Nigeria’s economic outlook uncertain, welfare worsening – World Bank

The World Bank has said Nigeria’s economic outlook is uncertain and its ability to attract domestic and foreign investments is also crashing.

The bank noted that the condition of welfare in Nigeria was worsening despite the economic recovery from recession.

The Washington-based bank said this in its draft report for State Action on Business Enabling Reforms, which is available on its website.

The bank report read in part, “Although the Nigeria’s economy in 2021-2022 recovered from recession induced by the COVID-19 pandemic and lower oil prices, growing by 3.6 per cent in 2021 with an expected growth of 3.2 per cent in 2022, welfare has continued to deteriorate.”

The global lender stressed the need to catalyse private investment in order to boost growth and create jobs, noting that this type of investment was declining in the country.

The bank said, “Besides, Nigeria’s ability to attract domestic and foreign investment is low and declining compared to its peers. Private sector investment’s contribution to growth has declined as a consequence of macroeconomic and financial policies that constrain exports and foreign investment.”

The World Bank further emphasised the need for a more flexible and transparent foreign exchange management regime, accelerated revenue-based fiscal consolidation, strengthened expenditure and debt management and improved business-enabling environment.

The Punch reported earlier in September that 32 states failed to attract foreign capital in the second quarter of 2022, according to a Foreign Direct Investment data released by the National Bureau of Statistics.

Of the 36 states and the Federal Capital Territory, only Lagos, Abuja, Anambra, Ekiti, and Kogi witnessed capital inflows.

Cumulative capital inflows totalled $1.54bn. Lagos ($1.05bn) attracted the most capital in the period under review, followed by Abuja at $453.95m, Anambra at $24.71m, Kogi at $2m, and Ekiti at $500,000.

In the first quarter, only six states attracted a total of $1.57bn as capital importation. The states included Abuja, Anambra, Katsina, Lagos, Oyo, and Plateau.

Nigeria’s capital importation has been steadily declining, with investors cautious with releasing their money into the economy.

Reacting to this, an ECOWAS Common Investment Market consultant, Prof. Jonathan Aremu, said Nigeria lacks attractive factors for investors.

He said, “One thing about investment is that it is crisis-shy. Investment doesn’t go to places where there are crises. This is because investors want stability and predictability of their investments, particularly having returns on their investments.