Challenge
Nigeria’s economy has been hit hard by a sharp decline in oil price, which has aggravated the long-standing weaknesses. Despite a strong economic track record, poverty is significant, and reducing it will require stronger non-oil growth and a greater focus on human development.
The country is facing a range of complex conflict and security challenges, although the incidence and causes of violence differ significantly among its 36 states. There is a great deal of variation across states in their capacity for governance, lack of a well-functioning civil service poses challenges to achieving sustainable development outcomes, and capacity and institutional challenges also affect policy design and dialogue. Further, the fragmentation of responsibilities across different commissions and agencies increases the difficulty of implementing reforms.
Access to and cost of finance are among the greatest constraints faced by firms. Financial markets lack the depth to drive economic diversification and job creation, or finance infrastructure investment. Nigeria is a diverse country with poorly integrated markets. Most Nigerian states still function largely in isolation and face enormous challenges in moving their economies beyond subsistence agriculture and local services. The country has a large infrastructure deficit, particularly in power and transport. Rural accessibility remains a serious problem, with major repercussions for agricultural and rural development, and 83% of Nigerian business owners consider lack of electricity the biggest obstacle to doing business.
The three tiers of government (federal, state and local) in Nigeria have overlapping but autonomous fiscal and policy jurisdictions for public services that directly impinge on the Millennium Development Goals (MDGs). In such federal settings, progress towards the SDGs is hindered or accelerated depending on synergy and coordination of policies and service delivery across the government. Nigeria faces skills gaps in both formal and informal sectors which are hindering the country’s efforts to improve competitiveness and increase employment. Universities and technical and vocational training institutions tend to be supply- rather than demand-driven. This leads to many graduates being unable to find jobs, while skills remain in short supply in some industries.
The security situation in Nigeria continues to be influenced by terrorism, armed conflict and general crime. The rise to prominence of Boko Haram in North East Nigeria has proven to be a considerable challenge to the country’s security forces. Along with the attacks carried out by Fulani Herdsmen in their movement south across Nigeria’s “middle belt” as the Sahel encroaches on their pastures, other major security challenges facing the country include kidnapping, crime and destruction of oil and gas facilities.
Approach
The World Bank Group (WBG) seeks to provide Nigeria with world class expertize and financing to help the country address key developmental issues by laying the foundation for socially and regionally inclusive growth. The WBG program seeks to leverage funds from private sector and other development partners. For example, a mix of instruments has been used to attract private investment in new generation capacity as well as in improving access to finance and supply of long term financing in the country.
In support of the government, efforts to improve human development outcomes, the IDA program helped develop a results based approach. The Saving One Million Lives (SOML) initiative in the health sector is taking a results-based approach to: strengthen basic services, particularly in rural areas, with the goal of preventing deaths of mothers and children; improve clinical governance across all care levels; strengthen primary and secondary prevention care; and create an enabling environment for private sector involvement in health services and commodities. An important element of the WBG program has been to help identify, capture and share local solutions to pertinent development challenges, to help bring them to scale across states. For example, as part of the Lagos Eko Secondary School Project, the WBG also piloted evidence-based secondary education reforms which include secondary schools in poor and marginalized (migrant) parts of Lagos. The impressive impact at secondary school level has led to linkages with primary school performance and approach. Several other states have been studying Lagos’ approach, illustrating that WBG support to one state which proves successful, may have the potential to be transformative more broadly within Nigeria.