Working Group to develop a unified vision for human capital development and drive implementation of interventions within the ‘Investing in our People’ pillar of the Government’s Economic Recovery and Growth Plan (ERGP).
Commenting on the initiative, the World Bank Country Director for Nigeria, Rachid Benmessaoud, said: “The World Bank welcomed the Government of Nigeria’s recent ‘Call for Action’, requesting all stakeholders to join the Government’s effort to address Nigeria’s alarming human capital outcomes.
“As a member of the Human Capital Working Group, the World Bank stands ready to support the Government of Nigeria in its bold steps to improve the lives of its citizens”, he added.
The report reflected further that Nigeria’s emergence from recession still remained sluggish, and sectoral growth patterns were unstable.
For instance, it noted that in the second quarter of 2018, the oil sector contracted by 4.0%, the usually-resilient agricultural growth slowed significantly to 1.2%, impacted by the security challenges in the Northeast and Middle Belt regions.
The World Bank Nigeria’s bi-annual Economic Update showed further that the non-oil industry and services, which constitutes over half of Nigeria’s economy, picked-up to 3.1% and 2.1% respectively, driven by growth in construction, transport, and ICT.
In addition, the report noted that the Nigerian economy remained dependent on the small oil sector (under 10 percent of GDP) for the bulk of its fiscal revenues and foreign exchange earnings, stating that although oil revenues are increasing with recovering oil prices in 2018, distributions from oil revenues to the three tiers of government are constrained by the petrol subsidy and other prior deductions.
This is even as it observed that in the first half of 2018, the current account surplus surpassed 4 percent of GDP, driven largely by higher oil exports, while non-oil revenue collections have come in lower than envisaged.
The update noted, however, that despite sustained efforts to improve the business environment, Foreign Direct Investment (FDI) inflows remained stagnated.
According to the update, the fiscal deficit will likely widen in 2018 due to increased spending and sustained revenue shortfalls. Furthermore, the current account balance is expected to remain positive, benefitting from the rising value of oil exports and limited growth of non-oil imports.
The report expatiated: “The capital account faces significant uncertainty, as external portfolio investors may exercise further caution, especially during the pre-election period, despite rising domestic yields.
“Given the clearly challenging economic backdrop, the Update suggests certain key policy reforms would be important to support macroeconomic resilience for Nigeria.
“These include among others, the acceleration of the economic diversification agenda, the reform of petrol subsidy regime to improve the fiscal space, improvements in the domestic revenue (particularly non-oil) to reduce volatilities in government revenues and increased investment in human capital for a truly sustainable growth”, the World Bank added.
