Reduce Your Dependence in Crude Oil and Invest in Nigerians, World Bank Tells Nigeria
The World Bank Group yesterday advised Nigeria to reduce its dependence on crude oil revenues and develop capacity of its citizens.
World Bank President Jim Yong Kim, who spoke at the opening of the 2017 World Bank Group-International Monetary Fund (IMF) Annual Meetings in Washington D.C, said Nigeria needed to invest in its people and develop their capabilities to create wealth.
He said to help Nigeria address its challenges, the World Bank was working to maximize finance for development. The global lender is pursuing private sector solutions to help achieve development goals and reserve scarce public finance for where it is most needed, particularly investments in human capital.
The global lender will continue to partner with the Federal Government to support people displaced by Boko Haram in the Northeast.
Kim said the bank was undertaking a Human Capital Project to help Nigeria invest more – and more effectively – in its people. The project will show how long-term investments in people can help grow economies – and create the political space for leaders to make critical investments.
The World Bank boss said the lender had earlier discussed with the government the need to diversify the economy away from oil, and ensure that the survival of the economy does not depend on the rise and fall of crude oil prices.
“We think this has the potential to be a game changer to meet rising aspirations all of the people. Nigeria has to think ahead. The conversation we need to have with Nigeria in many ways has to do with investments in human capital. The percentage to Gross Domestic Product (GDP) that Nigeria spends on education is less than one per cent and this has to change for the country to do better,” he said.
Continuing, he said all countries need to invest more in their human capital. “We are introducing an accelerated effort at the World Bank Group that would help countries invest more in their people. Long-term investments in people would help economies grow. Over the next years, we would be working with a wide range of experts and economists in education, to help develop human capital,” Kim said, adding:
“If you look at the numbers in terms of how successful African countries have invested in their human beings, versus other regions, you will know that it is a real issue. From next year, not just in Nigeria, but in the rest of Africa, we are going to focus on accelerating investments in human capital as well as investments in education, for the next phase in economic growth.”
Kim also said the World Bank would be focusing on supporting Small and Medium Enterprises (SMEs) initiatives.
“As commodity prices come up, we believe the economy would grow more, but Nigeria must focus on what the drivers of growth for the future would be. In Africa, we have to be much more creative. Again, investing in people is important. That is a major direction we have to go. It is not just about oil prices going up or down,” he added.
He said finance ministers and central bankers from over 189 member-countries were gathering in Washington to discuss “the challenges and opportunities we face as a global community”. “These discussions will help countries chart the path forward for how to improve the lives of their people – and in doing so, they should help set the agenda for the world’s economy in the coming year.”
The World Bank chief said trade was picking up, but investment remained weak. “We’re concerned that risks, such as a rise in protectionism, policy uncertainty, or possible financial market turbulence, could derail this fragile recovery in global economies. Overall, we’re seeing growth rise in most developing and advanced economies – which is why countries need to make critical investments now. This is the time to implement the reforms that are going to insulate against potential downturns in the future,” Kim said.
He said countries needed to build resilience against the overlapping challenges we face today, including the effects of climate change, natural disasters, conflict, forced displacement, famine, and disease.
IMF Managing Director Christine Lagarde said financial technology remained an opportunity needed to move global economies to the next level. She also said that tightening of the financial markets could hurt emerging markets, if it sparks a capital outflow. She said uptick in inequality remained a concern, and could endanger global growth.
Lagarde also disclosed that the global economy was experiencing harmony, which must be turned into a season of performance and productive output.
The IMF boss disclosed that world economic recovery remained stronger and more broadly based than before, which is why the Fund raised its growth forecasts to 3.6 per cent in 2017 and 3.7 per cent next year.
She said policy makers should use this moment to turn the fortunes of their economies around for good, including the use of structural reforms to achieve desired results.
“The global recovery continues. Although it is not yet complete, the more favorable conjuncture offers an opportunity to tackle key policy challenges to stave off medium-term downside risks, rebuild buffers, and raise potential output. Countries should undertake well-sequenced reforms to increase productivity, improve governance, and reduce policy uncertainty and future risks,” she said.
According to her, reforms should also aim to harness the benefits of technology and economic integration and ensure that they are widely shared.
Tackling challenges to the global economy continues to require cooperation and joint action across the membership, Lagarde said.
“The Fund will assist members through tailored policy advice and capacity development, and stands ready to provide financial assistance to support adjustment programmes,” she stated.
Besides, the Fund will conduct further analysis of the productivity slowdown, including measurement challenges in a digital economy, and identify structural reform priorities to boost productivity, investment, and growth.
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