The World Bank Group, on Monday,
said Nigeria’s economy has performed below par since 1995.
In a classification of growth
performance included in the 14th edition of Africa’s Pulse, Nigeria was ranked
in the bottom tercile alongside Angola, South Africa and 16 other countries
saying these economies did not show any progress in their growth performance.
“These countries did not show any
progress in their economic performance from 1995–2008 to 2015–18,” the report
read.
Explaining the methodology used
in the classification, the report said: “The taxonomy compares the average
annual GDP growth rates during 1995–2008 and 2015–18 against predetermined
thresholds.
“These thresholds correspond to
the bottom and top terciles of the annual average growth rates across 44
Sub-Saharan African countries between 1995 and 2008 (that is, 3.5 and 5.4
percent, respectively).
“If a country’s economic
performance declined from 1995–2008 to 2015–18, the country is categorized in
the bottom tercile, which includes “falling behind” and “slipping.”
“If a country’s growth rate
remained invariant over time, between 3.5 and 5.4 percent in both periods, it
is categorized in the middle tercile (or “stuck in the middle”).
“If a country’s economic
performance improved from 1995–2008 to 2015–18, with a growth of more than 5.4
percent per year, the country is categorized in the top tercile, which includes
the “improved” and “established” groups.”
According to the report, the
indices used were:
- Convergence, as proxied by the level of income per capita of the countries in each tercile
- Structural transformation, as captured by sectoral value-added share and sectoral employment share
- Capital flows (aggregate value and composition)
- Level and composition of public sector indebtedness, as captured by: (i) the general government gross debt and its currency composition, and (ii) the outstanding external public debt (and its composition, by creditor)
- Governance indicators, namely, government effectiveness, regulatory quality, control of corruption, voice and accountability, political stability, and absence of violence and rule of law.
The World Bank also cut its
growth projection for Nigeria from 2.2% to 2.1%, saying policy distortions and
stagnant oil production levels limit investments.
“Growth in Nigeria is projected
to rise from 1.9 percent in 2018 to 2.1 percent in 2019 (0.1 percentage point
lower than last October’s forecast),” the Bretton Wood institution said.
“This modest expansion reflects
stagnant oil production, as regulatory uncertainty limits investment in the oil
sector, while non-oil economic activity is held back by high inflation, policy
distortions, and infrastructure constraints.
“Growth is projected to rise
slightly to 2.2 percent in 2020 and reach 2.4 percent in 2021, as improving
financing conditions help boost investment.
“In Nigeria, although the
manufacturing and non-manufacturing PMIs remained above the neutral 50-point
mark—which denotes expansion—they fell further in February, due to weaker rises
in output and new sales orders across firms.
“Household consumption in Nigeria
has remained subdued, while multiple exchange rates, foreign exchange
restrictions, low private sector credit growth, and infrastructure constraints
have continued to weigh on private investment.”
In a chat with journalists on
Monday, Isaac Okorafor, spokesperson of the Central Bank of Nigeria (CBN), said
the bank has shown ingenuity in managing the economy.
“You know the crisis that we’ve
faced in the past three years. The bank has shown ingenuity in managing the situation
and ensuring that everything is stable.”
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