International Finance Corporation (IFC), has predicted that Nigeria, as well as other countries, will go into a recession, due to the losses incurred during the COVID-19 lock-down. It was predeicted that some losses will be as high as $79 billion in the sub-Saharan region, where economic growth is expected to drom from 2.4 per cent to between -2.1 and -5.1 in 2020.
IFC said: “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.”
According to the IFC’s report, the petroleum sector, which is a central pillar of Nigeria’s economy is in troubled waters.
Nigeria experienced a double shock in 2016, which was a result of a fall in global oil prices as well as supply problems owing to the crisis in the Niger Delta region of Nigeria. This threw millions of people, unexpectedly into poverty.
COVID-19 has not made it any easier on the economy, with its effects causing a prediction of a recession in the country.
“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.
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“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.
According to the aforementioned report, the Nigerian government recently announced key initiatives, towards aiding the real sector, which is predominantly driven by MSMEs, as a way to support their development and growth.
The report further said: “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.”
