The first outcome (or fresh fruit) of the “Zillion dollars” consultancy assignment which the “Seventy Senior Elders” (ex-KPMG Partners) are handling for the United Nations; the World Bank; and the International Monetary Fund [IMF] is the emphasis on co-ordination and synergy. There is no room for discordant voices.
Ban Ki-moon (Secretary-General of the United Nations); Jim Yong Kim (President of the World Bank); and Mrs Chistine Lagarde (Managing Director of the International Monetary Fund) have no problem about holding joint press conferences and indeed giving joint reports. This in addition to Ban Ki-moon’s presence in Washington DC (instead of being in New York) throughout the recent World Bank/IMF annual meeting from 10th October to 12th October 2014.
Jointly, they waved red flags to signify their utmost concern that Nigeria has the largest displaced population in Africa and the third largest in the world behind Syria and Columbia.
Here are some of the other reports which they have jointly issued and signed personally in the presence of the paparazzi:
(i) “NIGERIA WILL BE AMONG 10 COUNTRIES CONTRIBUTING
TO GLOBAL POVERTY IN 2030”
“Nigeria will be one of ten countries that in the year 2030 will remain as the main contributors to global poverty.
It said that the scenario requires that in Nigeria, currently contributing heavily to global poverty numbers, growth rates need to rise, but not to a degree that is entirely unimaginable.
It stated that in Nigeria, the growth rate needs to pick up from 2.3 to 3.2 per cent growth in real terms. According to the report Nigeria will contribute another 61.5 million poor people to the global total.
According to the World Bank, much more work needs to be done to end poverty and close the gap in living standards between those in the bottom 40 per cent and the top 60 per cent of the population around the world.
The report details, for the first time, the World Bank Group’s twin goals of ending extreme poverty by 2030 and promoting shared prosperity, measured as income growth of the bottom 40 per cent. GMR [Global Monitoring Report] 2014/2015 continues to monitor progress on the Millennium Development Goals, which inspired the WBG [World Bank Group] twin goals.
“The world has made great progress in the last quarter-century in reducing extreme poverty – it was cut by a stunning two-thirds, and now we have the opportunity to end poverty in less than a generation,” said World Bank Group President, Jim Yong Kim.
“But we will not finish the job unless we find ways to reduce inequality, which stubbornly persists all over the world. This vision of a more equal world means we must find ways to spread wealth to the billions who have almost nothing.”
The report notes that much success has been achieved in reducing extreme poverty – those living on less than a $1.25 a day.
However, the number of poor remains unacceptably high, at just over 1 billion people (14 per cent of the world population) in 2011, compared with 1.2 billion (19 per cent of the world population) in 2008.
Forecasts in the report show that poverty will remain stubbornly high in the South Asia and Sub-Saharan Africa regions, where an estimated 377 million of the world’s 4.12 million poor will likely reside in 2030.”
(ii) “A new report released in Washington DC by the World Bank and International Monetary Fund (IMF) on Wednesday challenged leaders to do much more to end extreme poverty in another 16 years.
The Global Monitoring Report 2014/2015, released by the World Bank, lamented the gap in living standards between those in the bottom 40 and the top 60 per cent of the population around the world, noting the need to promote shared prosperity, measured as income growth of the bottom 40 per cent.
Forecasts in the report showed that poverty in sub-Saharan Africa and South Asia will remain stubbornly high, where an estimated 377 million of the world’s 412 million poor will likely reside by 2030.
In 2001, the two regions were home to 814 million of the world’s one billion poor.
In terms of living standards, the report said the bottom 40 per cent in the developing world are much worse off when it comes to access to education, health, and sanitation.
For example, children in the poorest households, the report continued, are almost twice as likely to be malnourished than those in the top 60 per cent.
In the high-income world, which the report analyses for the first time, the main concern is income inequality, which has reached levels unprecedented since World War II.
The analysis on high-income countries was contributed by the Organization for Economic Cooperation and Development (OECD).
The OECD chapter finds that, among high-income countries, the average income of the richest 10 per cent of the population is now about 9.5 times that of the poorest 10 per cent as opposed to seven times 25 years ago.
The chapter also analyses the extent to which wealthier countries are amending their tax and transfer systems to improve their redistributive impact.
The world has made great progress in the last quarter-century in reducing extreme poverty – it was cut by a stunning two-thirds- — and now we have the opportunity to end poverty in less than a generation,” said World Bank Group President Jim Yong Kim.
“But we will not finish the job unless we find ways to reduce inequality, which stubbornly persists all over the world.
“This vision of a more equal world means we must find ways to spread wealth to the billions who have almost nothing,” he added.
The report noted that much success has been achieved in reducing extreme poverty – those living on less than a $1.25 a day.
However the number of poor remains unacceptably high, at just over one billion people (14 per cent of the world population) in 2011, compared with 1.2 billion (19 per cent of the world population in 2008).
According to Kaushik Basu, Senior Vice President and Chief Economist of the World Bank Group, “If it is shocking to have a poverty line as low as $1.25 per day, it is even more shocking that 1/7th of the world’s population lives below the line.
The levels of inequality and poverty that prevail in the world today are totally unacceptable.
“This year’s Global Monitoring Report, which brings together in one volume a statistical picture of where the world stands in terms of these goals, is essential fodder to anyone wishing to take on these major challenges of our time,” he said.
For Sam Nolan, IMF Deputy Director, Strategy, Policy and Review Department, “despite the weakness in the global economy in 2014, we still project growth for low-income developing economies to be over 6 per cent over the medium term, which bodes well for the world’s poor.
“We are generally optimistic about the growth prospect of the three regions with almost 95 per cent of world’s poor in 2011 – East Asia, South Asia and sub-Saharan Africa — but need to keep in mind that there are many individual countries within these regions where growth prospects are less benign.”
(iii) The International Monetary Fund has slashed Nigeria’s economic growth forecast for this year to 7 per cent as against its earlier projection of 7.1 per cent last April.
The Fund, in its World Economic Outlook obtained yesterday in Washington, also cut its outlook for global growth in 2015 to 3.8 per cent as against 4 per cent forecast in July, after a 3.3 per cent expansion this year.
Nigeria’s economy had grown by 6.21 per cent in the first quarter of 2014, up from 4.45 per cent in the same period last year.
This was; however, lower than 6.77 per cent recorded in the fourth quarter of 2013.
Nigeria’s economy had grown 6.5 per cent and 7.0 per cent in 2012 and 2013 respectively and was projected by the World Bank to grow at 6.7 per cent, 5.5 per cent and 6.1 per cent respectively in 2014, 2015 and 2016.
Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, had also corroborated the cut in Nigeria’s growth by the IMF.
She said Nigeria’s projected Gross Domestic Product (GDP) growth rate in 2014 would be reduced by 0.5 per cent, citing economic impact of terrorism and the deadly Ebola Virus Disease (EVD) as factors responsible for the cut.
The minister, who spoke in Lagos during a meeting with the Global Chief Executive Officer of Unilever, Mr Paul Polman, who is driving the expansion of Unilever investment in Nigeria, said although the country had managed the outbreak of the EVD excellently and was focused on tackling the menace of Boko Haram, both activities had a combined impeding effect on the economy, “marginally reducing economic growth rate.”
She however, added that the 0.5 per cent point decline in growth projection was more as a result of the terrorism activities of the Boko Haram sect that the EVD.
Meanwhile, the World Bank has lowered its forecast for economic growth in sub-Saharan Africa to 4.6 per cent this year compared to 5.2 per cent in April.
The IMF also cut its 2014 economic outlook for the region to 5.1 per cent from an earlier estimate of 5.4 per cent.
“The security situation in several parts of sub-Saharan Africa remains fragile, including in the Central African Republic and South Sudan. The fiscal position is weakening in a few countries on the back of rising current expenditures.
Growth in South Africa has remained lacklustre dragged down by protracted strikes, low business confidence and tight electricity supply,” the IMF said.
Besides, the World Bank and IMF have urged Sub-Saharan African economies, including Nigeria, to urgently prepare for the risks of the Ebola outbreak, wider budget shortfalls and security threats from militant groups.
“Risks that require enhanced preparedness include rising fiscal deficits in a number of countries, economic fallout from the activities of terrorist groups such as Boko Haram and al-Shabaab and most urgently, the onslaught of the Ebola epidemic in West Africa,” World Bank Chief Economist for Africa, Francisco Ferreira, said yesterday in a statement.
“The Ebola outbreak will cut economic growth in the worst affected nations of Guinea, Sierra Leone and Liberia by 2.1 percentage points to 3.4 percentage points,” the World Bank said.
The virus has killed more than 3,400 people in those three countries since March, out of 7,470-recorded cases.
“Without a scale up of effective interventions, the virus could spread more rapidly than assumed,” the Washington based lender said yesterday in its Africa’s Pulse report.
“In addition to the loss of lives, affected countries would suffer a sharper decline in output, with growth slowing markedly not only in the core countries, but also in the sub-region,” it added.
(iii) Front page headline “New Telegraph” newspaper of October 13, 2014
“NIGERIA, OTHERS NEED $2TRN INFRASTRUCTURE FINANCE YEARLY,
SAYS WORLD BANK”
“Nigeria and other developing countries require an estimated $2 trillion yearly over the next six years to meet the immediate and future infrastructure investments, the World Bank has said.
World Bank Group President, Jim Yong Kim, who made this known at the World Bank/International Monetary Fund (IMF) meetings, acknowledged that developing countries now spend about $1 trillion a year on infrastructure.
He, however, noted that maintaining current growth rates and meeting future demands would require investment of at least an estimated additional $1 trillion a year through to 2020.
In a bid to fill this financing gap, the heads of some of the world’s largest management and private equity firms, pension and assurance funds, and commercial banks have joined multilateral development institutions and donor nations to work as partners in a new Global Infrastructure Facility (GIF) that has the potential to unlock billions of dollars for infrastructure in the developing world, including Nigeria.
Kim said the presence of a broad range of institutional investors at the signing to launch the GIF sent a powerful message with the most recent data showing that private infrastructure investment in emerging markets and developing economies dropped from $186 billion in 2012 to $150 billion last year.
“We have several trillions of dollars in assets represented today looking for long-term, sustainable and stable investments,” said Kim. “In leveraging those resources, our partnership offers great promise for tackling the massive infrastructure deficit in developing economies and emerging markets, which is one of the fundamental bottlenecks to reducing poverty and booting shared prosperity.
The real challenge is not a matter of money, but a lack of bankable projects – a sufficient supply of commercially viable and sustainable infrastructure investments.”
Kim said the GIF was being designed to tap into expertise from within and outside of the Bank’s Group to deliver complex public-private infrastructure projects that no single institution could address on its own.
“The GIF is also being created to complement existing project preparation facilities in partner institutions across the globe. The multilateral development banks here represent that commitment to work together on behalf of our shared client countries, to bring together our resources, experience and our financing instruments,” he said.
(v) Front page of “The Punch” newspaper of October 8, 2014 headline:
“IMF EXPECTS SUB-SAHARAN AFRICA’S GROWTH TO REMAIN STRONG”
The International Monetary Fund has projected that growth in Sub-Saharan Africa will remain strong as an uneven global recovery continues, despite setback.
This was contained in its World Economic Outlook [WEO] for October. The outlook, which put global growth at 3.3 per cent in 2014 and reduced the 2015 outlook to 3.8 per cent from four per cent earlier projected in April, stressed the legacies from crisis and low potential growth weighed on recovery. It also warned of increased risks to global growth, including financial and geopolitical risks.
It said, “In sub-Saharan Africa, growth is projected to remain strong, broadly in line with the April 2014 WEO projections over the 2014-15 periods, although prospects vary across countries.”
For instance, it said while activity in Nigeria “has been resilient despite poor security conditions and a decline in oil production earlier this year”, in South Africa, 2014 growth “is being dragged down by industrial tensions and delays in fixing infrastructure gaps, including electricity constraints.”
It added that in a few countries, including Ghana and, until recently, Zambia, large macroeconomic imbalances had resulted in pressures on the exchange rate and inflation.
The WEO however warned that the Ebola Virus Disease outbreak could have a profound impact in the region.
It said, “Beyond the human toll it is exacting, the Ebola outbreak is set to have an acute impact on the economies of Guinea, Liberia, and Sierra Leone. Should the outbreak continue to intensify and spread significantly to neighbouring countries, it could have more far-reaching consequences.”
According to it, the projections of the report imply a robust outlook for low-income developing countries, with growth projected to exceed six per cent in both 2014 and 2015.
“Stronger growth in advanced economies will buoy low-income developing countries’ net external demand, although the projected easing in nonfuel commodity prices will induce some deterioration in the terms of trade for the net exporters of commodities. Domestic demand is expected to remain resilient as in recent years,’ it said.
In advanced economies, the outlook said legacies of the pre-crisis boom and the subsequent crisis, including high private and public debt, still cast a shadow on the recovery.
According to it, emerging markets are adjusting to rates of economic growth lover than those reached in the pre-crisis boom and the post-crisis recovery.
“Overall, the pace of recovery is becoming more country specific,” it said, adding that other elements were also affecting the outlook.
For instance, it said although financial markets had been optimistic, with higher equity prices, compressed spreads and volatility that had not translated into a pickup in investment, which – particularly in advanced economies – has remained subdued.
“And there are concerns that markets are underpricing risk, not fully internalizing the uncertainties surrounding the macroeconomic outlook and their implications for the pace of withdrawal of monetary stimulus in some major advanced economies,” it said.
Furthermore, the outlook observed that geopolitical tensions had risen, stressing that so far, their macroeconomic effects appeared mostly confined to the regions involved, although there were tangible risks of more widespread disruptions.
It warned that some medium-term problems that predated the crisis, such as the impact of an aging population on the labour force and weak growth in total factor productivity, were coming back to the fore and needed to be tackled.
It said, “These problems show up in low potential growth in advanced economies – which may be affecting the pace of recovery today – and a decline in potential growth in emerging markets.
With world growth in the first half of 2014 slower than expected, global growth for 2014 is projected at 3.3 per cent, 0.4 percentage lower relative to the April 2014 World Economic Outlook.
The growth projection for 2015 is also slightly lower at 3.8 per cent. These projections are predicated on the assumption that key drivers supporting the recovery in advanced economies – including moderating fiscal consolidation (Japan being one exception) and highly accommodative monetary policy – remain in place.”
(vi) Front page editorial in the “Daily Sun” newspaper of October 14, 2014
Headline: “WORLD BANK’S $500M FOR NIGERIAN SMEs
For many years now, Small and Medium Enterprises (SMEs) in Nigeria have been held back by lack of access to finance. This is in spite of the fact that they have the potential to create jobs through the production of goods and provision of services. To address this problem, the World Bank recently approved a $500m financial lifeline for SMEs from the lending window of its subsidiary financial institution, the International Bank for Reconstruction and Development.
One of the objectives of this intervention, according to the World Bank Board of Executive Directors which approved the facility, is to support the growth of SMEs in Nigeria as well as lend a helping hand to federal government’s efforts on job creation in the private sector through improved access to financing. The project is to run for seven years and will be implemented by the Federal Ministry of Finance.
Undoubtedly, this is a big boost for SMEs in the country. If the credit is effectively and efficiently disbursed, it will help ease the cost of doing business in Nigeria. Officially, there are 17 million SMEs in the country. Many of them are heaving under the numerous challenges of the nation’s economic sector, while their impact is hardly felt. So many others have gone under as they could not cope with the inclement business environment in the country. A major aspect of these challenges is the limited access to finance for their operations.
Statistics show that only 6.7 percent of SMEs in Nigeria have had access to bank loans or any other active line of credit in the current year. When loans are available, the interest rate is so high and the repayment period too short.
We commend the World Bank for this financial support for the growth of SMEs in Nigeria. There are certain areas in which financial intervention is badly needed. These include the need to strengthen the capacity of women entrepreneurs. Over time, entrepreneurs in Nigeria have been held back by a wide knowledge gap, limited access to markets and funds and the problem of land ownership rights.
While details of the $500m credit are being worked out, we urge the federal government and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), which supervises SMEs to articulate the challenges facing small and medium businesses and how best to address them using the available finances.
One critical area that needs to be looked into is the high cost of operating businesses in the country. The implications of such high costs are far reaching. They contribute to the collapse of industries and stifle their ability to keep pace with innovation. In addition, it is necessary to address the issues of social and regulatory costs. Social cost includes limited mentorship motivation for small and start-up businesses. Many small and medium-scale business owners complain that these social costs partly contribute to the inactivity and slow pace of firms.
We also believe that if SMEs are to play their expected role in the value chain of the economy, regulatory costs such as excessive charges by banks and government agencies, as well as problems that have to do with infrastructure, such as poor power supply and bad roads, should be urgently addressed. It has become essential to institute policies that are business and people-friendly.
Considering the important contribution of SMEs to the nation’s Gross Domestic Product (GDP), (accounting for over 60 percent), the effectiveness and transparency of the disbursement of the funds will determine the impact of this financial intervention on the Nigerian economy. If the government is interested in developing the non-oil sector and generating income from it, the best way to do this is to empower SMEs through easy access to credit and specific business-friendly policies.
In this regard, the N220 billion Micro, Small and Medium Enterprises (MSME) Development Fund recently launched by the Central Bank of Nigeria (CBN) must be properly administered to achieve its desired objectives. The aim of the fund is to provide wholesale credit at 3 percent interest to financial institutions, for onward lending to MSMEs at 9 percent interest over a maximum period of five years.
Many SMEs are complaining about their inability to access the loan, while allegations have been made by some that the banks have raised the interest rate beyond the 9 percent approved by the CBN.
We urge the banks to hasten the processes for lending this fund to the MSMEs so that they can get back on stream and contribute their own quota to economic growth and job creation. If government is sincere about diversifying the economy, this is the time to pay genuine attention to the non-oil sector and support SMEs to generate revenue and jobs.
Altogether, if our economy is to compete globally, priority should be given to SMEs by creating an enabling environment for them to thrive. Let the relevant authorities do what is necessary to reduce the cost of doing business and make credit available and affordable to genuine businesses so that they can survive, and grow. The $500 million from the World Bank should be seen as the lifeline that SMEs in Nigeria direly need to address the problem of underfunding.”
By Bashorun J.K. Randle, OFR, FCA
