The World Bank said the fiscal and monetary policy reforms that Nigeria implemented between 2003 and 2007 are exactly what is needed today to generate and sustain economic growth.
World Bank Group Vice President Indermit Gill said this in a speech at the 30th anniversary of the Nigeria Economic Summit hosted by the NESG.
He said during this period, Nigeria successfully managed its oil assets by adopting oil price fiscal rules, renewing the Paris debt and allowing market forces to determine the exchange rate.
He noted that these policies have led to significant inflows of foreign direct investment (FDI), leading to an increase in foreign exchange reserves and economic growth.
In his words: “Let me give you an example of a country that manages its oil wealth well. It has an oil price fiscal rule that protects its non-oil tradable goods sector from oil price fluctuations.” It also helped build a cushion of foreign exchange reserves.”
“The company managed its oil assets with an eye to the future, supporting not just the current generation but future generations as well. I’m sure everyone here thinks he’s talking about Norway. We are actually talking about Nigeria from 2003 to 2007.”
“In those four years, Nigeria implemented fiscal and exchange reforms, introduced unprecedented transparency in the recording and distribution of oil revenues, and renegotiated the Paris Club debt that had created an overhang that was suffocating the economy. The payoff was immense and immediate: Nigeria raised its sovereign rating to BB for the first time in history, started attracting FDI, and everyone started talking about the rise of Africa.
“So, I’m going to say something that’s probably unpopular, but the reforms in Nigeria from 2003 and 2007 were exactly what was needed.”
Additionally, Gill called on policymakers to continue ongoing reforms for at least 10 years. The economic effects would then be reflected not in Nigeria but in Africa as a whole.
He also pointed out that policymakers need to do three things to sustain the ongoing reforms in Nigeria. These include: Prioritize non-oil growth and expand one-time cash transfer programs to 10 million households to help vulnerable households cope with high inflation, ultimately making the economy more business-ready .
He commended CBN Governor Emi Cardoso for continuing monetary tightening efforts and foreign exchange market reforms, noting that today’s naira is the most competitive in the past 20 years.
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