The IMF disclosed this in its Regional Economic Outlook for Sub-Saharan Africa (SSA), titled, “Living on the Edge,” released Friday.
Meanwhile, following the global economic challenge exacerbated by Russia’s invasion of Ukraine, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has invited foreign investors to consider Nigeria and other countries in Africa, stressing that they are choice investment destinations.
Emefiele stated this while receiving the EuroKnowledge Award conferred on him by FIN Banking on Emerging Markets Forum on the sidelines of the ongoing International Monetary Fund/World Bank Annual Meetings in Washington DC. United States.
The IMF in its report stated: “123 million people or 12 per cent of sub-Saharan Africa’s population are expected to face acute food insecurity, two-thirds of the worldwide total, one-third of which have become acutely food insecure since the start of the pandemic.
“And of these, a large proportion are children in circumstances in which chronic hunger can permanently curtail future health and prospects. The rapid increase in food insecurity over the past two years is mainly due to the fallout from the pandemic and the recent war in Ukraine, a worsening security situation in some parts of the region, a four-season drought in the Horn of Africa, and other climate shocks.
“Areas of particular concern include the Democratic Republic of the Congo, Ethiopia, Nigeria, South Sudan, some parts of Kenya, and countries in the Sahel.” It further added, “given the size of the problem, countries should enhance their capacity to expand their targeted support at the scale or pace needed.”
Commenting, the Director, African Department, IMF, Abebe Aemro Selassie, said: “Nigeria could have benefited even more if there were more targeted ways of supporting people rather than the generalised fuel subsidies that are being used at the moment. So, oil prices have gone up quite significantly, but the amount of resources that are accruing to the budgets, to external accounts have been very circumscribed as a result of the very generalised subsidy that the country has.
“I think we have been long on record, flagging that generalised subsidies like this one are extremely costly. Second, they’re extremely regressive. So, they support families and households that are richer than the poorer households. A better policy in our view would be to find a way to redirect these resources to the most vulnerable households and supplement that with investments in health and education that Nigerians so desperately need.”
He stated that the political will has been to retain the fuel subsidies but would continue to advise against it.
Selassie added that the subsidy spend could be targeted directly to the vulnerable.
He added: “Ultimately, it is a political decision for Nigeria, and if that is how the country decides how resources should be used, that’s how it will be used. But, you know, our role here is to flag that there are better options that could be done where economic efficiency could be facilitated in Nigeria.
“If we keep talking as an institution about climate change, it is exactly because of what you’re highlighting now. It is not a theoretical thing for our region but it is something that is impacting people in real-time.”
He mentioned that the IMF is continually at the forefront of supporting SSA countries with funds to cushion the food crisis with its new programmed food shock financing window.
He said: “So, we are very conscious of that and how we can help an institution, as well as the advocacy we continue to make about every country in the world trying to do its utmost to reduce its footprint on climate change and not to contribute to global warming. We continue that advocacy and then, of course, use our policy advice and financing role to help countries as they are being impacted by this.”
Speaking at the award, Emefiele listed Nigeria, Angola, South Africa and Egypt as countries that investors should consider.
The apex bank governor added that business confidence in the continent was on the rise.
According to him, “Today, we talk about the frontier market and what I keep telling people is that as you continue thinking about growth opportunities in the world and you are looking at Africa, naturally you will have to think about some of the big economies in Africa.
“Nigeria, Angola, South Africa and Egypt are economies that you would need to think about. And I dare say these economies hold a lot of strong opportunities with opportunities for high yields and profitable projects and I can only seize this opportunity to encourage our friends in the foreign investment community to continue to take a look at Africa. Africa years for growth and development.
“We cannot do this alone; we will continue to need the support of the rest of the world. But I can assures all of us that as you do this, the opportunities are there and you will not regret taking the opportunities.
“The opportunities are there; I can only continue to say let’s give the support to Africa, let’s give the support to Nigeria. We should all continue to work together for the growth, not just for our individual countries but for Africa as a whole,” the CBN governor added.
Emefiele dedicated the award to his colleagues at the CBN as well as other Nigerians.
“When your credentials and all you have done is being read out to the public, you begin to wonder how you managed to do all these. But what this does is to encourage you to do more.
“When we talk about the challenges that we are currently facing, I can tell you that it hasn’t been easy in the last seven and half years, where we have gone through two recessions.
“One between 2015 and 2016 and another short-lived one in the second and third quarter 2021 during the period of COVID-19. Usually as the Governor of a Central Bank of Nigeria, you never pray to go through a recession twice but we have managed to go through this with a lot of hard work and support from our colleagues at the CBN, all our departments and members of our monetary policy meeting. We really want to thank all of you.
“This award is not just for me, it is meant for all of us who have worked hard in the last eight and half years to keep Nigeria strong. To keep the Nigerian economy strong and going.”