WB: Nigeria safe from global financial crisis

  1. Posted on Wednesday 8 October 2008 - 16:20
    Dolphyne
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    Joseph Appiah-Dolphyne, AfricaNews editor in Accra, Ghana
    The World Bank has assured Nigeria that global financial crisis will not affect the country. It is coming a month after the Central Bank of Nigeria had envisaged a minimal impact of the global financial turmoil on the country, owing to what is referred to as very strong macro-economic fundamentals.
    Central Bank of Nigeria
    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.

    Shanta Devarajan, World Bank’s Chief Economist has however warned that caution should be taken in formulating and implementing policies to avoid impact of the financial crisis on the Nigerian economy, according to Businessdaily.

    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.

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