Mr Lamin Barrow, Director-General of the African Development Bank Group’s Nigeria Country Department, has stated that the Nigerian government’s plan to lift 100 million Nigerians out of poverty by 2030 is jeopardized due to the country’s high rate of unemployment and income inequality.
On Tuesday, he spoke on behalf of AfDB President Dr Akinwumi Adesina as a panellist at an investors’ webinar highlighting investment opportunities in Nigeria’s privatisation and economic reform program.
Barrow stated that a recovery in crude oil prices, an increase in the VAT rate to 7.5%, and the elimination of fuel subsidies would provide some financial relief to the Nigerian economy.
According to him, there are high fiscal risks due to the country’s reliance on oil, as well as weakness in non-oil revenues and high debt service payments, and other risks to the country’s medium-term growth include inflation, insecurity, and high unemployment.
Fiscal risks are likely to remain elevated in the medium term due to high reliance on oil receipts, weaknesses in non-oil revenues (less than 4% of GDP), and high debt service payments (exceeding 60% of federally retained revenues) amidst spending pressures,” he said.
Besides the uncertainties associated with the pandemic, other downside risks to the medium-term growth outlook include fiscal pressures – (fiscal and current account deficits and financing); persistent (food) inflation; insecurity and high levels of unemployment, which has increased to 33.28 per cent (and especially youth unemployment – estimates range from 38 to 42.5 per cent).”
He observed that the COVID-19 pandemic had exacerbated already precarious social conditions.
“Poverty headcount has increased, with approximately five million more Nigerians likely to have been pushed into poverty in 2020. High unemployment and income inequality (35.1 per cent in 2020) pose significant challenges to the government’s objective to lift 100 million people out of poverty by 2030,” he added.
Barrow, on the other hand, praised the government’s efforts to mitigate the pandemic’s health and economic impacts on the people and economy, particularly the increase in the number of recipients of conditional cash transfers from 2.5 million to 7.6 million.
He advised the government to make prudent fiscal adjustments and implement policy reforms to ensure fiscal soundness, stating that the government needed to create an enabling environment for public-private partnerships to close Nigeria’s infrastructure gap in order to attract more investments.
He reaffirmed AfDB’s collaboration with the Nigerian government in addressing infrastructure deficits through the $256 million Nigeria Transmission Expansion Project, the $200 million Nigerian Electrification Project, and the $430 million support for the Enugu-Bamenda Road connecting Nigeria and Cameroon.