Rethink reform strategies, IMF advises Nigeria

Against the backdrop of frustrations faced by the general public in Nigeria and some other Sub-Saharan African countries undergoing economic reforms, the International Monetary Fund, IMF, has rolled out a set of recommendations on how to make the reforms acceptable and supported by the citizens.

The IMF, in its latest Regional Economic Outlook for Sub-Saharan Africa report, noted that the countries involved in deep reforms including Nigeria, Ghana, Ethiopia and Kenya, may now be experiencing what it called ‘adjustment fatigue’ while some are facing civil resistance.

Nigeria, for instance, has recorded multiple civil unrests and labour shutdowns following disenchantment with the impact of the macroeconomic reforms, especially in petrol and foreign exchange deregulations.

The IMF’s recommendations emphasized broad-based engagement with the populations, a communications strategy clearly articulating the benefits of reform, forging partnerships with key figures in the country, appropriate design and sequencing of reforms, establishing complementary and compensatory measures, and fostering inclusive growth.

The Fund sees an opportunity for making a success of the reforms if the frustrations faced by the citizens are adequately addressed.

The report stated: “In the face of popular frustration, there is also an opportunity to work to mobilize support for large, deep reforms, of the sort that, for instance, Ethiopia, Ghana, Kenya, and Nigeria are pursuing.

“Realising this opportunity requires rethinking reform strategies, to build and maintain pro-growth coalitions among constituent leaders and the general public. This will require greater attention to communication and engagement strategies, reform design, compensatory measures, and rebuilding trust in public institutions”.

Giving further details on what should be done, the report stated: “In particular, policymakers will need to focus on broad-based engagement with populations; a participatory approach, involving a two-way dialogue with stakeholders and the population at large, can help design policy approaches; building a sense of ownership among the public, and garner support from both business and civil society”.

IMF added, “Communications should clearly articulate the benefits of reform, the costs of inaction, the accompanying compensatory measures, and correct misinformation and misperceptions.

“Partnering with key figures including parliamentarians, community leaders, and independent researchers is also essential. The emphasis should be on listening to concerns and designing appropriate responses. Providing regular updates on reform progress, and establishing ongoing feedback mechanisms, will help maintain support over time.

“Appropriate design and sequencing of reforms; the costs and benefits of multiple reforms should be appropriately spaced through time so as not to overburden populations. Demonstrable, upfront gains will boost support, and beginning with reforms that do not threaten the core benefits of multiple social groups has been shown to improve success.

“Complementary and compensatory measures; Appropriately designed and well-targeted policies to support those most affected by reforms (such as stronger social safety nets, job search assistance, and retraining) can help overcome resistance to reform by mitigating potential social costs.

“Fair and transparent management of public resources; A strong governance framework that fosters trust in government and in its ability to adequately implement policies—including by promoting transparency, increasing accountability, strengthening the rule of law, and controlling corruption—is a precondition for public backing of any reform strategy.

“Opinion surveys indicate that trust in the government’s ability to use public resources to promote the population’s well-being is still relatively low in many sub-Saharan African countries

“Fostering inclusive growth; As painful as the current policy choices are, deeper and broader reforms will be required to guarantee that countries reap the gains, and not just the pain, of reform. Most of the region is struggling with low growth, lack of jobs, and widespread social exclusion. Unlocking more durable and inclusive growth, by making the economy work more effectively for all, will simultaneously reduce both macroeconomic vulnerabilities and social frustration, easing the task of policymakers”.

The Regional Economic Outlook is the IMF’s regular update on the group of economies within the region addressing challenges and the growth opportunities.