- The IMF assessment highlights Nigeria’s stalled per-capita growth, high poverty levels, and significant food insecurity amidst structural reform efforts
- Nigeria faces challenges of scarce external financing, soaring global food prices, and a hydrocarbon-dependent economy, hindering growth and exacerbating poverty
The International Monetary Fund (IMF) has released a detailed assessment indicating that Nigeria is grappling with stalled per-capita growth, high poverty levels, and significant food insecurity amidst efforts by President Bola Tinubu’s administration to implement crucial structural reforms.
The IMF’s Executive Board Post Financing Assessment (PFA) endorsed the staff appraisal, confirming Nigeria’s adequate capacity to repay the fund’s $3.4bn loan approved in 2020. However, it also identified several areas requiring urgent attention.
The IMF statement highlighted Nigeria’s challenging external environment and domestic issues, with scarce external financing and soaring global food prices. Per-capita growth has stagnated, and poverty and food insecurity are rampant, exacerbating the cost-of-living crisis. Low reserves and limited fiscal space further constrain the authorities’ options.
Despite a swift exit from the COVID-19-induced recession, Nigeria’s economic growth has been sluggish, barely keeping up with population growth. Reliance on the hydrocarbon economy has hindered overall growth, while security concerns, particularly in the Northern region, have severely impacted agriculture and food security.
The IMF projected a slight improvement in growth to 2.9% for 2023 and 3% in 2024, contingent on better hydrocarbon sector performance and control over oil theft.
While acknowledging the new administration’s efforts in addressing structural issues, the IMF stressed the need for monetary tightening and fiscal adjustments to restore macroeconomic stability. The focus on price stability, fiscal responsibility, and revenue mobilization was commended.
The IMF advised the complete phase-out of fuel and electricity subsidies, advocating for targeted support to the most vulnerable populations through social transfers. Digitization and improved revenue collection were highlighted as crucial for enhancing public service delivery and ensuring fiscal sustainability.
As Nigeria grapples with these challenges, the IMF’s assessment and recommendations offer a roadmap for sustainable growth and stability. Comprehensive reforms, fiscal discipline, and targeted support for the vulnerable are essential to address Nigeria’s economic dilemmas.