- IMF backs CBN’s tight monetary policy
Kunle Aderinokun and Obinna Chima in Bali, Indonesia
The World Bank Group has decried the poor level of investment in health, education and technology by the Nigerian government.
The president of the multilateral institution, Mr. Jim Yong Kim, said this Thursday, while responding to questions during a media briefing at the ongoing IMF-World Bank Annual Meetings in Bali, Indonesia.
This is just as Nigeria was ranked 152 out of 157 countries surveyed in a Human Capital Index (HCI) that was unveiled by the bank yesterday. The HCI measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education that prevail in the country where he or she lives. The index measures each country’s distance to the frontier of complete education and full health for a child born today.
In a related development, the Managing Director of the IMF, Ms. Christine Lagarde, yesterday also advised the Central Bank of Nigeria (CBN) to sustain its current tight monetary policy regime.
Continuing, Kim, in his response to questions during the media briefing, said it was unfortunate that Nigeria, one of the most important countries in the world, was ranked 152 out of 157 on the HCI.
He explained, “Nigeria unfortunately ranks 152 out of 157 countries. We provide quite a bit of support to Nigeria in terms of the health budget. But we feel that the overall spending on health is just far too low at 0.76 per cent of Gross Domestic Product (GDP). Also, the educational outcomes in Nigeria are very poor.
“Nigeria is one of the most important countries not only in Africa, but in the world. And so, we feel that it will be extremely important for Nigeria to really go on a different level all together in terms of their commitment to investing in human capital.
“Many African countries are in the red zone, if you see the HCI. You know, I think the World Bank has to take some responsibility for having emphasised hard infrastructure – roads, rails, energy- for a long time.
“We are now saying that’s really the wrong approach and that you have to start investing in your people right now. And not least of which, of all reasons why you need to do that, the rapid change in technology, the fact that many low-skill jobs will be eliminated.
“Nobody is quite sure how long that will take. But a child born today, in 20 years, almost certainly, many of the low-skill jobs today will be gone. And the requirement for this child to be able to learn throughout his or her entire life is simply going to get higher. The requirement and the needs are going to get higher.”
The World Bank boss stressed the need for Nigeria and other African countries to raise their level of investment in health and education and reduce their over-reliance on grants to grow the sectors.
“The message here is that head of states and ministers have to take responsibility. There’s so much waiting for grants to come. What has happened is that in many African countries, if they don’t receive grant-based financing, they simply don’t spend on health and education.
“So, we hope that this is a loud wake-up call for leaders throughout the African continent and especially in Nigeria,” he added.
Kim described human capital as a key driver of sustainable, inclusive economic growth, saying, investing in health and education had not gotten the attention it deserved.
Kim stated, “This index creates a direct line between improving outcomes in health and education, productivity, and economic growth. I hope that it drives countries to take urgent action and invest more – and more effectively – in their people.”
He added, “The bar is rising for everyone. Building human capital is critical for all countries, at all income levels, to compete in the economy of the future.”
On her part, Lagarde who expressed delight about the appointment of another female, Ms. Zainab Ahmed, as Nigeria’s Finance Minister, and recommended that the CBN should sustain its tight monetary policy.
“I would certainly recommend a tight monetary policy, higher non‑oil revenue mobilisation for Nigeria. I remind you—you know that probably inside out—that domestic revenue mobilisation is five per cent of GDP in Nigeria, and that is just way too low, relative to where Nigeria should be in order to address the issues of health, education, proper social spending on the people, and particularly the young people of Nigeria,” she said while responding to a THISDAY question on her advice for the new finance minister.
“That would certainly be a very strong recommendation that I would give her. And structural reforms, that would probably include really making sure that the refineries and the oil equipment that is available in Nigeria works well and works for the benefit of Nigeria. That would be my recommendation,” she added.
Buhari Tells Ministers Not ‘to Be Distracted by Politics’
Meanwhile, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Thursday disclosed that President Muhammadu Buhari had directed ministers and all members of the economic management team not to be distracted by activities surrounding the 2019 elections.
Udoma disclosed this while making a presentation at the ongoing IMF/World Bank meetings in Bali, Indonesia.
“Notwithstanding the upcoming election in February next year, we are continuing to focus on the delivery of our programmes and policies. We have been directed by President Muhammadu Buhari not to be distracted by the noise of the electioneering,” he explained.
The minister expressed optimism about the growth of the Nigerian economy.
Udoma also appealed to his audience who which was largely made up of foreigners attending the IMF/World Bank meetings to take advantage of the “friendly business environment in Nigeria.”
“If there is anybody here that is willing to invest in Nigeria, we can begin to discuss. We have simplified our Visa application process and Nigeria is a place where we have a lot of investment opportunities,” Udoma added.
“With respect to the problem of debt-vulnerabilities, I agree with the IMF that it is an issue that requires constant monitoring. Even though we, in Nigeria, have one of the lowest debt levels among African peers, we realise that we need to improve our revenues to bring down our debt service to revenue ratios to more comfortable levels.
“Accordingly, we are intensifying efforts on domestic revenue mobilisation and maintaining fiscal discipline. We are broadening our tax base through policy reforms such as the tax amnesty programme ‘VAIDS’.
“This, amongst other measures, has resulted in the number of taxpayers rising from 13 million in 2015 to over 19 million. We are also deploying technology in tax and customs’ collections to automate processes and enhance efficiencies.
“We are also on track to shifting our domestic debt portfolio to longer term maturities. And our external debt is primarily concessional borrowing, representing 54 per cent of our external debt as at June 2018.”
Also speaking during an interview with journalists, the Director General of the Debt Management Office (DMO), Ms. Patience Oniha, said, “We can’t run from the fact that we need to generate more revenue.”
She added: “Generating more revenue does not mean we should focus only on increasing production in the Niger Delta or praying for oil prices to rise, we have to generate long-term revenue.
“How do you generate that? You have to enforce compliance, which is all about increasing the tax base and making sure that those who are paying are paying the correct amount and not just paying a small amount to escape.”