After threatening to withhold $1.5 billion until Nigeria carries out foreign exchange reforms to its satisfaction, the world Bank has finally approved the facility for Nigeria.
While Nigeria is still working on its forex reforms, it appears the World Bank was moved to change its mind because “government revenues could fall by more than $15 billion this year, and the crisis will push an additional 5 million Nigerians into poverty in 2020.”
In a statement issued on Tuesday, the World Bank said its board has approved the $1.5 billion for two projects.
These are: an International Development Association (IDA) credit of $750 million Nigeria Covid-19 Action Recovery and Economic Stimulus – Program for Results (Nigeria CARES).
“This program will help increase access to social transfers and basic services, as well as provide grants to poor and vulnerable households. It will also strengthen food supply chains for poor households while facilitating recovery and enhancing capabilities of MSMEs. This is financed through” the World Bank said.
The second is another International Development Association (IDA) credit of $750 million for State Fiscal Transparency, Accountability and Sustainability Program for Results (SFTAS).
This facility is to build “on the progress made across 36 States, the original SFTAS program will be expanded and scaled up in response to COVID-19”.
“The Additional Financing will help meet the financing gap in the Programme Expenditure Framework, due to the sharp reduction in government revenues associated with the crisis”.
It will also “help increase the efficiency in spending, strengthen revenue mobilization, and enhance accountability and transparency in public resource management to further strengthen state-level COVID-19 response.”
The World Bank was silent on if the forex reform it demanded from the Nigerian authorities has been carried out. However, one its demands, the harmonization of forex rates is still in effect.
The World Bank Group (WBG) also approved a different $1.5-billion package for Nigeria to help build a resilient recovery post-COVID19.
The package is a new five-year Country Partnership Framework (CPF) to last from 2021 to 2024.
This $1.5 billion is approved for social protection and strengthening of state-level COVID-19 response.
Prepared jointly with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), this CPF proposes a collaborative approach of how resources across the entire Bank Group can best support the Government’s effort to achieve its goal to lift 100 million citizens out of poverty.
Shubham Chaudhuri, World Bank Country Director for Nigeria stated that “this Country Partnership Framework will guide our engagement for the next five years in supporting the Government of Nigeria’s strategic priorities by taking a phased and adaptive approach.”
He added that “to realize its long-term potential, Nigeria has to make tangible progress on key challenges and pursue some bold reforms.”
The World Bank Group he said “will focus on supporting Nigeria’s efforts to reduce poverty and promote sustained private sector-led growth.”
The CPF will focus on four areas of engagement. These are: investing in human capital by increasing access to basic education, quality water and sanitation services; improving primary healthcare; and increasing the coverage and effectiveness of social assistance programs.
“Additional investments in promoting women’s empowerment and youth employment and skills, especially for young women, will also help reduce maternally and child mortality,” the Bank said.
Another area of focus the $1.5 billion will spent on will be to promote jobs and economic transformation and diversification “by supporting measures to unlock private investment and job creation and increasing access to reliable and sustainable power for households and firms. The CPF will also focus on boosting digital infrastructure, and developing economic corridors and smart cities, to provide Nigerians with improved livelihoods.
“Enhancing resilience by strengthening service delivery and livelihood opportunities in the Northeast and other regions grappling with insecurity, as well as modernizing agriculture and building climate resilience. Will also receive attention from the CPF fund.
“The last area of focus will to strengthen the foundations of the public sector “by improving public financial management and strengthening the social contract between citizens and government through improved fiscal and debt management.”
Kevin Njiraini, International Finance Corporation (IFC) Director for Southern Africa and Nigeria said “a strong private sector is critical to support Nigeria’s economic growth and development. The Country Partnership Framework leverages the World Bank Group to enable business growth that is inclusive and sustainable.”
He added that the “IFC will continue to support a broader private sector-led growth strategy to help Nigeria realize its immense potential by attracting more investment and creating millions of quality jobs for its growing population.”
Merli Baroudi, Director at MIGA for Economics and Sustainability noted that “to achieve sustainable post-COVID economic recovery, Nigeria needs to strengthen reforms that support private sector solutions and crowd in private sector finance”.
Merli Baroudi added that “in close coordination with the World Bank and IFC, MIGA will continue to expand its support for cross-border private investment into Nigeria.”
The World Bank reiterated that “Nigeria is at a critical juncture. With the sharp fall in oil prices as a result of COVID-19, the economy is projected to contract by over 4% in 2020, plunging the country into its deepest recession since the 1980s.”