October 8, 2008


Following wide spread fears of the global financial crisis presently distressing many of world’s large economies, the World Bank has at last assured that the effect, after all, may not impact negatively on the Nigerian economy. The assurance is coming barely one month after the Central Bank of Nigeria (CBN) had similarly, during its latest Monetary Policy Committee meeting envisaged a minimal impact of the global financial turmoil on the Nigerian economy, owing basically to what it referred to as very strong macro-economic fundamentals. But the World Bank believes that with the Nigerian banking system not having significant foreign ownership, especially in the United States, for instance, it stands the least chance of experiencing the current turbulent situation of the U.S. banking system. Presently, Nigeria and South Africa which have the largest economies in Africa have foreign ownership share of just less than five percent compared with a developing country average of about 40 percent. Secondly, the World Bank believes that even if the present financial market turmoil results to a global recession, for oil exporters like Nigeria whose reference budget price is below $70, a drop in oil price would not be as damaging as in the past episodes. Again, the Bank envisages there could be a ‘cut-back’ in foreign capital inflows into the African region which could seriously affect growth and poverty but with Nigeria’s current Aid assistance from donors standing at about only one percent of its budget, such low inflows might not really affect the country’s economy. At a Video Conference organised by the Bank to brief the African press and the Civil Society Organisations (CSOs) on crucial global and regional issues in preparation for it’s up-coming Annual Meetings in Washington Mid-October yesterday, Shanta Devarajan, World Bank’s Chief Economist expressed these views but warned that caution should be taken in formulating and implementing policies to avoid impact of the financial crisis on the Nigerian economy. BusinessDay, p.4

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