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World Bank supports Nigeria on human capital investment

Benmessaoud was quoted as saying that the Bank welcomed the government’s recent ‘Call for Action’ requesting all stakeholders to join its effort to address Nigeria’s alarming human capital outcomes.

A towel with a print of the Nigerian naira is displayed for sale at a street market in the central business district in Nigeria's commercial capital Lagos February 4, 2016.

A statement by Olufunke Olufon, the World Bank Senior Communications Officer for Nigeria, on Wednesday in Abuja, quoted Benmessaoud as saying this while commenting on Nigeria’s bi-annual economic update released by the Bank on Wednesday in Abuja.

The report is titled:

The report said that Nigeria, like many other countries, had underinvested in human capital and remained very low compared to other countries.

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It also said that the Federal Government, in recognition that bold actions were required to address years of underinvestment in human capital, had established a Human Capital Working Group.

This, it said, was to develop a unified vision for human capital development and drive implementation of interventions within the ‘Investing in our People’ pillar of the government’s Economic Recovery and Growth Plan (ERGP).

According to the statement, Nigeria’s emergence from recession remains sluggish and sectoral growth patterns are unstable.

It also said that Nigeria’s Gross Domestic Product (GDP) growth was expected to hover slightly below two per cent in 2018, largely driven by non-oil industry and services.

“In the second quarter of 2018, the oil sector contracted by 4.0 per cent, the usually-resilient agricultural growth slowed significantly to 1.2 per cent, impacted by the security challenges in the Northeast and Middle Belt regions.

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“The non-oil industry and services, which constitute over half of Nigeria’s economy, picked-up to 3.1 per cent and 2.1 per cent respectively, driven by growth in construction, transport, and Information and Communication Technology (ICT).”

The update also reports that the Nigerian economy remained  dependent on the small oil sector (under 10 per cent of GDP) for the bulk of its fiscal revenues and foreign exchange earnings.

It said that although oil revenues were increasing with recovering oil prices in 2018, distributions from oil revenues to the three tiers of government were constrained by the petrol subsidy and other prior deductions.

“In the first half of 2018, the current account surplus surpassed four per cent of GDP, driven largely by higher oil exports, while non-oil revenue collections have come in lower than envisaged.

“In spite of sustained efforts to improve the business environment, Foreign Direct Investment (FDI) inflows remain stagnated.”

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It also said that the fiscal deficit would likely widen in 2018 due to increased spending and sustained revenue shortfalls.

The update said the current account balance was expected to remain positive, benefitting from the rising value of oil exports and limited growth of non-oil imports.

“The capital account faces significant uncertainty as external portfolio investors may exercise further caution, especially during the pre-election period in spite of rising domestic yields.

“Given the clearly challenging economic backdrop, the update suggests certain key policy reforms will be important to support macroeconomic resilience for Nigeria.

“These include, among others, the acceleration of the economic diversification agenda and the reform of petrol subsidy regime to improve the fiscal space.

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“Others are improvements in the domestic revenue (particularly non-oil) to reduce volatilities in government revenues and increased investment in human capital for a truly sustainable growth.”

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