World Bank warns Nigeria against relying on oil price rise

THE World Bank has warned Nigeria against the danger of putting trust in the prices of crude oil going up again and making its economic growth projections based on same.

The President of the Bank, Jim Yong Kim, gave the warning on Thursday at the opening press briefing for the annual meetings of the Bank and the International Monetary Fund (IMF) in Washington DC, United States.

Kim tasked Nigeria to shift focus from oil as a source of economic growth, though admitting that “things are just now getting better” after the prices of crude oil plummeted in the wake of a five-quarter recession.

The price of Brent crude, which once peaked at about $140 a barrel about three years ago, has been hovering around $40 in the last three years.

He said after acceding to President Muhammadu Buhari’s request that specific attention be shifted to the northern region during his first meeting him, a task he said had been very difficult, attention must not shift to sectors that would future economic growth.

He declared that investment in human capital development, particularly looking at investment in health and education, which he said remained the major drivers of future economic growth, should be the focus of the country now.

“In my very first meeting with President [Muhammadu Buhari], he said specifically that he would like us to shift our focus to the northern region of Nigeria and we’ve done that.  Now, it has been very difficult.  The work there has been very difficult.

“I think Nigeria, of course, has suffered from the dropping oil prices.  I think things are just now getting better.  But the conversation we need to have with Nigeria, I think, is in many ways, related to the theme that I brought to the table just this past week which is, investment in human capital.

“The percentage of GDP that Nigeria spends on healthcare is less than one percent.  Despite that, there is so much turbulence in the northern part of the country, and there is the hit that was taken from the drop in the oil prices.

“Nigeria has to think ahead and investing in its people, investing in the things that will allow Nigeria to be a thriving, rapidly growing economy in the future, is what the country has to focus on right now.  It can’t rely just on oil prices going back up.  It has to think, what are going to be the sources of growth in the future for Nigeria in what will surely be a more digitalised economy.

“And this is true for most of Africa.  If you look at the numbers in terms of how successfully African countries have invested into their human beings versus other regions, there is a real issue.  And so, over this next year, not only in Nigeria but in all of Africa.

“We’re going to focus on accelerating investments in human capital we call it but investments in health, education, social protection, so that Africa can prepare itself for the next phase in economic development.

“One of the real questions that we all have is our traditional notions of economic growth which are agriculture, to light industry to heavy industry.

“How many countries in Africa will actually experience that, and do we need to really think about another kind of path to economic growth that’s very focused on a small to medium enterprise as an entrepreneurship as they have in other parts of the world.  I think we still don’t know that.

“But the one thing we know is that better health outcomes, better education outcomes will be critical no matter what the global economy looks like. So, yes focus on the north, hope that as commodity prices stabilise, oil prices come back up and the economy will grow a bit more but very, very much focus on what the drivers of growth in the future will be,” he said.

The Bank noted that although global economy had made considerable recovery after years of “disappointing growth”, investment, it said, remained weak.

It also raised concerns that “the rise of protectionism, policy uncertainty or possible financial market turbulence could derail the fragile recovery.”

“Overall, we are 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.

“Countries need to build resilience against the overlapping challenges we face today, including the effects of climate change, natural disasters, conflict, forced displacement, famine and disease

“All countries need to invest more in their people…this is so critical and I introduced an accelerated effort called Human Capital Project that we are undertaking at the World Bank Group to help countries invest more- and more effectively in their people,” Kim said.