Ndiame Diop: Nigeria’s Reforms Are Crucial To Create Stability, Avert Fiscal Crisis, Drive Economic Growth

The World Bank Country Director for Nigeria, Dr. Ndiame Diop,  has expressed strong support for Nigeria’s economic reforms, emphasising that the country’s recent policy shifts are essential to stabilising the economy, attracting investment, and creating fiscal space for critical public spending.

Diop, in an exclusive interview with Arise News at the 2024 edition International Monetary Fund (IMF) Conference which was held in Washington, expressed strong support for Nigeria’s economic reforms, noting that the country’s recent policy shifts are crucial to the economic growth.

Responding to a question about Nigeria’s engagement with investors, Diop remarked, “The engagement with investors is exactly the right thing to do, communicating the reasons, the significance of the reforms, and the expected impact while stressing that there is no going back on unsustainable policies. I’m very glad that Nigeria’s Central Bank Governor and Minister of Finance have made it a priority to address these matters here in Washington.”

Diop outlined three major benefits these reforms would bring to Nigeria’s economy. “Firstly, they have averted a deep fiscal crisis, illustrated by 2022 figures where debt service made up nearly 100% — this was simply unsustainable.

“Secondly, these reforms help stabilise the economy, reducing macroeconomic risk and enhancing the policy framework, which is crucial for private investment and growth.

“Finally, they provide fiscal space for the government to spend on education, health, social protection, and critical infrastructure — all of which are vital,” he said.

However, Diop acknowledged the high social costs that have accompanied the reforms saying, “These reforms have come with quite high social costs. Inflation is high, and many Nigerians are feeling the pinch. It’s urgent to support people who are really struggling in this high inflation.”

To this end, Diop emphasised the importance of expanding the cash transfer program, noting that the World Bank is actively involved in financing and supporting its technical implementation. “Nigeria has the tools to set a gold standard in cash transfers, which means using a social registry — we’ve helped Nigeria establish this for 90 million households, covering about 60 to 70 million Nigerians. The government plans to ensure that, after January, all cash transfer recipients are biometrically identified, and that transfers are done digitally.”

He added, “Unfortunately, this slows the process, as the government has to verify each potential beneficiary’s National Identification Number. So far, 4.5 million households have benefited, but we need to scale up quickly to reach the target of 15 million.”

On Nigeria’s energy challenges, Diop remarked that electricity supply remains a key constraint for economic growth and human capital development. “Without improving the reliability of electricity supply, the economy will struggle to reach its potential. On a micro level, firms trying to boost productivity or expand will see their margins eaten by high electricity costs. It’s absolutely critical to address this,” he stated.

Diop outlined a multi-pronged solution for the energy sector. “The first piece involves reforming the grid. Nigeria’s economy needs an industrial-grade grid to support growth. This includes making distribution companies (discos) economically viable, ensuring they can pay their bills, and investing in metering and infrastructure to increase electricity reliability.”

Beyond the grid, Diop highlighted the importance of off-grid solutions, especially for rural areas. “Transmission to remote areas can take time, so people in these regions should not have to wait. Nigeria has many developers investing in off-grid electricity, but to make these ventures viable, the World Bank is working on a project to support developers with grants to offset delivery costs.”

Addressing the transition from low-paying to high-paying jobs, Diop noted that job creation is a pressing need across African countries, including Nigeria. “For African countries, including Nigeria, this is such a critical area. Governments must accelerate job creation.

“The data show that businesses remain small and struggle to grow enough to create substantial job opportunities. The economy must transform and grow at a faster pace to absorb the workforce, especially youth.”

Looking ahead to Nigeria’s economic prospects for 2025, Diop expressed optimism, saying, “I am very optimistic and excited about what I’ve been seeing in Nigeria. I’ve been here for the last four months, and even before, I was closely watching the transition and reforms. Nigeria is tilting its economy in the right direction to provide macro stability and create a conducive environment for investment and growth.”

In his closing remarks, Diop reiterated his confidence in Nigeria’s path forward and encouraged ongoing efforts to build a sustainable and prosperous future for all Nigerians.

Boluwatife Enome

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