World Bank says Nigeria is transiting from the extremely poor income category to the low-middle income country.
The World Bank said on Monday that grants and loans to Nigeria under its new country partnership strategy, CPS, would attract fresh terms following the reclassification of the country based on its improving credit rating in recent times.
The Nigeria Country Director of the Bank, Marie Francoise Marie-Nelly, said at the post-World Bank/IMF Spring meetings media briefing in Abuja, that with Nigeria’s gross national income per capita of about $1,200 exceeding the International Development Association, IDA, assessment threshold $1,170 for the past two years, it has to transit from the extremely poor category to the low-middle income country, considering its credit worthiness and very low debt ratio.
“Of the Bank’s new fiscal year, beginning July 2014, Nigeria is to become ‘blend country’. Till now, Nigeria was under the IDA only window, which is the concessional window, where financing, which come as grants, attract no interest, with 40 years repayment moratorium, 10 years grace period, and service charge of only 0.75 per cent,” she said.
According to the Country Director, the terms apply only to countries with poor national income per capita assessment of $1,170, pointing out that with Nigeria’s gross national income per capita of about $1,200, which has exceeded the IDA threshold for two consecutive years, the country is considered credit worthy, because its debt ratio is very low.
With the new status, she said Nigeria would transit into the club of low-middle income countries, adding that though it would continue to benefit from IDA resources, the terms would change slightly, and would start accessing the lending windows of the middle income countries under the International Bank for Reconstruction and Development, IBRD.
Under the IBRD window, the lending terms would change from 40 years repayment period to 25, while the grace period would be reduced from 10 years to five and interest rate would be reviewed upwards to between 1.3 and 1.5 per cent.
“Nigeria will be in the transition period over 6 to 7 year period. Gradually, the IDA allocation will be reducing, while the IBRD allocation will step in, till the country will be only in the IBRD window. We expect Nigeria to be in the blend status, called the IDA-17, the new circle that would start in July 2014,” she said.
On the outcome of the Spring Meetings, she said there was a consensus that world poverty was declining rapidly over the past three decades from about 1.9billion people in 1981 to about 1.2billion in 2010, though many still face complex challenges concerning rising inequality and social inclusion.
Ms. Marie Nelly said in Africa, after an increase, extreme poverty decreased from about 58 per cent in 1996 to 48.5 per cent in 2010, adding that in Nigeria, poverty is 62.6 per cent as against 64.2 per cent in 2004, with poverty in adult equivalent terms declining from 48.3 per cent to 46.1 per cent.
Though extreme poverty ratio is slightly higher at about 63.4 per cent, based on $1.25 per day, she said meeting the target would require significant sustained growth and reduction of inequality, adding that the third CPS would move away from the thrust of the previous strategy, which focused on the promotion of sustainable and inclusive non-oil growth, human development and good governance.
She said the implementation of the new CPS would focus specifically on four broad areas, namely sustainable development, human development, governance and economic reforms and private sector development.
“Governance has become an integral part of all what we are doing towards building institutional capacity, transparency and accountability. We are moving toward a result-oriented approach and away from an in-put approach, which did not trigger significant improvement in delivery of social services. We have developed a common donor platform (country assistance framework) to avoid duplication of tasks,” she said.
Ms. Marie Nelly said that while the Bank recorded some modest achievements in key sectors in Nigeria, like education, transportation, water, power, agriculture, good governance and private sector through support for standardization of some manufacturing and construction operational processes across the country, one of the key challenges was its inability to meet deadline for some projects completion.
She specifically celebrated the interventions in conjunction with the Lagos State government, which enabled the World Bank impact secondary education and the Bus Rapid Transit System’s in the state, with attendant implications for better students’ performance and transport system services delivery.