Isaac Anumihe, Abuja
International Finance Corporation (IFC) has predicted that Nigeria and other countries would slip into recession because coronavirus pandemic will lead to losses as high as $79 billion in the sub-Saharan region, where economic growth is expected to fall from 2.4 per cent in 2019 to between -2.1 and -5.1 per cent in 2020.
“Nigeria, Africa’s largest economy and a major oil exporter, will be negatively impacted, especially in the light of its slow recovery from a 2016 recession,” the corporation said.
According to the report, the petroleum sector is a central pillar of Nigeria’s economy, contributing about half of the government’s revenue and 90 per cent of Nigeria’s export earnings.
So, in 2016, Nigeria experienced a double shock as a result of a fall in global oil prices and supply problems owing to the crisis in the Niger Delta region of the country, so plunging millions more people into extreme poverty.
With the ravaging effect of COVID-19, the report, said, Nigeria (and numerous other countries around the world) is projected to fall into recession.
“The World Bank estimates that the number of poor people in Nigeria is likely to increase by several million by 2022. This will make the goal of lifting 100 million Nigerians out of poverty in 10 years more of a challenge.
“Nigeria faces the stubborn challenges of income inequality, insufficient infrastructure, insecurity, unemployment and an over-dependence on imports and raw material exports, especially oil. IFC has been engaged in Nigeria for over 30 years, helping the country lay the foundations for inclusive, sustainable, private sector-led growth. We have done this through direct investment, upstream advisory work, including the International Development Agency (IDA) private sector window, and an expanded Environmental, Social and Governance (ESG) advisory programme to increase support for market development and capacity building.
“IFC’s portfolio in Nigeria stands at $1.3 billion, within IFC’s global top 10 country exposures, in sectors including manufacturing, financial services, infrastructure and technology. IFC is also exploring opportunities in the gas, healthcare, and power sectors,” IFC said.
The Nigerian government, the report noted, recently announced key initiatives to help the real sector, predominantly driven by MSMEs, to support their development and growth, like the approval of $248 million soft loan facility for small scale agricultural enterprises.
“The coronavirus pandemic has had a tremendous impact on smaller businesses in Nigeria, which hosts Africa’s largest informal sector. These SMEs often have less capital for their day-to-day operations and are more vulnerable to shocks. The impact of the pandemic is particularly worrying for micro businesses. While Nigeria has an incredibly resilient private sector, this pandemic will be a debilitating blow. Still, there is a reason to be optimistic,” the report said.