Reforms in Nigeria not working, IMF report hints

The latest outlook report of the International Monetary Fund, IMF, for sub-Sahara Africa has indicated that the broad-based economic reforms embarked upon by the current federal government are still struggling for a positive impact, 18 months after commencement.

Also, stakeholders in the food sector have indicated that the reforms have failed to uplift the necessities of life in the country.

The IMF report rolled out yesterday acknowledged a few countries that have recorded little success in reforms but Nigeria was not mentioned, rather it mentioned Nigeria amongst those failing to meet desired results.

According to the report, the average economic growth rate in the region would remain at 3.6 per cent for the full year 2024, but Nigeria’s growth rate, put at 3.19 per cent, is below this average.

Presenting the report at the Lagos Business School, LBS, IMF Deputy Director, Catherine Patillo, indicated that macroeconomic imbalances in the region have started reducing with notable improvements in some countries, but she excluded Nigeria in the good news.

She stated: ‘‘More than two-thirds of countries have undertaken fiscal consolidation. With the median primary balance is expected to narrow by 0.7 percentage points alone in 2024. And these have included notable improvements in Cote d’Ivoire, Ghana, and Zambia, among others’’.

Further on the improving macroeconomic situations in the region, Patillo stated: ‘‘On the imbalances side, median inflation has declined in many countries. And it’s already within or below the target band in about half the countries’’.

But contrary to this position, Nigeria’s inflation which had slowed down in July and August returned to uptrend in September 2024 with further rise in October while analysts predict that November and December would sustain the uptrend.

Also at current 33.8 percent, Nigeria’s inflation rate is largely off the 21 percent target for 2024.

The IMF report actually mentioned Nigeria as one of the countries that have been unable to tame inflation.
She stated: ‘‘Inflation is still in double digits in almost one-third of countries, including Angola, Ethiopia, and Nigeria, and above target in almost half of the region, particularly where monetary policy is not anchored by exchange rate pegs’’.

Patillo further said that exchange rate was improving across most countries in the region. She stated: ‘‘Looking further at exchange rates, we do see that foreign exchange pressures have largely abated since the end of 2023’’.

But Nigeria has recorded the worse exchange rate instability and local currency depreciation so far this year.

The IMF report also highlighted the impact of debt burden on fiscal stability listing Nigeria amongst the suffering countries.

It stated: ‘‘Debt service capacity remains low by historical standards. In almost one-quarter of countries, interest payments exceed 20 percent of revenues, a threshold statistically associated with a high probability of fiscal stress. And rising debt service burdens are already having a significant impact on the resources available for development spending.

‘‘The median ratio of interest payments to revenues (excluding grants) currently stands at 12 percent. Some three-quarters have already witnessed an increase in interest payments (relative to revenue) since the early 2010s (comparing the 2010–14 average with the 2019–24 average). In Angola, Ghana, Nigeria, and Zambia, this increase in interest payments alone absorbed a massive 15 percent of total revenue’’.

Looking into the near future, the IMF report painted a picture of mixed fortune for the region but it grouped Nigeria amongst those that are still on the downside being one of the resource-intensive countries in the region. It also hinted that economic reforms and adjustments in Nigeria are faced with social and political resistance.

It stated: ‘‘Resource-intensive countries (RICs) continue to grow at about half the rate of the rest of the region, with oil exporters struggling the most.

“Second, both domestic and external financing conditions remain tight. Third, the region has recently witnessed several episodes of political fragility and social unrest. Political and social pressures are making it increasingly challenging to implement policy adjustments and reforms’’.

While removing Nigeria from the list of good news the IMF report stated: ”Significant increases are anticipated in Ghana, as it continues reestablishing macroeconomic stability; Botswana and Senegal, reflecting rising resource exports (diamonds, oil, and gas); and Malawi, Zambia, and Zimbabwe, as they recover from drought. Growth is also expected to improve in South Africa, given positive post-election sentiment and a reduction in power outages’’.

While listing Nigeria amongst those countries with what it called ‘‘adjustment fatigue’’, the IMF report made some recommendations for addressing the challenges, stating: ‘‘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’’.

Meanwhile, stakeholders in the Nigeria’s food sector have scored the Federal Government’s agriculture policies poor.

Speaking on the issues affecting the implementation of reforms in the sector, the stakeholders expressed divergent views and called for holistic implementation of the reforms.

The National President, All Farmers Association of Nigeria, AFAN, Arc Ibrahim Kabir, said the reforms are desirable by farmers but expressed concern over the implementation. Kabir said: “The reforms are desirable and in some instances necessary but the appropriate mechanisms for less painful implementation will make them more impactful.

“The Agricultural deliverables are usually slow in manifestation so we have to persevere.”
The AFAN boss said: “The future of the Agricultural sector is very bright and quite promising but definitely still work in progress.”

The Country Director, ActionAid Nigeria, AAN, Andrew Mamedu, said the current situation in the implementation of reforms has not really impacted positively on food production despite the efforts of the Tinubu-led administration after declaring state of emergency on food production.

Mamedu said: “The Tinubu administration has placed a spotlight on economic reforms aimed at reinvigorating Nigeria’s agricultural sector to ensure food security and economic growth. However, recent assessments and current data reveal that, despite these efforts, Nigeria remains one of the most food-insecure nations in 2024.

“According to the World Bank’s Food Security report in September 2024, Nigeria ranks 5th worldwide in food insecurity and third in Africa, behind Malawi and Liberia as the nation was among the top 10 countries most severely affected by food inflation.

“With this evidence at hand, it’s right to say that the President has not invested the quantity and quality of investments needed in Agriculture to deliver on his state of emergency declaration on food and Nutrition Security in Nigeria.

“Although current reforms put in place by the President have brought about some positive steps, such as budget allocations to the agriculture sector, attempts to stabilize exchange rates to favour agricultural imports, and policy directives intended to drive investment.

“But the harsh realities faced by Nigerian farmers such as high input costs, poor access to credit, insecurity in farming regions, and logistical bottlenecks continue to hinder tangible progress.

“The delayed implementation of the administration’s policy to open borders and reduce tariffs has unfortunately worsened the situation for Nigerian farmers and communities. This delay has led to increased food prices, affecting people across the country. Implementing the policy now will likely take time to stabilize food prices, as the effects of the delay have already been felt.

“Current outcomes have thus far yielded limited benefits for the average Nigerian, as food prices remain high, and many still cannot afford essential staples. The persistent inflationary pressures and the ongoing challenges related to infrastructure, transportation, and climate impacts further limit the accessibility and affordability of food for millions across Nigeria.

“To ensure that these reforms genuinely benefit Nigerians, we advocate for a more people-centred approach that addresses the root causes of food insecurity, such as poverty, inequality, and rural development deficits.”

The AAN boss said his organisation expects the reforms to concentrate on smallholder farmers to impact the needed in the nation’s food production.

He said: “Looking ahead, the agricultural reforms have the potential to drive positive change if they are aligned with the immediate needs of Nigerians, especially smallholder farmers who are vital to the food supply chain.

“To achieve substantial impact, we expect the government to focus on improving agricultural infrastructure, enhancing rural security, and providing subsidized inputs and flexible credit access to empower small-scale farmers.

“Also, as a nation, the Federal Government needs to subsidize organic agriculture to make food more affordable and accessible to citizens, particularly the poor and vulnerable.

“To achieve this, we should emulate the successful policies of leading economies like as China, the United States, the European Union, and Japan. These nations provide subsidies that support farmers, safeguard their livelihoods, and promote domestic agricultural production.

“By adopting similar measures, Nigeria can reduce its reliance on foreign produce, boost local agricultural output, and stimulate economic growth.

“Strategic subsidies can target key areas like organic fertilizers, irrigation systems, farm equipment, and research for climate-resilient crops, ultimately enhancing food security and improving the well-being of Nigerian farmers and citizens.

“Additionally, prioritising climate-resilient practices is essential, as Nigeria is highly vulnerable to climate change. If these reforms are implemented inclusively, transparently, and in a way that addresses local challenges, they could lead to a more secure and resilient agricultural sector that significantly contributes to Nigeria’s economic stability and food security.

“So, ActionAid Nigeria’s expectations are above 10 per cent budgetary allocation to the agriculture sector for 2025 with spendings focused credit, youth and women in Agriculture, labor saving technology, reducing post-harvest losses through provision of community/cottage processing and storage facilities and rural roads, extension services, funding Agroecology and irrigation, research and development and coordination.”