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New World Bank Group Program to Boost Djibouti’s Efforts to Reduce Poverty

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The World Bank Group’s Board of Executive Directors on September 23, 2021 discussed the new 2022-2026 Country Partnership Framework (CPF) for Djibouti, which supports the country’s goal of reducing poverty through a strong focus on private sector development.

The five-year CPF guides the work of the World Bank, the International Finance Corporation (IFC) which focuses on the private sector in developing countries, and the Multilateral Investment Guarantee Agency (MIGA), which facilitates foreign direct investment through political risk insurance and credit enhancement guarantees.

“The new Country Partnership Framework for Djibouti seeks to take advantage of Djibouti’s strategic location, at the crossroads of regions and continents,” said Marina Wes, World Bank Country Director for Egypt, Yemen and Djibouti. “With a strong focus on poverty reduction and shared prosperity, our partnership will support private sector development to boost productivity and job creation, with a renewed emphasis on human capital development and governance.”

Creating a more conducive environment to develop the private sector is critical for building long-term resilience to economic shocks such as COVID-19. The CPF will aim to address the immediate needs related to the pandemic while supporting medium- to long-term reforms to create the right environment for inclusive and job-creating growth. Aligned with Djibouti’s Vision 2035 and guided by the priorities of the government’s national strategy, the program has two main focus areas:

  • To promote inclusive private sector-led growth, job creation and human capital by stimulating entrepreneurship and Small and Medium Enterprise (SME) development, and strengthening productive skills and access to jobs, including for women and youth. The World Bank Group will also support government efforts to promote private sector development in key sectors such as tourism, housing and agribusiness while continuing its engagement in energy and infrastructure and improving intra-regional connectivity.
  • To strengthen the role and capacity of the state by supporting the government’s efforts to improve access to and the delivery of basic services in health, education and water; and to promote the transparency, accountability and efficiency of the public sector with a focus on enhancing transparent management and public debt sustainability.

Throughout the two focus areas, the CPF will foster digital transformation, strengthen transparency to support good governance, and promote gender parity. To help strengthen Djibouti’s resilience to external shocks, regional integration will be core to the program which also maintains engagement in climate change adaptation, mitigation and disaster response.

The Djibouti Country Partnership Framework will support business environment reforms to boost productivity and encourage private investment in Djibouti with IFC and MIGA support.

“The private sector plays an essential role in creating jobs and promoting economic growth. IFC will continue to work closely with the government of Djibouti and with the World Bank to explore opportunities to support reforms that will improve Djibouti’s business environment and investment climate and help the country achieve its development goals,” said Jumoke Jagun-Dokunmu, IFC Regional Director for Eastern Africa.

Aligned with the World Bank’s regional strategy for the Middle East and North Africa, the Djibouti Partnership Framework is underpinned by the Systematic Country Diagnostics (SCD), the World Bank Group’s  comprehensive analysis of the opportunities and challenges for Djibouti to achieve poverty reduction and shared prosperity in an inclusive and sustainable way. It builds on extensive consultations with a broad range of stakeholders including the government, private sector, civil society and development partners. Implemented jointly by the World Bank, IFC and MIGA, the CPF will span two International Development Association (IDA) cycles – IDA19 and IDA20.

“Our new Country Partnership Framework takes into account the global pandemic, its impact on Djibouti’s economy and population and current regional dynamics”, said Boubacar-Sid Barry, World Bank Resident Representative in Djibouti. “We will work closely with the authorities to support the new development program, with the goal of reducing poverty and achieving more sustainable and inclusive growth, while also boosting regional integration.”

The World Bank’s portfolio in Djibouti consists of 13 projects totaling US$248 million in financing from the International Development Association (IDA), the World Bank’s arm for the poorest countries. The portfolio is focused on education, health, social safety nets, energy, rural community development, urban poverty reduction, the modernization of public administration, governance, and private sector development with an emphasis on women and youth.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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MPC Meeting on July 22-23 to Tackle Inflation as Rates Set to Rise Again

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Interbank rate

The Monetary Policy Committee (MPC) is set to convene on July 22-23, 2024, amid soaring inflation and economic challenges in Nigeria.

Led by Olayemi Cardoso, the committee has already increased interest rates three times this year, raising them by 750 basis points to 26.25 percent.

Nigeria’s annual inflation rate climbed to 34.19 percent in June, driven by rising food prices. Despite these pressures, the Central Bank of Nigeria (CBN) projects that inflation will moderate to around 21.40 percent by year-end.

Market analysts expect a further rate hike as the committee seeks to rein in inflation. Nabila Mohammed from Chapel Hill Denham anticipates a 50–75 basis point increase.

Similarly, Coronation Research forecasts a potential rise of 50 to 100 basis points, given the recent uptick in inflation.

The food inflation rate reached 40.87 percent in June, exacerbated by security issues in key agricultural regions.

Essential commodities such as millet, garri, and yams have seen significant price hikes, impacting household budgets and savings.

As the MPC meets, the National Bureau of Statistics is set to release data on selected food prices for June, providing further insights into the inflationary trends affecting Nigerians.

The upcoming MPC meeting will be crucial in determining the trajectory of Nigeria’s monetary policy as the government grapples with economic instability.

The focus remains on balancing inflation control with economic growth to ensure stability in Africa’s largest economy.

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Nigeria’s Growth Forecast Lowered to 3% for 2025, Higher than Most Emerging Markets

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The International Monetary Fund (IMF) has projected a 3% growth rate for Nigeria in 2025, slightly down from the 3.1% forecasted for 2024.

Despite this slight decline, Nigeria’s projected growth remains higher than that of many emerging markets as detailed in the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s economy is expected to grow by 1.2% in 2025, up from 0.9% this year. Brazil’s growth is projected at 2.4% from 2.1% in 2024, and Mexico’s growth forecast stands at 1.6% for 2025, down from 2.2% in 2024.

However, India is anticipated to see a robust growth of 6.5% in 2025, although this is slightly lower than the 7% forecast for 2024.

The IMF’s projections come as Nigeria undertakes significant monetary reforms. The Central Bank of Nigeria has been working on clearing the foreign exchange backlog, and the federal government recently removed petrol subsidies.

These reforms aim to stabilize the economy, but the country continues to grapple with high inflation and increasing poverty levels, which pose challenges to sustained economic growth.

Sub-Saharan Africa as a whole is expected to see an improvement in growth, with projections of 4.1% in 2025, up from 3.7% in 2024. This regional outlook indicates a modest recovery as economies adjust to global economic conditions.

The IMF report underscores the need for cautious monetary policy. It recommends that central banks in emerging markets avoid easing their monetary stances too early to manage inflation risks and sustain economic growth.

In cases where inflation risks have materialized, central banks are advised to remain open to further tightening of monetary policy.

“Central banks should refrain from easing too early and should be prepared for further tightening if necessary,” the report stated. “Where inflation data encouragingly signal a durable return to price stability, monetary policy easing should proceed gradually to allow for necessary fiscal consolidation.”

The IMF also highlighted the importance of avoiding fiscal slippages, noting that fiscal policies may need to be significantly tighter than previously anticipated in some countries to ensure economic stability.

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Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

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Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

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