World Bank urges Nigeria to deepen reforms to mitigate COVID-19 impact

Nigeria is facing a concerning spike in COVID-19 cases, with 675 new cases and six deaths reported by the Nigeria Center for Disease Control on Thursday. As the country grapples with this resurgence, the World Bank has advised the Nigerian government to bolster its reform efforts in order to mitigate the impact of the pandemic on the economy. Victor Aluyi, Head of Portfolio Management at Commercio Partners, discussed the situation with CNBC Africa, emphasizing the need for continued precautions and enhanced reforms to navigate the challenges posed by the ongoing health crisis. Aluyi highlighted that the contagious nature of the virus is evident not only in Nigeria but also in other parts of the world, stressing the importance of proactive measures to curb the spread. The World Bank's recommendations have been consistent throughout the year, focusing on collaborative initiatives between the Central Bank of Nigeria and the Ministry of Finance to shield the economy from the adverse effects of the pandemic. Aluyi underscored the significance of consolidating these efforts to ensure a robust recovery trajectory while minimizing negative repercussions. The World Bank's call for deeper reforms aligns with the monetary challenges facing Nigeria. The government's pursuit of additional financing, including a 1.5 billion loan from the World Bank, necessitates comprehensive reforms to stabilize the Naira and address fiscal constraints. Aluyi noted that monetary authorities have taken the lead in spearheading reforms due to fiscal strains, which could exacerbate deficits and impede economic growth. The currency situation remains a critical concern, with the World Bank emphasizing the need for strengthened reforms to qualify for financial support. Aluyi acknowledged the complexities involved in navigating external imbalances and underscored the potential for improved currency stability contingent on sustained recovery in crude oil prices. Despite the challenging economic outlook, Aluyi expressed optimism regarding the prospects of recovery, projecting potential advancements by the latter half of the next year if reform initiatives are consistently reinforced. The World Bank's projections on income and inflation trends paint a sobering picture of Nigeria's economic landscape. The anticipated loss in per capita income and regressive GDP per capita levels underscore the severity of the recessionary pressures confronting the nation. Aluyi characterized the situation as a 'double-dip recession,' accentuating the far-reaching implications on the populace. However, he emphasized that the ongoing reform agenda could serve as a mitigating factor in alleviating these adverse effects, potentially paving the way for economic rejuvenation by mid-2022. Furthermore, the swelling population numbers in Nigeria, projected to surpass 200 million, pose additional challenges for policymakers. The World Bank's forecast of a substantial increase in the number of individuals below the poverty line amplifies the urgency of addressing social and economic disparities. Aluyi emphasized the need for sustained policy interventions to avert deepening social crises and reiterated the critical role of both monetary and fiscal authorities in steering the country towards stability. Despite fiscal constraints constraining policy flexibility, Aluyi expressed confidence in the positive outcomes of current reform initiatives, projecting a gradual recovery towards the latter part of the upcoming year.