The World Bank has warned that Nigeria’s economic growth is too slow to address the challenge of extreme poverty in the country.

Meanwhile, the bank has retained its economic growth (Gross Domestic Product, GDP) forecast of 2.8% for Nigeria in 2023, citing challenges of high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.

The World Bank gave the warning in the Global Development Prospect report for June 2023.

Among other things, the bank downgraded its economic growth forecast for Sub Saharan Africa to 3.2% for 2023, from 3.4% projected in its April World Economic Outlook. It also projected that global economic growth will slow to 2.1% in 2023, with prospects clouded by financial risks.

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The World Bank stated: “After growing 3.1 percent last year, the global economy is set to slow substantially in 2023 to 2.1 percent, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4 percent.

“Growth in Sub-Saharan Africa (SSA) continued to decelerate earlier this year owing to various country-specific challenges and heightened external economic headwinds.

“Growth in the three largest SSA economies – Nigeria, South Africa and Angola – slowed to 2.8 percent in 2022 and continued to weaken in the first half of this year. In Angola and Nigeria – SSA’s largest oil producers – the growth momentum has stalled amid lower energy prices and stagnant oil production.

“The post-pandemic rebound in Nigeria’s non-oil sector cooled earlier this year because of persistently high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.

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“Growth in SSA is expected to decline further to 3.2 percent in 2023 before picking up to 3.9 percent in 2024. The recovery in South Africa is projected to slow to 0.3 percent this year as widespread power outages weigh heavily on activity and contribute to the persistence of inflation.

“Growth in Nigeria is expected to remain barely above the population growth – far slower than needed to make significant inroads into mitigating extreme poverty.

“Outlook downgrades, however, extend beyond the major regional economies with elevated cost of living restraining private consumption and tighter policies holding back a pickup in investment in many countries.

“More broadly, worsened domestic vulnerabilities together with tight global financial conditions and weak global growth are expected to keep recoveries subdued.”

The House of Representatives has demanded forensic audit of all rehabilitation projects at Port Harcourt, Warri and Kaduna refineries.

The demand followed the consideration of the recommendations of a report by its ad-hoc committee on the state of refineries and the need to ascertain the actual daily consumption of Premium Motor Spirit, PMS, otherwise known as petrol, in Nigeria.

It will be recalled that the consideration of the report was deferred when presented last week because the chairman of the committee of the whole and deputy speaker, Ahmed Idris-Wase, last week told the committee chaired by Ganiyu Johnson to give clear cut recommendations based on its specific mandate.

Re-presenting the report at plenary, yesterday, Johnson said the findings of the committee revealed that the rehabilitation of the three refineries had cost the nation N11.35 trillion in 13 years, beginning from 2010.

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He said the refineries became unproductive from 2010, making a range of losses, with Port Harcourt put at 7.6 per cent losses to the tune of N132.52 billion from 2012; Warri at 6 per cent losses amounting to N111.37 billion from 2014 and Kaduna at 10 per cent losses to the tune of N122.62 billion from 2014.

The report stated that from 2010 to 2019, the refineries performed sub-optimally, with an annual combined capacity of less than 30 per cent.

According to the report, the NNPC obtained an executive approval and shutdown the refineries for comprehensive rehabilitation to restore the plants to a maximum of 90 per cent utilisation.

The report said total losses from the non-functional refineries since 2010 were placed at N366.52 billion, while the total cost of operations and running them from 2010–2020 stood at N4.80 trillion.

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It further indicated that subsidy payments totalling N5.9 trillion was made from 2010 to 2020.

The committee, however, recommended that the NNPCL fast tracked the rehabilitation programme of the refineries empowered by the legislative intent for a deregulated business environment and restore the refineries to a minimum 90 per cent nameplate capacity utilisation.

Vanguard reports that the committee also recommended that NNPCL and the contractor (Tecnimont SPA of Italy) be urged to ensure that phase one of the rehabilitation works in Refinery Area 5 of the Old Port Harcourt Refinery, OPHR, with the processing capacity of 60,000 barrels per day earlier expected to be restored to 54,000 barrels per day of processing capacity representing 90 per cent capacity utilization by March, 2023, should unfailingly meet the new target date of September, 2023.

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It asked that a bank (names withheld) refund to the nation the total sum of US$438,012.44 paid them as retainer fees from 2017-2018 as the financing advisory contract for the rehabilitation of the three refineries was not successful and was suspended due to the financing consortia not reaching agreeable terms for the transaction with the NNPC.

Other recommendations include “that the NNPCL and the Contractor (Tecnimont SPA of Italy) be further urged to ensure that phase two of the rehabilitation works in Refinery Areas 1&2 of the New Port Harcourt Refinery (NPHR), with an installed capacity of 150,000 barrels per day be restored to the estimated processing capacity of 135,000 barrels per day.”
VANGUARD

The Federal Government recorded N930.8bn fiscal deficit in January and February 2023 according to the Central Bank of Nigeria.

The CBN stated in its monthly economic report for February 2023 that, “The estimated overall fiscal deficit of the FGN expanded in February, due to a drop in the retained revenue.

“At N513.05bn, the provisional fiscal deficit of the FGN rose by 22.8 per cent relative to the preceding month. However, it was 16.2 per cent below the budget benchmark.”

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According to the report, the fiscal deficit was N417.75bn in January.

The report said accretion into the federation account decreased by 32.3 per cent in February relative to the preceding month, on account of the 60.2 per cent fall in oil revenue.

It added that the development led to the expansion of the overall fiscal deficit (provisional) by 22.8 per cent due to a 16.4 per cent surge in provisional FGN capital expenditure, and a 7.7 per cent fall in FGN retained revenue.

Total public debt at N46.25tn (23.2 per cent of GDP) at end-December 2022, remained within the 40.0 per cent national threshold.

It stated that, “At N1.04tn, federation receipts were below the level in January by 32.3 per cent. Similarly, it was below the budget2 of N1.58tn by 34.3 per cent.

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“The decline, relative to January was attributed to a fall in collections from petroleum profit tax and royalties. Oil revenue, at N308.07bn, was 60.2 per cent below receipts in the preceding month.

“The outcome was driven, largely, by the 60.5 per cent decrease in collections from petroleum profit tax and royalties.”

At N730.21bn, non-oil revenue, was below the level in the preceding month and the monthly target by 3.7 per cent and 7.4 per cent, respectively.

The decrease was largely attributed to the 10.5 per cent decline in collections from corporate tax on account of the seasonality associated with its payments.