GDP will grow 5.2% by end 2022, but Ukraine war and COVID-19 add to uncertainty
Economies in the Middle East and North Africa (MENA) region are expected to grow by 5.2% in 2022, the fastest rate since 2016, on the back of oil-price windfalls benefitting the region’s oil exporters. But heightened uncertainty surrounds this forecast due to the war in Ukraine and ongoing threats from COVID-19 variants.
Titled “Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty”, the World Bank’s latest economic update forecasts an uneven recovery as regional averages mask broad differences. Oil-producers will benefit from higher oil prices and vaccination rates as fragile countries lag. But tighter global monetary policy, the unpredictability of the course of the pandemic, ongoing supply chain disruptions and food price hikes raise inflation risks for the entire region.
“The harsh reality is that no one is out of the woods yet. The threat of COVID-19 variants remains and the war in Ukraine has multiplied risks, particularly for the poor who bear the brunt of the increase in food and energy prices. A good dose of realism about the region’s growth prospects during these times of uncertainty is essential,” said Ferid Belhaj, World Bank Vice President for the MENA region. “Managing this wave of uncertainty is a key challenge for policymakers and the World Bank is committed to working alongside governments across the MENA region during this time of compounding risks,” he added.
Currency depreciation in some countries in MENA is already adding to inflationary pressures. Economies facing fiscal and debt vulnerabilities will likely encounter more challenges as they roll over existing debt, or issue new debt amid tighter financing conditions as global central banks aim to contain inflation expectations.
Inflationary pressures created by the pandemic have been exacerbated by the Ukraine war. Countries in the MENA region rely heavily on food imports, including wheat from Russia and Ukraine. The rise in food prices and the higher risk of food insecurity are likely to hurt poor families the most, because the poor tend to spend more of their household budget on food and energy than do rich households. The full extent of the consequences of the war are yet to be determined, but early signs point to a heightening of the economic difficulties already besetting MENA economies, particularly oil-importing middle-income countries.
Despite the projected growth rate of 5.2%, GDP per capita, an indicator of people’s living standards, will barely exceed pre-pandemic levels due to a generally lackluster performance in 2020-2021, the report said. In Gulf Cooperation Council countries, buoyed by the increase in oil prices, GDP per capita is projected to grow by 4.5% in 2022, but will not recover to pre-pandemic levels until 2023. In contrast, in 2022, GDP per capita of middle-income oil exporters is projected to grow by 3.0%, and by 2.4% for the region’s oil importers, both barely lifting living standards above pre-pandemic levels. Overall, if these forecasts materialize, 11 out of 17 economies in MENA may not recover to pre-pandemic levels by end of 2022.
Adding to pandemic-related uncertainty, only a third of the middle-income MENA countries have higher vaccination rates than their income peers. As of April 4, 2022, Gulf countries, excluding Oman which has a 57.8% vaccination rate, have an average rate of 75.7%, which is far better than their income peers. But countries like Algeria and Iraq have vaccinated around 13 to 17% of their populations and Yemen and Syria have vaccination rates in the single digits, thus leaving them more exposed to the economic and health consequences of Covid-19 in the near future.
Each MENA Economic Update chooses a special focus area and this April’s edition provides a reality check on growth forecasts over the past decade, including those provided by the World Bank, the International Monetary Fund, and the private sector. Economic forecasts are a valuable tool for governments as they prepare for the future, especially during times of uncertainty. The authors found that growth forecasts in the MENA region over the past decade were often inaccurate and overly optimistic when compared to those of other regions. Overly optimistic forecasts can lead to economic contractions down the road. A key driver of forecast uncertainty is the availability and accessibility of quality and timely information, an area where MENA lags behind the rest of the developing world.
“In the current context of global and regional uncertainty, getting the most accurate forecasts possible becomes even more important. Lack of data and limited data openness are risky strategies. Only with better and more transparent data can forecasts, and with them planning and policy formulation, improve,” said Roberta Gatti, World Bank Chief Economist for the MENA region.
Conflict economies such as Libya and Yemen have outdated GDP data, last available for 2014 and 2017 respectively. Only 10 out of the 19 MENA economies covered by the World Bank Group have monthly or quarterly information on industrial production; for the remaining nine, information is not publicly available; and none publish monthly unemployment data. The report provides guidance about how to improve national data systems.
EFCC Grills Suspended Accountant-General of The Federation, Discovers 17 Properties
The Economic and Financial Crimes Commission (EFCC) said it has traced not less than properties to the Accountant-General of the Federation, Ahmed Idris.
On Wednesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the suspension of Idris who is currently being grilled by the EFCC for fraud amounting to N80bn.
The letter titled: ‘Letter of Suspension’, read in part: “Following your recent arrest by EFCC on allegations of diversion of funds and money laundering, I write to convey your suspension from work without pay effective May 18, 2022.”
Investors King can confirm that an anonymous EFCC official revealed that the 17 properties linked to the former AG of the Federation are located in the UK, Dubai, Abuja, Lagos, and Kano.
However, he said preliminary investigations showed that the nation’s chief accountant allegedly used proxies to buy some of these properties. The commission would therefore need to invite some of the proxies of the accountant-general.
The official added that from all indications, these properties were purchased while Idris was in office and did not declare them before the Code of Conduct Bureau as stipulated by law.
“About 17 houses in London, Lagos, Kano, Abuja and Dubai have been traced to him. In Abuja, some of the houses are located in serviced estates,” he added.
Investors King reported earlier in the week that EFCC had arrested the suspended Accountant-General, saying “the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.”
“The funds were laundered through real estate investments in Kano and Abuja.
“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts.
“It further alleged that the funds were laundered through real estate investments in Kano and Abuja,” EFCC added.
REcall that Ahmed Idris had been under surveillance since last year following allegations that he offered huge sums of money to a family in order to secure the marriage of their 16-year-old daughter.
Nigeria’s Trade Deficit Rises to $765m in Q1 2022 – CBN
The Central Bank of Nigeria (CBN) has said the value of Nigeria’s international trade deficit rose by 175.13 percent from $152.94m recorded in January 2022 to $420.79m in March 2022.
The International Trade Summary on the CBN’s website reports that the total value of international trade as of the first quarter (Q1) of 2022 was $28.77bn. Imports stood at $14.77bn while exports accounted for $14.01bn, reflecting a total trade deficit of N764.69m.
In January 2022, export was $4.74bn and import was $4.89, with a trade deficit of $152.94m.
The value of the trade deficit increases further in February 2022 to hit $190.96m, with exports at $4.70bn and imports at $4.89bn.
There was a massive increase recorded in March 2022 as the trade deficit jumped to $420.79m, with exports at $4.57bn and imports at $4.99bn.
In June 2021, Godwin Emfiele, the CBN Governor has said Nigeria would reduce its imports bill by the first quarter of 2022, especially with the Dangote refinery projected to resume operations. This, he said would help reduce the importation of finished petroleum products.
“Of course for petroleum products, by the time the refinery goes into production by the first quarter of next year and the petrochemical plants we would have reduced our importation by about at least close to 35 per cent,” he said.
However, Nigeria has failed to cut down on its import bill and the Dangote refinery is yet to be completed and operational. In fact, a recent Fitch report estimated that the refinery won’t be operational until 2024, and that is if Aliko Dangote raises the needed $1.1 billion (N900 billion) necessary for its completion.
In its recent report titled ‘Reforms Towards Resolving Foreign Exchange Challenges in Nigeria’, the Nigerian Economic Summit Group (NESG) explained how a rising trade deficit caning impact the nation’s economy.
According to the NESG, Nigeria will continue to rely on foreign loans via Eurobonds and multilateral financial institutions to bolster its foreign reserves as long as the nation’s trade balance continues to decline.
In part, the report stated: “Owing to the deteriorating trade balance position, the country is increasingly exposed to external borrowing through Eurobonds and multilateral loans to shore up its external reserves. In 2021, the trade deficit widened to N1.9tn from N178.3bn in 2020.
“The country had persistently recorded a trade deficit since the fourth quarter of 2019 when the land borders were shut. However, maintaining a trade surplus consistently coupled with adequate inflows of foreign investments will contribute significantly to improving the net flows of forex through the economy – which crashed from $100.8bn in the first three quarters of 2014 to $44.5bn in the corresponding period of 2021.”
“Huge dependence on imports has limited the CBN’s ability to effectively manage the demand for foreign exchange,” it stated.
NESG further said, “Meanwhile, the massive dependence on imports has constrained the CBN’s ability to manage forex demand by prohibiting certain commodities that could otherwise be produced locally from accessing forex at the official market since 2015.
“The result of this policy action has heightened demand pressures in the parallel market, leading to a wide gap between the official exchange rate (now the I&E Window exchange rate) and the parallel market exchange rate. The parallel market premium averaged N104.7/US$ in 2021, 64.9 per cent higher than the average premium of N63.5/US$ in 2020.”
Twitter Agog As Nigerians React To AGF’s Arrest, Fraud Allegations
The social media has been buzzing all day as Nigerians were in dismay, following the arrest of the Accountant-General of the Federation, Ahmed Idris by the Economic and Financial Crimes Commission (EFCC) for allegedly looting a sum of N80bn.
While many Nigerians lauded the efforts of the EFCC, some said the looted money is far more than what the Academic Staff Union of Universities (ASUU) is requesting.
In his reaction via the micro-blogging platform, Twitter, the spokesperson of former President Goodluck Ebele Jonathan, Reno Omokri said: “Dear ASUU, If the Accountant General of the Federation can steal N80bn, you have no reason to end your strike. Ask Buhari to use the stolen N80bn to pay you and keep the change. After all, the money ASUU is asking for is not even up to N80bn!”
Some Other Twitter Reactions:
The Mouthpiece @Real_AmakaIke said: “Fight Against Corruption In Nigeria Always End With Cruise. Just Loot And Bail Yourself If At All You Are Arrested,And They Will Reward You With Another Political Position. Ahmed Idris’s 80 Billion Naira Fraud Case Has Ended With Immunity. Nigeria Is A Very Big Scam.”
Adenike Danjuma @DeNiike_Ahmed said: “Idris should be persecuted using Sharia law.”
Kwaghngu John @DoshimaJohn – “According to the EFCC, the funds (stolen by the AGF Ahmed Idris) were laundered via real estate investments in Kano and Abuja” Real estate investments!!! Folks standing on this table ehn! It will take some balls to vigorously shake this table. A table of crooks & rogues.”
Ayemojubar.js @ayemojubar – Alhaji Ahmed Idris, the Accountant General of the Federation stole $137,931,034. Please, how much is ASUU asking for?
Adebola @ThisIsAdemuyiwa – Our problem is not religion and ethnicity. Religion and ethnicity are distractions. Alh. Ahmed Idris (Accountant General) who stole N80bn couldn’t have done it alone. He’d have been aided by Southerners from other faiths . Let nobody deceive you.
OKEKE OLIVER (Don Olive) @OKEKEOLIVER2 – Ahmed Idris was appointed Accountant General of the Federation on 25th June, 2015, to succeed Jonah Ogunniyi Otunla. His predecessor was sacked by Buhari for alleged misappropriation of N2.5bn naira.
If you make ₦28.3m a year, it would take you 40 years to make ₦1 billion. The Accountant General stole N80bn in 4 years, at ₦28.3M/year it would take you 3,200 years to accumulate that much money. Ahmed Idris you are very very heartless,” another user, Jerry ayuba (@Donjerry_) said.
Investors King recalls that Operatives of the Economic Financial Crimes Commission (EFCC), on Monday, arrested the current Accountant General of the Federation, Mr. Ahmed Idris in connection with alleged diversion of funds and money laundering activities.
EFCC, in a statement, wrote: “The Commission’s verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.
“The funds were laundered through real estate investments in Kano and Abuja.
“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts”.
EFCC further noted that: “Its verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities, using proxies, family members and close associates.
“It further alleged that the funds were laundered through real estate investments in Kano and Abuja”.
The anti-graft agency stated that Idris was arrested after failing to honour invitations to respond to issues connected to the fraudulent acts.
Ahmed Idris was appointed as Accountant General on June 25, 2015, to succeed Jonah Ogunniyi Otunla who was sacked by Muhammadu Buhari on allegedly misappropriating security agencies’ funds.
EFCC had, on December 7, arraigned the former Accountant-General of the Federation, Mr Jonah Otunla, and eight others before the Federal High Court in Abuja on money laundering charges involving diversion of N2bn from the account of the Office of the National Security Adviser.
The defendants were to be arraigned before Justice Nnamdi Dimgba on Tuesday but the arraignment was rescheduled to December 7 due to the absence of the judge, who was said to be attending a training organised for some judges in the country.
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