Nigeria: Macroeconomic Stability for Accelerated Growth, Job Creation, and Delivering Services for the Poor

July 18, 2016

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Nigeria’s economy has sustained economic growth for a decade, while making strides in diversifying its economy. Yet, it is still heavily dependent on oil revenues, and the recent decline in oil prices has had a major impact on the economy and public finances. Faced with the sharp decline in oil price, Nigeria needs to develop a more resilient economic model, fit to harness the country’s strong growth fundamentals. Nigeria has been working with the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) to foster non-oil growth and to lay the foundation for socially and regionally inclusive economic growth.

Challenge

Nigeria’s economy has been hit hard by a sharp decline in oil price, which has aggravated the long-standing weaknesses. Despite a strong economic track record, poverty is significant, and reducing it will require stronger non-oil growth and a greater focus on human development.

The country is facing a range of complex conflict and security challenges, although the incidence and causes of violence differ significantly among its 36 states. There is a great deal of variation across states in their capacity for governance, lack of a well-functioning civil service poses challenges to achieving sustainable development outcomes, and capacity and institutional challenges also affect policy design and dialogue. Further, the fragmentation of responsibilities across different commissions and agencies increases the difficulty of implementing reforms.

Access to and cost of finance are among the greatest constraints faced by firms. Financial markets lack the depth to drive economic diversification and job creation, or finance infrastructure investment. Nigeria is a diverse country with poorly integrated markets. Most Nigerian states still function largely in isolation and face enormous challenges in moving their economies beyond subsistence agriculture and local services. The country has a large infrastructure deficit, particularly in power and transport. Rural accessibility remains a serious problem, with major repercussions for agricultural and rural development, and 83% of Nigerian business owners consider lack of electricity the biggest obstacle to doing business.  

The three tiers of government (federal, state and local) in Nigeria have overlapping but autonomous fiscal and policy jurisdictions for public services that directly impinge on the Millennium Development Goals (MDGs). In such federal settings, progress towards the SDGs is hindered or accelerated depending on synergy and coordination of policies and service delivery across the government. Nigeria faces skills gaps in both formal and informal sectors which are hindering the country’s efforts to improve competitiveness and increase employment. Universities and technical and vocational training institutions tend to be supply- rather than demand-driven. This leads to many graduates being unable to find jobs, while skills remain in short supply in some industries.

The security situation in Nigeria continues to be influenced by terrorism, armed conflict and general crime.  The rise to prominence of Boko Haram in North East Nigeria has proven to be a considerable challenge to the country’s security forces. Along with the attacks carried out by Fulani Herdsmen in their movement south across Nigeria’s “middle belt” as the Sahel encroaches on their pastures, other major security challenges facing the country include kidnapping, crime and destruction of oil and gas facilities.

Approach

The World Bank Group (WBG) seeks to provide Nigeria with world class expertize and financing to help the country address key developmental issues by laying the foundation for socially and regionally inclusive growth. The WBG program seeks to leverage funds from private sector and other development partners. For example, a mix of instruments has been used to attract private investment in new generation capacity as well as in improving access to finance and supply of long term financing in the country.    

In support of the government, efforts to improve human development outcomes, the IDA program helped develop a results based approach. The Saving One Million Lives (SOML) initiative in the health sector is taking a results-based approach to: strengthen basic services, particularly in rural areas, with the goal of preventing deaths of mothers and children; improve clinical governance across all care levels; strengthen primary and secondary prevention care; and create an enabling environment for private sector involvement in health services and commodities. An important element of the WBG program has been to help identify, capture and share local solutions to pertinent development challenges, to help bring them to scale across states. For example, as part of the Lagos Eko Secondary School Project, the WBG also piloted evidence-based secondary education reforms which include secondary schools in poor and marginalized (migrant) parts of Lagos. The impressive impact at secondary school level has led to linkages with primary school performance and approach. Several other states have been studying Lagos’ approach, illustrating that WBG support to one state which proves successful, may have the potential to be transformative more broadly within Nigeria.


" So prior to CADP’s intervention, Quicklink Farms used to produce less than 70tonnes per annum but with encouragement from CADP and with what we see at seminars and workshops, our output has increased to about 150tonnes per annum. "

Mrs. Bolaji Dania

Quicklink Farms, a member of the Ikorodu Fish Farm Estate and the President of Commercial Agricultural Development Association (CADA)

Bank Contribution

As of end-May 2016, the IDA lending portfolio in Nigeria consists of 28 projects with total commitment of $6.65 billion across various sectors - 25 national IDA operations ($6.4bn) and three regional IDA operations ($250m).

Partners

IDA has maintained close partnership with other donors within the Country Assistance Framework (CAF). The CAF is the common strategic approach of Nigeria’s development partners in support of the Government’s development plans. CAF partners currently include AfDB, Canadian International Development Agency, European Union, French Development Agency, Department for International Development (UK), Embassy of Brazil and Embassy of China in Nigeria, High Commission of India in Nigeria, Korea International Cooperation Agency (KOICA), International Monetary Fund, Japan International Cooperation Agency, the Agencies of the United Nations (UN), particularly UNDP and UNICEF, USAID and the World Bank Group.  The CAF has recently been renamed to the Development Partner Group.

Results

Nearly 90% of Nigeria’s $7.7bn portfolio is IDA funded, supporting various sectors throughout the country:

  • Health: Through a $292m IDA contribution to fight polio, Nigeria was recently removed from the list of polio-endemic countries after interruption of the transmission of thevirus during the Bank’s FY16. The $150m IDA-funded States Health Investment Program (NSHIP), which uses the performance-based approach, aims to increase the delivery and use of high-impact maternal and child health interventions, and to improve the quality of care at selected health facilities. The project has delivered better health services in the three participating states, including a steady increase in out-patient consultations. Over a 12 month period, NSHIP health care centers recorded a steady increase in out-patient consultations, up 85.6% from a monthly total of 13,105 to 62,812 new visits. In addition, there was a 126% increase in the volume of normal deliveries over the same period, and a more than 500% increase in the volume of pregnant women who had three standard antenatal care visits, which is a key determinant of maternal health.
  • Agriculture: The $150m IDA-funded Commercial Agriculture Development Project (CADP) assisted participating states in:
    • implementing breakthrough technological initiatives for promoting commercial agriculture
    • reshaping of the animal feed industry
    • Securing a consistent supply of quality maize grain to aggregators in Kaduna and Kano states
    • increasing fish feeding, production and processing to smoke fish, including export markets in the US and UK
    • Adoption of improved varieties of rice for quality processing and packaging in Cross River, Lagos and Kano states
    • Linking beneficiaries to advisory and financial services
    As of June 2016, the project reached 36,332 small to medium commercial farmers through 33, 391 commodity interest groups (CIGs, i.e. Value chain cooperative societies, extended 69 improved production, processing and packaging technologies), fund 1,432 business plans under its matching grants mechanism and completed 307 km of link roads, to facilitated farmers access to technologies, services and markets. As a result beneficiaries have increases significantly their production, productivity and volumes of sales.
  • Rural Development: Under the IDA-funded Rural Access Mobility Project (RAMP) in Kaduna State, more than 470 km of roads were rehabilitated, and 146 river crossings completed, which led to:
    • An increase of about 60% in the rural population around project areas with access to an all-weather road within 2 km
    • The rehabilitation of river crossings enabled a 31% increase in the agricultural produce transported across those.
  • Urban Transport: Under the $330m IDA-funded Federal Roads Development Project, Nigeria now has a National Road Design Standard, which has helped to decrease the fatality rate of road accidents along project-supported corridors. Since the project, the car accident fatality rate (no. of accident deaths per 10,000 vehicles) decreased by 25% from 161 deaths to 120 deaths.
  • Water: The IDA-funded $320m Second National Urban Water Resource Project (NUWSRP2) succeeded in increasing water production in both Lagos and Cross River States, based on improvements made to three major water works in Lagos, Ishashi, Adiyan and Iju. In Lagos, six micro-water works were completed, with a total capacity of 10M cubic meters of water. Water is now being supplied for 18 hours in a day compared to six hours before the project. In Cross River State, water production and supply increased after the rehabilitation works in the old treatment plants and new schemes in four towns, and 264km of new pipes have been laid for distribution, increasing house connections from 1,000 to 53,130. Similarly in Lagos communities, the 175km of pipeline laid increased house connections to 185,560 from 165,000.
  • Public Finance Management: The progress achieved under the IDA supported public financial management projects, such as the State Governance and Capacity Building I Project, the Public Sector Governance Reform and Development Project, and the State Employment and Expenditure for Results Project. This includes:
    • harmonization of the budget, accountingand reportingclassification methodologies across an increasing number of states in the federation
    • linkage of budgets to sector strategies across a few states
    • improved timeliness in producing fiscal and financial reports across all states
    • progressive movement towards improved cash management systems, using tools like the Treasury Single Account to help the governments exercise better control over their liquidity and reduce the costs of borrowing through improvements in rationalizing their banking arrangements
    • strong progress in deployment of GIFMIS integrated financial management system across the federal and an increasing number of state governments; and enactment of enabling laws - Organic PFM, Public Procurement, Fiscal Responsibility, and Audit – across states to create a more conducive environment for improved financial management.
    Through the use of GIFMIS, the government has recovered more than N34bn from illegal accounts of various MDAs, saved N3 Trillion from implementation of the Treasury Single Account (TSA), N4.5bn from ghost workers (43,000) and about N50bn from the audit of security agencies’ accounts.
  • Youth Unemployment & Public Financial Management: The State Employment and Expenditure for Results Project (SEEFOR), with $200 million in IDA funding, aims to  enhance opportunities for employment and access to socio-economic services while improving the public expenditure management systems in the four participating states in Niger Delta. The project has provided employment for 7,765 youths across the four states through the implementation of 277 sub-project contracts on road maintenance/rehabilitation and waste collection and disposal. Forty-nine percent of these beneficiaries are young girls who are severely affected by inadequate employment and its attendant effects. These intervention resulted in the maintenance of 322.65 km of roads, rehabilitation of 11.83km of roads; and construction/rehabilitation of 75.21 km of drainages, while 276,325 households were provided with waste collection and disposal services. The project is currently rolling-out 334 sub-project contracts that will create jobs for an additional 9,077 youths across the four beneficiary States bringing the cumulative total number of youths employed in 2016 to 16,842.
  • Environment: The $500M-IDA funded Nigeria Erosion and Watershed Management Project (NEWMAP) was designed with the intention of protecting people and physical assets that had been affected and remained threatened by erosion and soil degradation with focus on reducing vulnerability to soil erosion in targeted sub-watersheds. Results achieved include reclaiming up to 110.49 hectares of degraded land by using innovative erosion control techniques that had worked successfully in other parts of the world.  In addition, 3,355 households are benefitting from livelihoods enhancement activities. While a total of 2,312,635 direct project beneficiaries have been reached of which, 1,133,820 (49.03%) are women and girls.

" We were given the combine harvester which is another important support of the project. Initially, we use to harvest our field with human laborer also. It is either they use their hands, knife or sickle and it will take 7 to 10 days for 20 able women to harvest a hectare but the combine harvester can harvest two hectares in one day and if the operator can go the extra miles and with a favorable weather, it can harvest three hectares in a day. "

Mr. Abdul-Ghaniyy Alabi-Ojolowo

Rice 4 Job Cooperative Farms (A Member of Rice 4 Job Commercial Cooperative CIG)

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Moving Forward

The WBG will continue to support Nigeria in addressing its development challenges and emerging priorities. This level of collaboration has recently been expanded to include support to addressing the impact of declining oil prices on public finance and inclusive growth, and to articulating and implementing support to the conflict affected states in north-eastern Nigeria.   

Beneficiaries: Commercial Agriculture Project:

Mrs. Bolaji Dania, Quicklink Farms, a member of the Ikorodu Fish Farm Estate and the President of Commercial Agricultural Development Association (CADA) has this to say “I have benefited greatly from CADP. We got collapsible tanks which reduce stress of mobility. If I decide to change location today, my business would still continue because all I have to do is find a way of moving my fish and my collapsible fish pond. The collapsible fish pond is an improved fish rearing pond system. Also, we got fish inputs which includes the improved Clarias Garriepinus (Dutch breed) and quality fish feed. We also got automatic fish grader (sorting machine)” …….
In areas of training and capacity building, we have participated in a lot of workshops and seminars which they organize regularly for us. We also go on agricultural fairs to showcase our produce and interact with other farmers which have really been beneficial to me and my farm.”
Dania added “The farm can boast of a standard hatchery, located on the farm with six (6) concrete nursery tanks by the side of it. The hatchery turns out up to 100,000 juveniles per month and the farm turns out about 12tonnes of table size fish per month. So prior to CADP’s intervention, Quicklink Farms used to produce less than 70tonnes per annum but with encouragement from CADP and with what we see at seminars and workshops, our output has increased to about 150tonnes per annum.

The story is the same for Mr. Abdul-Ghaniyy Alabi-Ojolowo of Rice 4 Job Cooperative Farms (A Member of Rice 4 Job Commercial Cooperative CIG). He is one of the 741 farmers under the rice value chain. The project had supported the farmers under the rice value chain with various inputs including tractor, milling machine, threshing machine, combine harvester, storage bin, rotary dryer, willower, de-stoner, agro chemicals, tricycle, improved seeds, and motorized sprayer among others. With Intervention of CADP, Land preparation for rice has changed from manual to mechanized system with provision of 4WD Tractors and implements. This has reduced the cost of land preparation from N30, 000 to N5, 000 per Hectare. “The cost of land partition has drastically reduced unlike before the CADP intervention. Likewise, the project also supported us with the procurement of bird scare (Gas gun) because before the project intervention there has been complaint of bird gathering and damage of the rice field but with the introduction/demonstration of gas gun technology by CADP to farmers, it has helped us to reduce the cost we spend on scaring of bird because ordinarily what we do is to hire human labor to be on the farm for about two months- morning till evening and we have to feed them morning, afternoon and possibly evening. “We were given the combine harvester which is another important support of the project. Initially, we use to harvest our field with human laborer also. It is either they use their hands, knife or sickle and it will take 7 to 10 days for 20 able women to harvest a hectare but the combine harvester can harvest two hectares in one day and if the operator can go the extra miles and with a favorable weather, it can harvest three hectares in a day”.        

Read more at: http://www.vanguardngr.com/2014/01/cadp-moving-farming-profitable-business/