Nigeria has World Bank’s largest portfolio of more than $12b, says Malpass

World Bank Group President David Malpass and Vice President for Western Africa, Ousmane Diagana, in a media roundtable on Thursday, speak on its portfolios in Nigeria, fuel subsidies and more. With the portfolio, programmes under implementation cover a variety of sectors, access to electricity, water, education, health and agriculture. Excerpts:

In 2020, Nigeria requested for a 3-billion-naira loan from the World Bank. We were able to get 1.5 billion. How soon are we expecting the balance of 1.5 and–or is there any change, delay, in the payment of that 1.5 billion?

Malpass: Thanks. And I’m going to turn to Ousmane, as well, but I wanted to say one thing, which is Nigeria has huge potential. And with some of the improvements in the economic policies, the growth can be rapid for people across Nigeria. We’ve encouraged efforts that would reduce the subsidies for fossil fuels, that would encourage trade across borders, where Nigeria could be doing more in that area.

And very importantly, the multiple exchange rates have been a burden on the people of Nigeria, and we’ve encouraged the elimination of the official rates and the unification of rates so that money and investment and remittances can flow in and out of Nigeria with less friction. So, our program remains strongly supportive of the people of Nigeria and of Nigeria. Let me turn to Ousmane for some specifics on Nigeria.

MR. OUSMANE DIAGANA: Thank you very much, David.

As we speak, we have probably the largest portfolio of the World Bank in Nigeria. More than $12 billion. Those are programs under implementation covering a variety of sectors, access to electricity, water, education, health, agriculture.

Especially for this year, indeed, we have prepared a pipeline–we had a pipeline of a number of programs and we have delivered about $2 billion for Nigeria in order to help the population have access to critical services but also to support governments and institutions to provide some technical assistance to a variety of stakeholders.

The conversation of when Nigeria continues around some of the critical reforms that I think Nigeria has been waiting for some time. And we have seen progress and producing the will continue in Nigeria as a very important partner for the Bank and also the role that it plays in Africa clearly–we make any investment in Nigeria will have also some positive externalities for African countries.

Thank you.

MR. MALPASS: Yeah, can I underscore that last point of Ousmane’s, as well, that throughout Africa, if one of the major economies can do well, it has very positive synergy with its neighbors, and that’s one of our primary goals, to have successful economies that then bring synergy with neighbors, because that’s a way that there can be massive progress in Africa.

Major undertakings

MR. MALPASS: I want to quickly go through several of our major undertakings. As you know, COVID-19 has taken a toll on lives and livelihoods and economies, so it’s the highest priority in the various meetings and in our work. It’s devastating the poor and the job losses are immense. And also, the reversals in education are a giant challenge.

Over the last ten years, the World Bank Group has invested over $200 billion in Sub-Saharan Africa and, as I announced on Tuesday at the summit in Paris, in just the next five years, we intend to invest and mobilize about $150 billion in Africa to support the continent’s recovery. And a large portion of that is through grants and long-term zero interest rate loans from IDA, which provides a strong net-positive flow for Africa. So, we’re working full speed on an ambitious IDA20 replenishment, to be concluded by December 2021, and that will be critical for the concessional financing and grants that the IDA countries in Africa need. So, that gives you the context for the funding support that we’re doing both for the public sectors and the private sectors through IFC in Africa. So, it’s an all-out effort by the World Bank to provide as much support as possible during the crisis.

One of the areas of our work has been on vaccines themselves. Since the outbreak of the crisis, we have invested more than $24 billion in Africa to support health and economic recovery. Our Board authorized $12 billion for the vaccination efforts. And as of today, 18–as of today, there have been 38 African countries that have requested support on vaccination efforts, and 18 of those from West and Central Africa. We have six projects already approved by the World Bank Board, that includes Cote d’Ivoire, The Gambia, Cabo Verde, and more are scheduled to be approved over the next few weeks, several weeks. And so, this effort is moving along fast from the World Bank standpoint, providing financing for countries to both purchase vaccines or receive vaccines from other intermediaries, and, importantly, to distribute those vaccines to people within their countries.

Unfortunately, the supply of vaccines has been limited. The delays are deepening. The inequality, the divide that’s going on in the world and is a serious problem for fragility and for people’s lives and livelihoods, and I’ve repeatedly urged countries that expect to have excess vaccine supplies to release their excess as soon as possible to developing countries that have delivery programs in place. This is a very important connection that needs to be made week-by-week now. We’re at the crisis stage. We have been–of the COVID pandemic, and there has to be a matching between the countries that have access and the countries that have delivery programs that are ready to go. I’ve emphasized the need for transparency on that, because one of the big gaps is in knowing who has excess vaccines, which manufacturers have deliveries available, and which countries have programs that are ready to actually put shots, put jabs in people’s arms.

So, in that spirit, the World Bank yesterday launched–we launched a comprehensive online portal that provides easy access to information. I tweeted about it this morning. I encourage everyone to click on the website and see how the countries are–how the vaccination programs are set up in each of the now 22 programs that we have in place, and it’s going to mount week by week. We hope to reach 50 programs by midyear, which have clear documentation, clear explanation of the connection to the deliveries in countries.

This builds on the assessments that we did earlier in the year and late last year, 140 assessments of the capacity to actually deliver vaccines. So, this becomes the critical path in the vaccination effort for the countries that have excess vaccines to free up their options, their control, their export limitations so that the vaccines can go to developing countries that have programs and the World Bank has active, transparent programs that reach people arms, and they’re available now and they’re transparently disclosed on the website. And we encourage other intermediaries and other participants in the global vaccination effort to do the same in terms of transparency.

I want to turn to debt sustainability. It also has a very important transparency aspect to it. The contracts are burdened by collateralization, by non-disclosure clauses, and by restraints on comparable treatment as countries look to restructure their debt contract. This is a major problem in West Africa. And as COVID-19 persists into 2021, the debt situation will certainly deteriorate further.

Comprehensive debt solutions, we think, involve four elements which we have proposed: One is debt suspension; then, there is debt reduction; there is the resolution of debt; and there’s transparency, debt transparency. So, in all four areas, there needs to be much more progress. We supported the DSSI, but recognize that there was only partial–for many of the major creditors, there was only partial participation. And during 2020, and now into 2021, large profits are being withdrawn from Africa, even during the crisis, and there’s no real prospect for cancellation of those debts.

One of the themes of the Paris Conference two days ago, on Tuesday, was the call by African heads of state for cancellation of debts, but that’s not the direction that the world is moving at this point. A permanent solution is necessary for this overhang of debt stocks for countries that have unsustainable debt levels. World Bank is working closely with the IMF to try to implement the G-20 common framework for debt reduction. The success of that hinges on full participation by the private sector, and also improvements in debt transparency. The full private sector participation is an essential part of any path to lasting debt sustainability. Let me give you some examples.

It’s not sufficient that Chad or Ethiopia, which have asked for common framework treatment–merely for them to seek comparable treatment from private creditors. The private creditors themselves must do their fair share and deliver debt relief in a timely manner and on fully comparable terms to official bilateral creditors. That process is underway, but has moved very slowly and it means continuing burden of unsustainable debt on countries within Africa.

The private creditors need to recognize that a successful debt restructuring is a beneficial outcome for all parties involved. It brings relief to the people of the country, as we are trying to do in Chad, and it also benefits the private sector, because it limits their losses compared to a scenario of outright default. So, in the longer term, we want to–we, the World Bank and the countries of Africa are working to try to have a stable and thriving economic growth prospect for the people of Africa and the business opportunities that are available there. But without the private creditors fully on board, the common framework won’t be able to provide sustainable solutions for Chad, Ethiopia, or Zambia, the three countries that have asked for common framework treatment.

And this–okay, so, I wanted to go through that in some detail, because we’re at an important turning point in the common framework and we are urgently trying to implement it successfully so that we can have sustainability in debt. This builds on very strong World Bank financing, including to Chad. Over the next decade, the World Bank plans to put as much as $1.4 billion into Chad. This will strengthen Chad’s ability to sustain a moderate debt burden, if that can be achieved. So, that’s the overall goal, to bring Chad to a moderate debt level. But so far, the participation by creditors has been limited and we’re working on that in detail.

Okay. I want to also mention, and I’m happy to take questions on these areas–but I want to mention climate change. This is a critical part of the World Bank efforts. We are working with countries to strengthen their capacity to absorb and adapt and transform their systems in response to climate change. We’ve announced the elements of our climate change action plan.

These include–and importantly, we want to integrate climate and development so it works for the people of the countries. We want to have actual results in terms of success, successful adaptation and successful mitigation efforts within the climate sphere. There needs to be electricity access, and so that means growth in the production of electricity, but in ways that are cleaner and that are lower carbon emitting as we go along. So, that’s a major effort underway and the elements have been announced and we’ll be releasing the plan itself and also participating actively in countries’ nationally determined contributions, the NDCs that are part of the Paris Agreement, as we, the World Bank, work to align our financing with the Paris Agreement. And we’re also participating actively in the runup to COP26.

I wanted to mention also, and I’m sorry to be so brief on very important issues, the work that we’re doing on fragile, conflict, and violent states. Eleven of the 22 countries in the West Africa Region are now affected by FCV, and more than 70 percent of the population live in FCV countries. So, this is the–we’re scaling up our financial aid to the G-5, the Sahel countries: Burkina Faso, Chad, Mali, Mauritania, and Niger through IDA to support the conflict prevention and also the resilience and emergency responses that are needed. Our aid to those five, we expect to reach $8.5 billion for the fiscal years 2021, 2022, and 2023. So, that is starting now for the next two or so–little more than two calendar years from now.

Let me conclude, very nice to be with you today. We know that the road to recovery will be a long one. The countries in the Region have applied lessons from previous crises, such as the Ebola outbreak in 2014. Many countries have strengthened their social safety nets to help protect the poor, and the World Bank is working actively–World Bank Group is working actively on those efforts and we think those are important preparations for future crises and the ability to get money to people during a crisis is a critical part of preparation.

And we want to also move faster on the key reforms that each of the countries is facing that will help draw in new investment. So, that gives you some description of the expanse of our work and I look forward to your questions.

Do you believe that we are in danger of having a lost decade in Africa? And what can we do to avoid it, or what debt relief will have to do with the solution?

MR. MALPASS: Yeah, thank you. Well, the COVID itself was a historically large setback, and it was particularly harmful for people–for the poorest and most vulnerable. And so, from that standpoint, we recognize that it will take years to claw back some of the losses.

I mentioned earlier the education system. So, by having the advanced economies close down, and then the education systems–often, schools closed–children weren’t able to move forward, and that’s a critical part of the future of every country, and especially in Africa with the youth.

So, we’re working very hard to avoid a lost decade; so, I want to say that. And I don’t think–I think there are still pathways forward in order to avoid having all of the setbacks extend in Africa. So, I want to give some specifics on that.

One is from the vaccination effort. So, we have to get vaccination started in more countries, and that means getting the supply, and that means those countries with excess releasing the supply. And that means using programs that are ready, that are on the shelf, that are on websites, and fully disclosed as the World Bank programs are, to get vaccinations to people across their countries. So, that’s a key starting point.

And then, I wanted to say a second vital area is on debt. Oftentimes, the term “lost decade” is applied to Latin America, and I worked throughout the 1980s on the Latin debt crisis. And we’re trying hard to avoid the situation that occurred in that crisis where, year after year, the debts were rescheduled, they were pushed forward into the future, but never actually reduced. And so, the new investment couldn’t come in because they were–they realized that they were going to end up be used to pay previously contracted debt. So, there needs to be a mechanism for those countries in Africa that have unsustainable debt burdens, for them to have actual debt reduction, debt relief.

And that’s what we’re working on with–that’s what we’re trying to do with my call a year ago–over a year ago–was for a debt moratorium. The G-20 put forward the debt suspension initiative, which delayed the payments but kept the interest rates compounding on that debt. And now, we have the common framework, where it faces the obstacles from the debt being–much of the key debt being collateralized, being nondisclosed as far as the contracts, and these are obstacles to successful debt restructuring and raises the concern or the possibility of a lost decade; so, we’re working on that.

And then third, and my final point, is on the economic advancements themselves. Many countries have key things that they could be doing in terms of digitalization, in terms of trade facilitation, in terms of unification of exchange rates, in terms of the business climate being improved, in terms of infrastructure, which is so vital. All of those things could be done more.

And I would like to cite Sudan. We are making progress in Sudan. And you know on Monday there was a major conference in Paris on the progress on Sudan. We were able to clear our arrears, then the African Development Bank’s arrears. And now, the IMF’s arrears are on track to being cleared. And that enables the international system to help Sudan. And then, in order to accomplish that, Sudan was taking very important steps to help itself through the unification of the exchange rate and other reforms that are really working.

And so, I encourage each country to work to avoid the last decade that is still a risk for the continent.

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