The World Bank has said that the Nigerian economy
has been slipping since 1995 and this continued till 2018, Punch reports.
The bank, in its latest report on the regional
economy titled, ‘Africa’s Pulse’, released the taxonomy of growth performance
in sub-Saharan Africa, which focused on the macroeconomic and financial
features that led to growth resilience on the continent.
According to the bank, the taxonomy is used to help identify the factors that
are correlated with success or failure in economic growth performance in
sub-Saharan Africa, with emphasis on macroeconomic and financial variables.
The analysis, it said,
involved a series of macroeconomic variables for 44 sub-Saharan African
countries from 1995 to 2018.
The key elements that
determined the positions of each of the 44 sub-Saharan economies in the
taxonomy, the World Bank said, included the level of income per capita of the
countries; structural transformation, as captured by sectoral value-added share
and sectoral employment share; and capital flows.
Others are level
and composition of public sector indebtedness, as captured by the general
government gross debt and its currency composition, and the outstanding
external public debt.
The last of the
indicators has to do with governance vis-a-vis government effectiveness,
regulatory quality, control of corruption, voice and accountability, political
stability, and absence of violence and rule of law.
According to the World
Bank, the taxonomy compares the average annual GDP growth rates during
1995–2008 and 2015–2018 against predetermined thresholds.
It also categorised
growth performance into five groups: falling behind, slipping, stuck in the
middle, improved, and established. The five groups were further reclassified
into three groups: Top tercile, middle tercile and bottom tercile.
The Bretton Wood
institution said, “If a country’s economic performance declined from 1995–2008
to 2015–18, the country is categorised in the bottom tercile, which includes
‘falling behind’ and ‘slipping.’ If a country’s growth rate remained invariant
over time, between 3.5 and 5.4 per cent in both periods, it is categorised in
the middle tercile (or stuck in the middle). If a country’s economic
performance improved from 1995–2008 to 2015–18, with the growth of more than
5.4 per cent per year, the country is categorised in the top tercile, which
includes the ‘improved’ and ‘established’ groups.”
Based on the above classification, the Nigerian economy was categorised
alongside 18 other sub-Saharan African economies as slipping having recorded
declined economic performance between 1995 and 2018.
The World Bank said, “The
bottom tercile consists of 19 countries: Angola, Burundi, Botswana, the
Republic of Congo, the Comoros , Gabon, Equatorial Guinea, Liberia, Lesotho,
Mauritania, Malawi, Namibia, Nigeria, Sierra Leone, Eswatini, Chad, South
Africa, Zambia, and Zimbabwe. These countries did not show any progress
in their economic performance from 1995–2008 to 2015–18. For instance, their
median economic growth rate decelerated, from 5.4 per cent per year in
1995–2008 to 1.2 per cent per year in 2015–18.”
The bottom performing
economies, according to the World Bank, produce almost 60 per cent of the
region’s total GDP, emphasising that the three largest countries in the
region—Nigeria, South Africa, and Angola—and many commodity exporters are in
Burkina Faso, Côte
d’Ivoire, Ethiopia, Ghana, Guinea, Guinea-Bissau, Kenya, Mali, Rwanda, Senegal,
and Tanzania made the top tercile.
The middle tercile
countries are Benin, the Central African Republic, Cameroon, the
Democratic Republic of
Congo, Cabo Verde, The Gambia, Madagascar, Mozambique, Mauritius, Niger, Sudan,
São Tomé and Príncipe, Togo, and Uganda.
The World Bank also cut
its growth forecast for sub-Saharan Africa this year to 2.8 per cent from an
initial 3.3 per cent.
The commodity price slump
of 2015 cut short a decade of rapid growth for the region, and the bank said
growth would take longer to recover as a decline in industrial production and a
trade dispute between China and the United States take their toll.
The bank’s 2019 forecast
means economic growth will lag population growth for the fourth year in a row
and it will remain stuck below three per cent, which it slipped to in 2015.
overall growth reflects ongoing global uncertainty, but increasingly comes from
domestic macroeconomic instability including poorly managed debt, inflation and
deficits,” the bank said.
The Bretton Wood
institution equally cut Nigeria’s growth forecast by 0.1 per cent.
It said, “Growth in
Nigeria is projected to rise from 1.9 per cent in 2018 to 2.1 per cent in 2019
(0.1 percentage point lower than last October’s forecast).
“This modest expansion
reflects stagnant oil production, as regulatory uncertainty limits investment
in the oil sector, while non-oil economic activity is held back by high
inflation, policy distortions, and infrastructure constraints.
“Growth is projected to
rise slightly to 2.2 per cent in 2020 and reach 2.4 per cent in 2021, as
improving financing conditions help boost investment.
“In Nigeria, although the
manufacturing and non-manufacturing PMIs remained above the neutral 50-point
mark—which denotes expansion—they fell further in February, due to weaker rises
in output and new sales orders across firms.
“Household consumption in
Nigeria has remained subdued, while multiple exchange rates, foreign exchange
restrictions, low private sector credit growth, and infrastructure constraints
have continued to weigh on private investment.”
The Chief Economist for
Africa at the bank, Albert Zeufack, said the region could boost annual growth
by about nearly two percentage points if it harnessed Information Technology
“This is a
game-changer for Africa,” he added.
spokesperson for the Central Bank of Nigeria, Mr Isaac Okorafor, said the CBN
under the current governor, Mr Godwin Emefiele, had shown so much ingenuity in
managing the economy.
“You know the crisis that
we have faced in the past three years. The bank has shown ingenuity in managing
the situation and ensuring that everything is stable.”