Again, W’Bank Warns Nigeria Of Likely Debt Service Hiccups

• Lowers Country’s 2018 Growth By 0.4%

The World Bank Group, on Wednesday lowered its 2018 growth forecast for Nigeria by 0.4%, from the 2.1% rise projected in its January report, on the back, noting that the expected support for its recovery from the oil sector may be less than government’s projections.
Contrary to insistence by Nigeria’s Finance Minister, Mrs. Kemi Adeosun that the nation is not included in the World Bank’s earlier warnings about burgeoning debts on the continent, the World Bank’s June edition of the Global Economic Prospects, again noted the high “debt sustainability” risks in Sub-Saharan Africa.
Rising interest payments on government debt as a share of tax revenue last year in Ghana, for example, it said, was estimated at more than 40%, and over 25% in Nigeria and Zambia. Such, noted the World Bank report, could lead to debt service difficulties in such countries.
“Indeed, some of the region’s largest economies, such as Ethiopia and Nigeria, are particularly vulnerable to an uptick in social unrest. Risks to debt sustainability are also
high in the region. Heavy reliance on commercially-priced debt could lead to debt service difficulties in some countries, including Ghana, Nigeria, and Zambia,” the report stressed further.
While the report blamed the possible slow-down in Nigeria’s economy this year on structural constraints now slowing efforts at attracting long-term investments, prospects in Angola and South Africa were however revised upward by 0.1% and 0.3% respectively.
This is at a time when Sub-Saharan Africa, outside of the three largest economies is expected to slide 0.1%. Angola’s for example, was reviewed to reflect hope that “a more efficient allocation of foreign exchange, rising natural gas production, and improved business sentiment would help support the rebound in economic activity.”
In the case of South Africa, the report said “the pickup in business confidence is expected to help sustain the ongoing recovery in investment.”
However, the World Bank expects “policy reforms in Nigeria to improve the business environment could advance faster than expected, and significantly boost non-oil sector growth.”
This prospect, the World Bank continued, is however dimmed by “the risk of worsening political instability, and a concurrent weakening of needed reforms, (which) remains high.
“Indeed, some of the region’s largest economies, such as Ethiopia and Nigeria, are particularly vulnerable to an uptick in social unrest,” the report added.