Adedipe faults World Bank, IMF on Nigeria’s economic outlook
•Output growth to exceed 3 per cent in 2023
•Premium on black market exchange rate cannot be removed
The Chief Consultant of B. Adedipe Associates Limited and economist, Dr. Biodun Adedipe, yesterday, faulted views of the World Bank, International Monetary Fund (IMF) and other pro-west institutions about the country, saying the outlook looks very bright and promising.
Adedipe, who spoke at the 2023 microeconomic outlook organised by the Chartered Institute of Bankers of Nigeria (CIBN) and his firm, faulted the position of the Bretton Wood institutions on the country’s revenue, growth, debt sustainability, foreign exchange management, subsidy among others, insisting there is the need for a more comprehensive assessment of the situation.
The economist said Nigeria does not have a revenue problem but “an issue the issue is a matter of priority,” noting that the tax revenue exchange for infrastructure is often excluded from the computation of debt to revenue ratio.
“With all sense of responsibility, I do not agree with what the World Bank says about our economy. The claim that a lot of our revenue is going into debt servicing is incorrect. We have a situation where there is an exchange of tax revenues for infrastructure.
“When we compute our revenue, we ignore that. That is part of our revenue, and before computing the debt service to revenue ratio, you should bring that into the conversation. Then, you will get a healthier ratio,” Adedipe argued.
He said he was not carried away with the debt profile but the utilisation of the proceeds, saying a lot of spending has gone into aviation, road, rail and power infrastructure.
According to him, unknown to many Nigerians, the capital expenditures of electricity districting companies (DisCos) undertaken last year were funded by the Federal Government. The enormous expenditure, he said, should be realistically brought into the debt analysis discussion for an objective conclusion on the subject.
The World Bank, in its January Global Economic Prospect, downgraded the country’s growth projection for 2023 to 2.9 per cent. But Adedipe said the outlook is brighter than the position the bank has taken, pegging his conservative projection at 3.27 to 3.32 per cent.
The inflation rate, according to him, is expected to slow down to 17.76 per cent, from its current 21.34 per cent, while the parallel exchange rate would close at N705/$ as against the official rate of N480/$.
The economist also faulted the consistent call on the Central Bank of Nigeria (CBN) to devalue the naira based on the widening gap between the official and roadside rates, saying the premium will return in the long run even if devaluation closes the gap today.
He also supported the use of both orthodox and unorthodox approaches in managing inflation and foreign exchange rate, insisting that that has become the global trend.
The CBN has been under intense pressure from the World Bank and IMF to adopt a more liberal FX management approach to close the market arbitrage, which is said to be responsible for the gross manipulation of the market. The Guardian reported that the country may have lost about N8 trillion to the differential in the past three years.
Adedipe also faulted what he called the wrong labelling of Nigeria as the poverty capital of the world. He said fresh insights have supported the need for a more realistic evaluation of what constitutes poverty and that the existing narratives are flawed.
Also speaking at the event, the President/ Chairman of the Council of CIBN, Dr. Ken Opara, was optimistic “better days are ahead of Nigeria” in the year, laying his confidence on forthcoming exchange in political leadership.
“We need to gain insight into the impact of several economic indices to help us undertake a comprehensive assessment of the opportunities, challenges and indeed the threats that businesses may encounter during the current year. Every organisation needs to be fortified with adequate information to give them insights into what the new year holds.
This will undoubtedly serve as a guide in making informed decisions critical to the growth of businesses and in reviewing strategic plans as the need may arise,” Opara said.