In the last few days to the end of 2020, we were welcomed with what seemed like a cheering news from the International Monetary Fund (IMF) saying ”Nigeria is the biggest economy in Africa in terms of the size of her Gross Domestic Product (GDP)”. Moreso, the IMF added that globally “Nigeria is ranked 26th largest economy with Gross Domestic Production (GDP) of $442,976 billion in year 2020”.
This news won’t have come cheering to handlers of the Nigerian economy at this point going by the current recession as well as covid-19 pandemic impacts. The Nigerian economy contracted in the fourth quarters with poor revenue generation, high inflation, and abysmal appreciation of the naira. This in particular in all expectation point a doom economy outflows for Nigeria, but the latest IMF released report is highly gladdening information for the Buhari administration in the face of its critics.
According to the multilateral institution, fondly known as IMF in her well dissected document “World Economy Outlook (WEO)”. This Bretton Wood institution stated that “Nigeria maintained its leads as the biggest economy in Africa in terms of the size of the country GDP”.In addition, the IMF report ranked Nigeria 26th largest economy with an average GDP of $442,976 billion globally.
However, no matter how cheering this news maybe, there are concerns which Nigerian fiscal authority must take not of and addressed it consequences based on the report of year 2020 IMF Article IV Constitution on Nigeria.
For instance the IMF World Economy Outlook (WEO) on Nigeria stated that “the country economy is buffeted from side to side by a cocktail of issues”. In other words, isseues identifies by IMF includes “uncertainties over the covid19 pandemic, low oil prices, capital outflows and balance of payment challenges”. A look at the above suggest that in real time, the Nigerian economy has been exposed to the remnants shock from the global economy tension that is not just peculiar to us alone ,but we are not guarded appropriately.
Subsequently, the IMF report also made another obvious revealing verdict that “supply shortages have pushed up headline inflation to 3 months high”. Thus, in clear term, we are all witness to the upsurge in commodities price hike, especially food as well as other item that includes transportation, services and charges. This for instance erodes the purchasing power of Nigerians.
In another summation, the IMF disclosed in a crystal clear analysis the Buhari economy policies impact, stating that “under current policies the outlook is challenging. It allege that Real GDP projection contract 3% per cent in 2020”.To many analyst and economy observers in Nigeria, the under current recession turbulent is much expected as the government of the day failed to initiate people centre economy policies.
We must however not loose side with all this projection that necessitates cheer and gladness in the camp of Nigerian government. However, the IMF was generous enough to acknowledge the efforts of the Godwin Emiefele lead Central Bank of Nigeria tackling of the “reins of inflation”. According to IMF projection “food price is expected to remain double digit above the CBN target”.Therefore, the CBN must maintained a focus adherence to see to defeat of double digit that is softly reducing the value of the naira purchasing power of the people.
Controversially, the IMF further stated that “following a significant decline in revenue collection from all levels that were already among lowest in the world”. We are all aware of slump in crude oil, the sole revenue generation for the Nigeria state, this support the IMF findings in this regards. Succinctly, the IMF report maintained that “fiscal deficits are projected to remain elevated in the medium term”. Thus, we are all alive to see level of borrowing, bond and treasury bills sells by CBN and Debt Management Office (DMO) with both domestic and external debt standing at N32.225 trillion.
As a way of encouraging the Nigeria state, IMF said “recovery is projected to start in 2021,with subdue growth of 11/2 per cent and output recovery only in 2020.The report call for “broad market reform” in order to address derold of the present reality.
A reality of widespread poverty, inefficient health and educational services, low levels of human capital development, unemployment and underemployment, poor drinking water accessibility, epileptic energy and power output, environmenmental degradation, poor housing and transport system, deplorable road network are all pointers of negative characteristics of the Nigeria state. Insecurity is another bigger challenger, and one wonder how did Nigeria emerged biggest GDP in Africa, and occupying 26th largest in the world as ranked by IMF.When all aforementioned challenges are not suitable for economic production business activities in real sense of its. The way forward is our linking effectively the agricultural to industrial sectors, making our research institution innovations suitable for manufacturing and factory setting. With this our target to be among the 20th largest economy is certain. Meanwhile, we must be careful with the “broad market reform” suggestion.
Adefolarin .Olamilekan is a Political Economist & Development Researcher. He can be reached at Adefolarin77@Gmail.Com or 08073814436, 08107407870
