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DESIGN: Gallagher Wood Design PHOTOGRAPHS: Cover, Back and Inside Photos by Curt Carnemark, unless otherwvise specified Twvo Generations, Cover Market Scene, page 4 Lagos Skyline, page 6 On the Road Again, Mohamed Sani, Embassy of Nigeria, Washington, D.C., page 8 Exchange, Mohamed Sani, page 10 Working Together, page 13 The Engine of Opportunity, Mobil Producing Nigeria Ltd., page 14 Perfection, page 16 Industrial Development, page 18 Connecting Lagos, Mohamed Sani, page 20 Trading, page 22 Productive Fields, page 27 The Harvest, page 28 Women in the City, page 29 Chickens, page 30 Getting There, page 31 Go-Slow, page 33 City View, page 34 Anchors Away, Mohamed Sani, page 35 One Goal, page 37 Self Sufficiency, page 38 At School, page 41 Young Girl, pagc 42 Urban Setting, page 43 The Mighty Delta, Maria-Franziska Kail, page 45 Community Participation, page 46 Working Together, page 47 To Be Young, page 48 Nigeria, page 49 Abuja Skyline, Maria-Franziska Kail, Annex 5 Future World Bank Offices, Abuja, Hazel Denton, Inside Back Cover Grace, Back Cover -r F x i I L E S: WAKA Nigeria Limited P R I N ' I N G: Colortone Press MGERA XA TILE WQILB BANK LEARNING FROM TIHE PAST L OO K I N G T O T H E F U T IIR E Manufactured in the United States of America First printing May 1995 The material in this booklet is not copyright. Users may make and distribute copies as they wish. The findings, interpretations, and conclusions expressed in this publication are those of the authors and should not be attributed in any manner to the International Bank for Reconstruction and Development/The World Bank, to its affiliated organizations, or to the members of its Board of Executive Directors or the countries they represent. 'VHF P E. O r p E B E H I N I) T H E 13 t) ( K 1. 1. I This Booklet is the culmination of an effort to inform interested readers about the Nigeria-World Bank Partnership. The Booklet was managed by Hazel Denton together with Maria-Franziska Kail. Initiating support was provided by Joanne Salop. Many have contributed to this work, including: Boubker Abisourour, Ladipo Adamolekun, Doug Addison, Surendra Agarwal, Carlos Algondona, Said Al-Habsy, Jennifer Alleyne, Manouchehr Ashouripour, Athena Azarcon, Jane Banda, Philip Benoit, Geoffrey Bergen, Paul Bermingham, Anil Bhandari, Lewis Campbell, Alan Carroll, Yoo Whan Chang, Anil Chandramani, Eric Chinje, Patrick Connolly, Cynthia Cook, Alan Coulthart, Pamela Crivelli, Timothy Cullen, Alain D'Hoore, Alan Drattell, Cyril Enweze, Esther Gadzama, Yeshimebet Gonfa, Wadi Haddad, Gregory Hancock, David Henley, Indu Hewawasam, Myra Holsinger, Phvllis Hughes, Ishrat Husain, Thomas Hutcheson, Dele Ilebani, Eriko Ishikawa, James Feather, Gerald Flood, Saran Kebet-Koulibaly, Hugh Lantzke, Frans Lenglet, Judith Maguire, John Mitchell, Santiago Montenegro, Gary Moser, John Ngwafon, Fauzia Najm, Eileen Nkwanga, Greg Nzekwu, Akin Oduolowu, Ken Ohashi, Anne Okigbo, Eugene Okongwu, Ngozi Okonjo-Iweala, Foluso Okunmadewa, Samuel Onwona, Barbara Opper, Aloysius Ordu, Bernard Pasquier, Nirmaljit Paul, David Peters, Ian Porter, David Radel, Balroop Rambocus, Sheela Reddi, Robert Roche, James Sackev, William Saint, Elie Saleeby, Lourdes Sandoval, Dieter Schelling, Gotz Schreiber, Mark Segal, Beth Sherman, Jasdip Singh, Surjit Singh, Mary Oakes Smith, Jose Sokol, Gary Sterle, Yemi Suleiman, Townsend Swayze, Borje Tallroth, Klaus Tilmes, Turto Turtiainen, Hiroshi Ueno, Ray Unamma, Pietronella van den Oever, Olinda Vela, Olayemi Vera-Cruz, Dunstan Wai, Peter Watson, Michael Wishart, Josephine Woo, James Wright, Gianni Zanini, and Ot Zysman. Foreword by Edward V.K. Jaycox, Vice President, Africa Region ..............................5 [fTIIE ll0RI,I BAX K A\ND ITS BEGIHNNIN'S The World Bank Then ............................................................. 7 The W orld Bank N ow ..................................................... 11 NIGERIAI: IVORKING Tt'OGETIIEIt 1ITII THE BANK Learning from the Past, Looking to the Future ......................................... 17 The Structural Adjustment Program .................................................. 18 Agriculture - What Constitutes Success? ............................................. 27 Transport - Getting There ......................................................... 31 Urban Development - Wresting Order from Chaos ..................................... 32 Petroleum - Blessing and Curse .................................................... 35 Power - Policy First ............................................................. 36 Telecommunications - Missed Connections ............................................ 37 Private Sector and Industrial Development - David and Goliath ........................... 39 Social Services - Help to the People ................................................. 40 Education .................................................................. 41 Health .................................................................... 42 The Population Program ...................................................... 43 Environment and Natural Resources - Key to Lasting Development ........................ 44 IFC Loans - Boosting Private Enterprise ............................................. 44 Bringing Partners Together - The Bank in Nigeria ..................................... 46 People Are the Future ............................................................. 49 AXNEXES 1. Historical Lending Program, 1958-1995 ......................................... 50 2. Ongoing Projects in Each Sector ...............................................53 3. Lending and Disbursements, 1978-1995 ......................................... 54 4. Recent Economic and Sector Reports ............................................55 5. List of Addresses in Nigeria Where World Bank Publications Can be Obtained ...........56 Addresses of World Bank Offices ......................... .......... Inside Back Cover TABLE OF CONTENTS 3 WI I - - - - ; ~~"l-- -- ''a __ 4 _ _ _ _ _ _ _ _ _ - *- P A RT N E R S F O R F O RT Y Y E A R S NIGERIA ANB TIE WORLB BANK With its remarkable resource base -centering on large reserves of high-grade oil and a dynamic population in excess of 100 million, Nigeria should be Africa's economic giant. From the time of independence (1960) to the mid-1970's, Nigeria was building towvard a vibrant economy based on its diverse agricultural output. The oil booms of the 1970s, Which might have been employed to spur rapid and equitable growth, wvere lost opportunities. Today, the average Nigerian is less well-off than two decades ago (before the first oil boom), with an income of only about US$300 a year. The challenge is how to convert Nigeria's enormous natural wvealth into sustainable, equitable develop- ment that improves the lives of its citizens. For a time, it appeared that the right equation had been found. In the mid-1980s, -when IowT international oil prices had severely eroded national income, Nigeria undertook a comprehensive program of economic reforms. With these policy improvements, national income quickly turned around, growing by an average of 5 percent a year over the next six years. Unfortunately, by the early 1990s Nigeria had begun to dilute and back aw ay from many of these progressive reforms, and by 1994 had abandoncd them altogether. As a result, Nigeria fell back to its earlier pattern of eco- nomic decline. Hopefully, the recent changes in economic policy announced by the Government will be the beginning of a return to the path of economic reform. To assist in efforts to improve the lives of Nigerians, the World Bank is currentlv funding 32 projects across the country -making it one of the Bank's largest portfolios -in agricuittire and rural development, education, health, environmental maintenance, water supply, transportation, energy, and private sector development, among others. In these operations, the goal is to reach Nigeria's poorest and most vulnerable groups, particularly women and children. Yet these projects are no substitute for the immense task of forming the national economv, and returning it to the path of steady growvth. Responsibility for doing so lies with Nigerians themselves. The Bank is - and will NIGERIA AND THE WOIDI) BANK S 5 ,, - - - -. 4 . . - -. C - remain -a committed partner for development, but only Nigerians can actually implement the eco- nomic and social policies that will bring about poverty-reducing, sustained national growth. This booklet reviews the course of Nigeria's economic development, and responds to frequently- asked questions about Nigeria's partnership with the World Bank. I hope that all Nigerians will have access to the facts contained in this brochure, and will thus be more fuilly informed of the productive potential of their country. Edward V.K. Jaycox Vice President Africa Region World Bank Group 6 NIGERIA AND THE WORLD BANK The World Bank's objective is to enhance the quality of hundreds of millions of individual human lives in partnership with its member countries. To this end, the World Bank promotes the adoption of policies and institutional arrangements designed to increase economic growth and to reduce poverty. It works through policy dialogue together with governments, makes loans for specific investments, supports reforms, undertakes studies and research, and coordinates assistance with donors and with Non-Governmental Organizations (NGOs). Over the past 50 years, the Bank has amassed a rich repository of knowledge, experiencc, and analysis of the development process. THE WORLD BANK THEN The World Bank began in July 1944, in the small town of Bretton Woods, New Hampshire, in the U.S., where delegates from 44 nations met. The outcome of World War II was then still uncertain; Europe and Japan were in ruins; Asia was struggling with colonialism, and Africa remained under its sway; democracy barely existed in the developing world. Against this background, the Bretton Woods conference set up the International Bank for Reconstruction and Development (IBRD) -commonly called the World Bank -to use global backing to reconstruct postwar Europe and Japan and to assist lesser developed economies every- where. The Bretton Woods Conference also set up the International Monetary Fund at the same time. Since then, the Bank has conducted studies, given expert advice and technical assistance, and lent more than US$300 billion in support of over 6,000 projects in about 140 countries. Outstanding commitments to Nigeria -where the Bank is now funding 32 ongoing projects - are the largest in Sub-Saharan Africa. THE WORLD BANK AND ITS BEGINNINGS 7 IMF Founded jointly at the Bretton Woods conference, the World Bank and the International Monetary Fund (IMF) play complementary roles. The Bank focuses on economic development in the context of long-term economic growth. The IMF helps countries to resolve short-to medium-term balance of payments problems. The Bank promotes economic progress and pover- ty reduction in developing countries through long-term financing of development projects and programs. The IMF oversees the international monetary system, promotes exchange stability and orderly exchange rates among its member countries, and provides credits to members in tempo- rary balance of payments difficulties to assist them to adopt policy reforms and restore economic growth. Both the Bank and the IMF also offer technical assistance to member countries in areas of their special expertise. Since it began fifty years ago, the Investment Guarantee Agency (MIGA), and International Bank for Reconstruction and the International Center for Settlement of Development (IBRD) has added four affiliate Investment Disputes (ICSID): institutions: the International Development Association (IDA), the International Finance IBRD Corporation (IFC), the Multilateral The International Bank for Reconstruction and Development (IBRD) -founded in 1944 -is the single largest provider of development loans to middle income devel- -_ oping countries and a major catalyst of sim- ilar financing from other sources. The em IBRD funds itself primarily by borrowing on international capital markets. A Bank team first came to Nigeria in ! ...1953, when it conducted one of its first IVt E. economic survey missions anywhere. * NIGERIA AND THE WORLD BANK IDA I F C IBRD/IDA Blend in Nigeria The International Development Association The International Finance Corporation 1958-1969 (IDA) -founded in 1960- assists the low- (IFC) supports private enterprises in the income developing countries by providing developing world through the provision of IBM) interest-free credits with 35-40 year maturi- loan and equity financing, and through a ties. IDA is primarily funded by government range of advisory services. It stimulates pri- contributions. vate investment through assisting private Nigeria -a generous donor nation dur- firms in finding partners for joint ventures, 1970-1985 ing the oil boom - regained eligibility to offers syndicated loans, and underwrites IIA borrow from IDA in 1988. It thereby gained securities issued by companies in develop- access to soft loans, particularly to finanfce ing countries. IFC has an active program in social programs. IDA financing also enables Nigeria. some countries to borrow from other sources on harder terms. Nigeria is one of a handful 1986-1994 of "blend" countries which borrow from both - IBRD and IDA. WHO OWNS THE WORLD BANK? The World Bank is a global cooperative owned by the member countries. The size of a country's share in the Bank is determined by the size of its economy relative to that of the world. To date, 178 nations are members of the World Bank. Each member country is represented by a governor and an alternate governor -the Board of Governors which meets once a year jointly with the Board of Executive Directors. The Bank's 24 Executive Directors are accountable for the conduct of the general operation of the Bank, with the President of the Bank serving as Chairman of the Board. According to the Bank's Charter, known as the Articles of Agreement, the five largest shareholders (the United States, Japan, Germany, France and the United Kingdom) each appoint one Executive Director. The other countries are grouped into 19 constituencies, representing over 61 percent vot- ing power. It takes 85 percent of the shares to change the Articles of Agreement, but virtually all other matters are decided by majority vote. THE WORLD BANK AND ITrS BEGINNINGS * 9 -Y- MIGAs th fl woffrinivsmntodelpg Agnc (MGA ofrinetrinuacfcltes *~=% - met in deeoigcutis d^atrc foreig > Q ~---a-- . inesmet Ove it '0ya hsoyheWrdBn ICSIDcountries thavroined abtaogehro an commliton The Multernational Cenvetmernorth Guaratlement truhu h oln omeh hleg MGAg thee flowfofffees iignsID invurages ioveseinn against noncommercial risk and helps govern- ments in developing countries attract foreign investment. Over its SO-year history, the World Bank has become a global partnership in which 178 countries have joined together for a common I C I Dpurpose: to improve the quality of life for people The International Center for the Settlement throughout the world and to meet the challenge of Investment Disputes (ICSID) encourages of sustainable development. 10 * NIGERIA AND THE WORLD BANK "Throughout ... the [Bank] mission kept in While the improvements in Nigeria their minds the need to see at first hand all have been more modest, the gains have still aspects of Nigeria and to visit as many differ- been considerable. Although incomes have ent areas of the country as possible .... The stagnated in Nigeria, basic social indicators mission spent a week in Lagos planning its such as health and literacy have improved course of procedure and talking to govern- since the 1960s. Life expectancy has risen to ment and other officials [about] work to be 52 years in 1990 from 40 years in 1960 and done ... then visited the capital of each region infant mortality decreased to 91 per thou- and met with local executive councils, busi- sand live births in 1990 compared to 189 nessmen, and farmers, political leaders, edu- per thousand births in 1960. (See Table on cators, and others in an attempt to under- page 40.) stand local conditions and local aspirations The Bank has changed as the world and plans for economic development .... Each has changed - and as thinking about the of the full-time members traveled an average development process has evolved. In the first of 5,000 miles ... by train, automobile, launch- three decades after World War II, the Bank and when necessary, by bicycle and on chiefly supported infrastructure (such as the horseback ....." building of roads and ports) and agriculture projects expected to generate tangible bene- First World Bank Mission to Nigeriafisortecmuty pcfcal,o Interal Mmoradum,IBRDfits for the communitv -spccificallv, to Internal Memorandum, IBRDi' March 26, 1954 increase employment and income. But in the late 1970s, the increase in T H E W O R L D B A N K N O W world oil prices threw many developing countries into financial crisis. It then became Over the past generation, more progress has apparent that inappropriate macroeconomic been made in reducing poverty and raising liv- policies had exposed both businesses and the ing standards than during any other compara- very poor in those countries to economic ble period in history. The World Bank, shocks. This became even more apparent in through its development efforts, has made a the early 1980s as rising interest rates in contribution to this progress. In the develop- international markets dramatically increased ing countries: the cost of servicing the debts that develop- * Life expectancy has increased from 40 ing countries had incurred to pay their high- to 63 years. er oil bills; or, as in the case of Nigeria, that * Infant mortality has been reduced by had financed overly ambitious investment 50 percent. programs. * Incomes per person have doubled. THE WORLD BANK AND ITS BEGINNINGS * 11 WHERE THE MONEY COMES FROM . . . IBRD, the main lending arm of the World Bank Group, raises most of its money on the world's financial markets. It sells bonds and other debt securities to other banks, corporations, pension funds, insurance companies, and individuals around the world. For the twelve months ending June 1994, the Bank borrowed $8.9 billion. Other sources of Bank funds are capital contributions from the member countries and retained earnings. * The IBRD bonds have the highest possible investment rating, backed as they are by the callable capital of 178 member governments. Mainten- ance of a high credit rating also requires prudent financial policies, together with a strong portfolio of performing projects backed by timely repayments on funds loaned out. As a matter of policy, the Bank does not reschedule interest or principal payments on its loans, or participate in debt resched- uling agreements with respect to its loans. The Bank needs to maintain a solid credit rating so that it can borrow at the best interest rates, and thus pass the savings on to its Borrowers. * IDA funds, which account for one quarter of all Bank lending, provide the poorest developing countries with interest-free credits. Because of these soft terms, IDA cannot borrow on capital markets as IBRD does. However, the donor countries provide concessional resources through three -ear replenishments of IDA, which enables IDA to lend on these low terms. Thirty-four countries are contributing to the current replenishment. IDA also helps mobilize and coordinate aid from other multilateral organizations and donor countries. On average, for every dollar IDA commits, 50 cents of cofinancing is mobilized. * . . AND WHERE IT GOES Countries come to the Bank for economic research, policy and technical advice, and for capital loans with the understanding that these will be repaid. The Bank is a cooperative, not a profit- maximizing institution. A portion of IBRD's net income is allocated to its reserves to ensure a high degree of financial protection in the world capital market. Although IBRD does not pay dividends to its members, a portion of net income has been used to support commitment fee and interest rate reductions. * IDA money is lent without interest but with a small service fee of 0.75 percent against the outstanding balance of credits to meet administrative expenses. There is competition for these limited IDA funds, which are channeled to the poorest countries which cannot meet their foreign exchange needs from commercial sources, and demonstrate that they can use the funds effectively. 12 * NIGERIA AND THE WORLD BANK As the thinking about development - 3 The Bank seeks to evolved, the Bank determined to adopt a j j improve citizens' methodical approach to economic develop- Al.t ' ability to carry out ment, and saw the need for stricter -and local development by more market-based -economic policies. It . assisting in providing supported countries that adopted such training and technical reforms, with a new lending instrument -the assistance. structural adjustment loan/credit. Since the late 1980s, the Bank has - , focused its development assistance on reduc- -2 .. ing poverty and raising the living standard of the poor. Ts o this, it has increasingly sup ported programs designed to provide basic social scrvices to help build the human capital fi > of the poor, and to empower the poor to reap 7 U the gains of economic growth. The Bank also seeks to improve citizens' ability to carry out local development by assisting in providing training and technical assistance. To improve its accountability to the - public, the Bank began to publish environ- mental assessments and country economic and sector reports. Making information about Bank-sponsored projects more accessible offers client governments, NGOs, and community- based groups the opportunity to understand Bank operations better. (There are several sources from which to obtain World Bank documents in Nigeria. See Annex 5 for addresses.) A clearer understanding of Bank operations also lays out openly which policies work and which do not. THE WORLD BANK AND ITS BEGINNINGS * 13 * -q iJi !III ... , .. ~~~* , ,g Wi!! ;- " .k.I', v' ' t -*m r I-I j- I.' igeria first sought assistance from the Bank for basic infrastructure - to upgrade the railways (1958) and Apapa Wharf in Lagos (1963). Since then ninety-eight loans and credits have been approved, for a total commitment of $6.8 billion. Nigeria has requested Bank assistance for projects not only at the Federal level (i.e., universi- ties, NEPA, NNPC) but also for individual states (i.e., state water supply, highways, agriculture and health projects). (See Annex 1 for a summary of all Bank loans and credits to Nigeria.) The size and complexity of Nigeria presents particular challenges for the creation of economic change and growth. Continuous efforts are needed: in some instances, NGOs are assisting in imple- mentation; donors seek to coordinate their assistance, to avoid wasting resources in overlapping efforts; and initiatives aimed at expanding beneficiary participation at the community level are ongoing. Assistance from the Bank has been spread widely, and currently includes support for state-level agricultural development projects, irrigation technology and agricultural research, highway construc- tion, water supply and sanitation, primary and secondarv health care, implementation of the National Population Policy, education at all three levels, urban development, a credit line for small and medi- um size enterprises, and development and implementation of Federal and State environmental action plans. The total funding in loans and credits currently allocated but not yet drawn down by the beneficiaries is $1.6 billion (March 1995). During the 1980s when the collapsing oil market sent Nigeria reeling under the effects of the oil bust, the Bank provided help in reorienting its macroeconomic policies with two structural adjustment loans in 1986 and 1989. NIGERIA: WORPNG TOGFTHER WITH THE BANK * 15 - tV I. HOW THE LOANS ARE DISBURSED After a loan has been negotiated between the Borrower and the Bank, it is submitted to the Board of Executive Directors of the World Bank for approval. All member countries are represented on the Board. Once conditions have been met for the loan to become effective, Bank funds are made available and matched by local counterpart funds. The funds are drawn down by the Borrower over the life of the loan (around 5-7 years in Nigeria) only for the goods, works and services specified in the legal agreements for the loan. Procurement of such goods and services is handled in different ways, depending on the nature of the items, following the Procurement Guidelines of the World Bank which are based on international business practices. For example, purchasing may be done locally for small quantities of some goods and services such as office furniture for the implementing agency - but is generally advertised to enable a Borrower to achieve the most cost-effective pur- chase. For goods, works and services costing a large amount which are likely to be of interest to bidders in any other member countries, advertising must appear in appropriate journals with enough lead time to enable bidders' participation. (A preference margin may be given to bidders in the advertising country when procurement is through international competitive bidding.) Each withdrawal of funding is subject to review by the World Bank. Supervision teams monitor the use of the funds on a continuous basis, with regular site visits. Annual audits are required by the Bank. At the end of a loan, an Implementation Completion Report is prepared by the Borrower and the Bank to evaluate the performance of both parties. 16 * NIGERIA AND THE WORLD BANK LEARNING FROM THE PAST, stration is assisting local experts to analyze LOOKING TO THE FUTURE household survey data. In 1994, a Federal Ministry of Finance World Bank lending policy and project and National Planning Commission Task design is not made in a vacuum. Nor is it sim- Force undertook a review, together with ply an exclusive reflection of Government or World Bank staff, of the Public Expenditure of Bank wishes. It is rather the product of Program. The joint Nigerian/Bank team constant communication between the findings were that stabilization of the econo- Borrowing country and the Bank. my is an urgent priority. Government officials, Bank staff, project Another Bank program of particular managers, project assessors, and -most importance to Nigeria is the Economic importantly -the people affected by the pro- Development Institute (EDI), which con- jects, all contribute to World Bank lending centrates on institution-building and the strategies. The Bank constantly evaluates its training of policymakers and other essential own strategies together with the Borrowing personnel in such core areas of macro- countries to make sure that they are directed economic management as structural adjust- at promoting sustainable economic growth ment, foreign debt, trade, public and private and reducing poverty. sector institutions, and the delivery of public Throughout its history, the Bank has services. Nigerians who take part in the EDI- also worked with countries to develop the sponsored Research Fellowship Program baseline data needed to assess local economic bring to the Bank the Nigerian perspective and financial conditions and policies. It has been involved in studies of countries' fiscal, ECONOMIC AND SECTOR WORK monetary, sectoral, and infrastructure develop- Nigeria and the Bank keep talking to each other both to learn and to ment strategies and has gathered examples of inform. A continuous dialogue on sector strategies helps provide a best (and worst) practices from every corner sounding board for Nigerian thinking, and a basis for project develop- of the globe and in every area of development. ment. The dialogue may result in a formal report, a workshop, or iden- Joint workshops in all sectors are held to raise tification of a project. Recent reports have reviewed the Energy Sector, mutual awareness. Social Services, Land Resource Management, Development of an To help develop a Poverty Assessment Environmental Action Plan, Infrastructure, Industrial Pollution, for Nigeria, Nigerian research institutes are Banking and the Structural Adjustment Program. (Recent Economic providing papers on issues related to poverty, and Sector Reports are listed in Annex 4.) These reports provide an and the Bank, with support from UNICEF independent review of critical issues, developed in partnership with and the Overseas Development Admini- Nigerian specialists, with the support and assistance of Government. NIGERIA: WORKING TOGETHER WITH THE BANK * 17 The World Bank on such issues as capital flight, debt conversion, T H E S T RU C T U R A L report titled and financial market development. Alumni of AD J U ST MEN T P R O G RAM "Nigeria -Structural EDI, furthermore, fill many important positions Adjustment Program: in Nigeria. "In the African countries that have under- Policies, Implementa- Nigeria and the World Bank learn from taken and sustained major policy reforms, tion, and Impact," each other in a constant exchange of informa- adjustment is working. But a number of published in May tion, experience, and opinion, and Nigeria's countries have yet to implement the reforms 1994 and covering the senior officials enjoy ready access to top man- needed to restore growth. And even among period 1986-92, agement of the Bank.This process informs both the strongest adjusters, no country has attempts to clarify the sides, allowing them to develop a common, gone the full distance in restructuring its important role played informed agenda for Nigeria's economic future. economy." by external shocks, The breadth and depth of the partnership The opening paragraph of a over which the coun- of forty years is shown in the sectoral sum- recent World Bank study of try has little control, maries which follow. But first, a review of the adjustment in Africa as opposed to the story of SAP -the structural adjustment pro- domestic economic gram which the Nigerian Government intro- Where does Nigeria fit in this general policies adopted to duced in the mid-1980s. description? Has Nigeria really taken the manage these shocks and the other broader development challenges that Nigeria faces. I 18 NIGERIA AND THE WORLD BANK Real Crude Oil Price in the early 1980s and then collapsed in Try telling a Nigerian 45 1986. Nigeria's export earnings fell from today that structural ,$26 billion in 198U adjustment works- an Tee Teeonomv when real income and 35 was devastated, and with it, Nigerians' living consumption are no 30 - - -standards, which reached their low point in higher now than they 25 1986-87. Public policies hurt the Nigerian were in the early economy. Government controls over foreign 1970s, before the oil exchange, pricing, and agricultural marketing boom. But looking at 1 stifled competition and economic growth. Nigeria's own early 0 - Little of the Government's oil rceipts was experience during s invested in the Nigerian people or in pro- 1987-92, it is clear id uctive assets with high returns. Much was that structural adjust- 1972 '73 '74 '75 '76 '77 '78 79 '80 '81 '82 83 '84 '85 86 '87 '88'89 '90 '92 '93 ,vasted on uneconomic projects and corrup- ment does work. So tion. what happened? adjustment cure? And has the cure worked? In After 1981 it took some time for pub- recent reports on the SAP experience by both lic spending to come down, and throughout the Central Bank of Nigeria and the World 1983, the Nigerian Government spent more Bank, the answer is, yes, Nigeria has taken the adjustment medicine. But often irregularly Real Per Capita Consumption and never the full prescription. Even so, the Nigerian economy showed a remarkable turn- around in the second half of the 1980s, when compared wvith the period preceding the 1.8 adjustment years. 1.7 M 1.6 BACKGROUND 1.5 - 1.4 Nigeria's economy is heavily dependent on oil > - -_- exports. In the 1970s, as crude oil prices I climbed upwards, the Nigerian economy 1.2 soared, together with Government's expendi- la - tures. With the economy flush with foreignI exchange, living standards also doubled. Oil prices in the world markets dropped 1972 '73 '7475 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 NIGERIA: WORKING TOGETHER WITH THE BANK 19 EARLY PROPOSALS FOR ADJUSTMENT: A MISSED OPPORTUNITY The stabilization component of the 1983 reform package included prescriptions for raising tax revenues; phasing out subsidies on domestic fuel consumption; strict controls over current ,expenditures; a cutback in real capital expenditures (50 percent); and a significant devaluation of the currency. + The structural elements of the reform package induded improvements in the quality of the public investment program; commercialization and privatization of selected parastatals, to increase the efficiency of their operations; tighter discipline in the budgetary process; reform of the incentive policies in agriculture and industry to encourage efficient domestic production and non-oil exports, through elimination of import quotas and their sub- stitution with (moderate) customs tariffs; upward adjustment in farm support prices; and streamlining of regulatory controls to encourage investments in industry and fiscal incentives to promote manufactured exports. * It took three more years of worsening economic perfor- mance before a comprehensive package would be launched. 20 * NIGERIA AND THE WORLD BANK than it earned. The Government relied on However, that early attempt to intro- borrowing from the banking system and duce a reform package was shelved in 1984 money creation, which generated inflation. To by the new military government, as a num- finance its foreign expenditure, it ran down ber of the key SAP reforms proved politically the country's international reserves, borrowed indigestible, such as adjustment of the offi- heavily, and accumulated large-scale payments cial exchange rate, abolition of quantitative arrears. When oil prices collapsed further in import restrictions, and an increase in 1986 and forced the Government to adopt a domestic fuel prices. Instead of a compre- comprehensive package of economic reform, hensive reform package, the Government Nigeria's economy wvas in a deep-seated crisis. chose to introduce only budget-tightening measures. These measures, introduced with- out structural adjustment reforms to deal WHY THE SAP ? with the internal and external macroeconom- A first draft of a comprehensive reform pro- ic imbalances, plus the collapse of oil prices gram was discussed by the Shagari administra- in the spring of 1986, failed to revive the tion wvith the World Bank and the IMF as economy. early as 1983, as the Nigerian Lending to Nigeria economy' was fac- -________ ing two critical 1958 - 1995 -1100 [FISCAL YEARS] issues: first, man- aging the imme- 1000 diate financial 900 crisis and stabi- 800 lization of the economy, and z 700 second, longer- > 600 term structural 5 adjustment of 4 the economy to lessen its depen- 300 dence on oil and 200 to develop a wider productive base. 1958 '63 '64 '65 '66 '69 '70 '71 '72 '73 '74 '75 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 NIGERIA: WORKING TOGETHER WITH THE BANK 21 the economy, or address fundamental eco- c- nomic and financial problems confronting Nigeria, the new Government realized it had ,, P to launch a comprehensive package of stabi- ' " .lization and structural reform measures any- ~ - way. = t .Thus, with the blessings of the IMF but , - -without any of its money, the Government announced its own Structural Adjustment X,' i,Program (SAP) to the nation on August 27, - JUI . . * 1986. And instead of borrowing from the - . -.IMF, the Government took an adjustment ..; . - loan from the World Bank for $452 million, *- - most of which was used to increase the supply ' *.of foreign exchange to the private sector, - ,thereby helping stabilize the exchange rate - -throughout 1987. This first loan was then fol- lowed by a second one in 1989 for $500 mil- The subsequent government launched a public "IMF debate" during 1985 in the hope lion. A proposed third loan for another $500 publc "MF dbat" dring198 in he ope million was shelved at the end of 1990, when of obtaining popular support for a structural it became apparent that the reform program adjustment package. The result was an over- whelming refusal to take an IMF loan with its in the area of public expenditure management associated conditionalities. The opposition had gone off track. The dialogue between the among academics, students, labor leaders and Government and the World Bank on a reform business people to a program backed by an program has, however, continued. IMF loan was based on three main reasons: a) the defense by organized manufacturers and THE EXPECTATIONS FROM SAP organized labor of the protective walls created by the system of import licensing; b) the belief The promise by the Government of the SAP that the loan proceeds would be wasted; and c) in 1986 was not a quick turnaround to high the perceived offense to the international status growth rates and pre-oil boom per-capita con- and internal sovereignty of Nigeria that an IMF sumption levels, as some people perceived. loan with its conditionalities would bring. Instead it was damage control in the short run Since the 1984-85 budget-tightening and necessary restructuring for sustainable measures did not stop the continuing decline in growth in the medium to long run. The goal 22 . NIGERIA AND THE WORLD BANK of policymakers was a return to moderate rates During 1986 - 92, overall GDP of growth in production and of living stan- growth averaged about 5 percent per year. dards (around 4 percent). Only agriculture This contrasts sharply with the average was seen as an area where improvements could decline of 2 to 3 percent per year between make an immediate impact on the supply situ- 1980 and 1986. It represents a remarkable ation, and where dependence on the external turnaround of 7 percent in growth rates. sector for food and industrial raw materials Several factors can explain such a could be quickly reduced. robust growth of GDP despite weak progress with reforms. First, the private sector- THE ADJUSTMENT PROCESS mainly the agricultural sector and those manufacturers who succeeded in shifting to Nigeria's SAP was comprehensive. It com- local resources performed well. Second, more efficient use of private capital and some bined exchange rate and trade policy reforms ices nivsmn locnrbtdt (aimed at revitalizing the non-oil economy) therecoery oftGDP g owth.bThid th with stabilization policies (designed to restore t production and export of oil, generally unaf- equilibrium to the balance of payments and to fected by public sector inefficiency and other mued pricesfmores stable). Thveprogram spolicy distortions, strongly picked up from incldedeffots o lmit ovenmen spnd-1989 and contributed substantially to GDP ing, downsize the public sector, improve the management of publicly owned assets, growth. improve allocations to infrastructure and social Economic Performance Before and After sectors and relv more on market forces. It the Introduction of the SAP freed up the foreign exchange market, and eliminated import licenses, the agricultural ANNUAL RATES OF GROWTH 1980-86 1986-92 marketing boards, and most price controls. 19E0CENT86E9 ' (PERCENTAGE) It launched a program of privatization and commercialization of public enterprises, and Agriculture 0.5 3.8 took steps toward the deregulation of the Industry -5.1 4.5 Mining -5.9 4.3 bnigsse.Manufacturing -1.8 4.9 Although the Government sustained 0.2 6.3 Services 0.2 6.3 some reforms, others were abandoned while GDP -1.7 4.7 others were implemented unevenly. All suf- OH-based value-added -5.3 4.5 fered from the vagaries of the increasingly Non-oil value-added -0.2 4.9 erratic macroeconomic environment. Note: Compound growth rates based on value-added at factor cost In constant 1987 prices Nonetheless, the new approach worked. Source: Federal Office of Stanssscs NIGERIA: WORKING TOGETHER WVITH THE BANK * 23 Oil prices were still Overall growth performance could have the lack of foreign exchange -and patients dropping even as the been even better, if reforms had been pursued increasingly bypassed the public health system. SAP was being intro- vigorously. But just as good policies were In education, with the cutbacks in funding to duced. Even so, instrumental in the recovery, the retention of the sector, the quality of teaching suffered, Nigerians attributed the failed old policies would have pushed the with a shortage of instructional materials and to the SAP the impact economy further down if they had been left higher pupil to teacher ratios, and enrollments of the drop in oil in place. fell -a situation that was not reversed during income on the econo- People's incomes and consumption grew the SAP period. A similar trend prevailed in my, on their living at 2 percent a year in 1987-92 on a per capita the water supply sector. standards and on the basis. But even though the SAP revived Thus, contrary to the SAP objectives value of the naira. growth, that growth has been insufficient to which specified a permanent shift in expendi- This undermined make up for the huge drop in purchasing ture priorities toward infrastructure and social political support for power from the collapse of international oil spending, the Government failed to attain that the program, especially markets which added to the burden of servicing goal. For example, the share of total public for the program's sta- the increased external debt. In real per capita expenditure going to education in 1988 was bilization policies, and terms, consumption and income are now no only about one half of what it was in 1980, caused it to be imple- higher than they were in the early 1970s prior and in the health sector the already very low mented erratically. to the onset of the oil boom (see Graphs on pre-SAP share was not increased. page 19). The urban middle class -in particu- In other words, actual spending priori- lar workers in import-substituting industries- ties were elsewhere (on Abuja, the Armed has borne the consequences of the economy's Forces, Ajaokuta, the Aluminum Smelter, the adjustment to the downturn in oil markets and fertilizer subsidy, the petroleum subsidy, and the collapse of foreign exchange earnings. the political transition program). These pro- grams have not had a positive impact on the PUBLIc EXPENDITURE PRIORITIES economy. And they have drained resources from necessary infrastructure improvements and from the needs of health and education, What happened to the social sectors, particu- whl grai the hgbi- of the larly health and education? By the time the SAP while generating the huge build-up of the was adopted, the decline in oil revenues had budget deficit. been responsible for severe cutbacks in some areas of public funding, and the social sectors C o N C L U S I O N S were hard hit. With the decrease in resources provided to the health sector, the quality and At the inception of the SAP, Nigeria under- availability of services continued to decline- took challenging and important reforms. the import of drugs was cut sharply because of However, the structural reforms were not fully 24 * NIGERIA AND THE WORLD BANK WHY HAS THE NAIRA COLLAPSED? Nigerian governments, reflecting strong popular sentiments, have tried on many occasions to resist or buck the pressures in the foreign exchange market towards a depreciation of the naira. Such a policy can only work if and when a country has foreign exchange reserves to draw dqwn (or can borrow) to satisfy the market demand in excess of the market supply. Without such backing, attempts to fix an exchange rate at a low level will generate demand that outstrips available supply and leads to further devaluation. The only way to maintain stability in the exchange rate is to put in place policies that address the root cause of the pressures. * What have been the root causes of the naira depreciation since the inception of the SAP? The answer in the case of Nigeria is sim- ple: government expenditure mismanagement. In addition to this, political instability has greatly contributed to the recent dramatic loss of confidence in the naira. * It is instructive to look at what has happened to consumer prices. Since 1986, the rate of inflation has fluctuated widely, reflecting variations in government management of revenue and expenditure. In 1986 and up to the middle of 1987, despite a 70 percent loss in the value of the naira, satisfactory management of money supply kept the inflation rate to below 16 percent. * Expansionary fiscal and monetary policies since 1990, instead, caused inflation to rebound, with rates in excess of 60 percent in 1993 and 1994. In parallel, the foreign exchange rate, that is, the naira price of foreign exchange, increased in the market from about N10 to the dollar in 1990, peaked briefly at over N100 in late 1994, and fluctuated in the N75-85 range in early 1995. * Perhaps the weakest part of Nigeria's adjustment program has been the control of government spending. The public sector spent progressively more each year as revenue grew only slowly. The deficit, by and large, was financed by printing more naira. Since 1990, as the then anticipated democratic transition approached, fiscal deficits rose sharply and the economy was flooded with newly printed naira. * As more and more naira chased after the same or a slowly growing amount of goods and services, each naira became worth less. This was reflected in rising consumer prices. Those whose naira income did not rise at the same speed could buy less. Meanwhile, more and more naira were chas- ing the same or a slowly growing amount of foreign exchange. Thus more and more naira were needed to buy the scarce foreign exchange. * The attempts to tighten controls on the purchase and sale of foreign exchange in 1994 kept the official exchange rate artificially stable at N22 to the dollar. However, this "stability" came at a very high price to Nigerian exporters. Their competitive advantage, particularly towards neighboring countries, largely disappeared. The re-opening of the foreign exchange markets, as highlighted in the 1995 budget, is an important step toward stimulat- ing exports from Nigerian producers. NIGERIA: WORKING TOGETHER WITH THE BANK * 25 implemented, and stop-go fiscal policies under- choked off. The declining rates of real GDP mined the SAP's stabilization objectives and growth in 1992 and 1993 barely kept up with introduced uncertainty about the sustainability population growth. Heightened political of the new policies. The large debt overhang uncertainty since the middle of 1993 aggra- was also a factor in discouraging some savers vated the gloomy economic outlook. and investors. Reductions in large-scale unpro- Moreover, the 1994 budget policies on ductive public investment did not occur, and exchange and interest rates dismantled to a spending levels for the social sectors were not large extent the remaining incentive frame- protected. Nevertheless, key economic distor- work introduced during the SAP years. The tions associated with the pricing and availability earlier gains from the SAP -including the of foreign exchange were reduced in the SAP improved international competitiveness of the years, and the growth response over the 1987- Nigerian economy and the impact on growth 92 period was good. -have been placed very much at risk. The erosion of the gains of macroeco- But looking ahead, the central economic nomic stability in the 1990s is, however, due to challenge facing Nigeria is to bring the macro- growing extra-budgetary expenditures, which economic situation back under control, as a reflect narrower political concerns, associated in necessary step in establishing an environment large measure with special interests and a very conducive to sustained growth and poverty expensive electoral process. These large outlays reduction. But this will require many political- have been financed primarily by printing money ly difficult measures, particularly expenditure and by diversion of oil receipts into off-budget restraint and a reordering of spending priori- accounts. Consequently, the resulting inflation ties, as well as a functioning market-deter- Lnding Operations by Sector has reduced the mined exchange rate system and deregulated 1958_1994-purchasing interest rates. Even more importantly, it will 1958-1994 (PERCENTAGE) power of con- require transparency in the budgetary and Agriculture/Rural Developement sumers and spending processes -so that the people can Urban/Water Supply aggravated dis- judge for themselves how the Government is Structail Adjustment satisfaction with using its resources and the implications for Transportation recent econom- their future. The first important steps were Education, Health/Population ic policies. The taken in the 1995 budget. climate for pri- As consensus on the way forward Industry/Oil and Gas I Power vate investment emerges -and Nigeria decides resolutely to has been under- implement the needed reforms -external Teleconmnunications- mined and the donors and creditors are likely to support the Environmental/Technical Assistance U 0 10 15 20 25 30 supply response effort to help ensure its sustainability. 26 . NIGERIA AND THE WORLD BANK AGRICULTURE - ' d - What Constitutes Success? In Nigeria today, state-wide Agricultural a Development Programs (ADPs) exist in all thirty states and the Federal Capital Territory (FCT). These Nigerian-managed ADPs, sup- ported in part through Bank loans, reach four- fifths of the rural population. Over the last twenty years they have been instrumental in improving rural infrastructure, introducing new farm technology, and measurably increas- ing Nigeria's agricultural productivity. From 1988 to 1993, for instance, Nigerian agricul- ture grew annually at a rate of 4 to 5 percent, much above that achieved by most Sub- Saharan nations. projects -begun when oil money was plen- The Agriculture Unit The basis for Nigeria's strong agricultur- tifult w ere a success: productivity rose, of the Lagos Office, al development program was laid in 1953, rural roads were built, and water was provid- with one representa- when the World Bank sent its first mission to ed for rural people and for livestock in the tive from the Nigeria to study the country's economy. At dry season. The projects also created an Washington Head- that time, the Emir of Kano confidently extension organization that reached a large quarters and eight asserted that "the basis of [Nigeria's] econo- number of farmers. The middle-belt and Nigerian senior staff, my is its agriculture and will remain so, and southern zone projects which followed were provides implementa- everv effort must be made to improve it." Yet more ambitious in design and were faced tion assistance to the twenty years later, most Nigerians saw oil- with diminishing government financial sup- Bank-aided agricul- not agriculture - as their future. As oil rev- port. Although they made little impact on ture projects in enles rolled in throughout the 1970s, people agricultural output, the projects left behind a Nigeria and assists bought imported foods, and local agriculture useful legacy as they provided the nucleus with project prepara- was all but forgotten. The Federal budget for later extension services and improved tion and appraisal. allocated less than 3 percent a year to the sec- rural infrastructure. tor, and that rate dropped to 1 percent in the In 1980 Nigeria's Federal Government late 1980s, after oil revenues had dried up. vowed to break the country's dependence on Nigeria's use of Bank assistance food imports and to increase local produc- began in earnest with a series of area develop- tion 3.5 percent a year for five years. It ment pilot projects in 1974/75. The northern established the first state-wide ADPs, which NIGERIA: WORKING ToGETHER WITH THE BANK, 27 -. I WOMEN AND DEVELOPMENT Women, in Nigeria as elsewhere, have many responsibilities. Broadly speaking, these fall into three main categories: bearing and rearing children, maintaining the welfare of family and household, and working to earn income in cash or kind. It is not surprising, then, that studies have shown Nigerian women to work considerably longer hours than men. Yet their contribution to the country's social and economic development remains largely unrecognized in official statistics. Clearly, no country can aspire to achieve its full development potential unless all of its people, women and men, are full participants in this process. Add this to the fact that women's earnings are very likely to be spent on the health and education of their children, and it is easy to see why about half of all the projects supported by the World Bank today specifically target and involve women. * The great majority of Nigeria's women work in agriculture and related activities. In fact, women provide well over half of all labor in agricultural production and processing. They also perform much of the rural transport work, carrying on their heads, over long distances, farm pro- duce, fuelwood and water. Achieving agricultural growth and raising incomes in Nigeria's thou- sands of villages is, therefore, crucially dependent upon directly reaching and involving the women. The World Bank has collaborated with the state agriculture ministries through the Agricultural Development Projects in efforts to make rural women more productive and to raise their incomes. Today, the agricultural extension services of all states include strong Women-in-Agriculture pro- grams: large numbers of women work as extension agents, and farm technology advice is reaching 28 X NIGERIA AND THE WORLD BANK women farmers through women's groups and ; female contact farmers. The Bank is also work- ing closely with the forestry departments to address the fuelwood problem faced daily by 7' ' many women. Projects supported by the World .-r Bank help ease women's workloads by provid- - | ing sources of safe drinking water in the vil- i lages and by promoting more efficient tools and techniques for processing crops. * The Bank has worked with Nigerian ministries and - 'I agencies to provide better health care, educa- tion, nutrition, sanitation and family planning services to Nigeria's women and their families. Healthier and better educated mothers and children are essential for the country's future. - * Nigeria's women also work in, and often manage, a wide variety of small and micro businesses, ranging from food processing and trading to a multitude of artisanal and cottage industry pursuits. And, as many local agencies as well as development agencies have learned, if - R given the opportunity, women are excellent money managers and credit risks. Their enterprise and business acumen are renowned and represent a tremendous potential for spurring the country's development. A group of women in the town of Moniya provides an example. A few years ago, these women formed a cassava-processing group, calling it "Stop Hunger." Supplied with peeling knives, machinery, stoves and advice by scientists from the International Institute of Tropical Agriculture in Ibadan, they went to work. Today, they not only process food for their families faster and more easily in the community center, thereby freeing up time for other tasks, they also take on contract processing to earn extra income. Now they have organized a morning school before work, where they study reading, English, and arithmetic -to help them do their accounts. NIGERIA: WORKING TOGETHER WITH THE BANK . 29 - x-cultural projects, these multistate ventures put the strengthening of planning and implement- ing institutions before infrastructure works, while continuing support to federal coordinat- ing and evaluating units. They also empha- A -sized the involvement of women's groups, and set in motion the expansion of the - -Women-in-Agriculture program which now operates nation-wide. Today, both Bank and government money has been made available for multistate projects on a competitive basis, replacing the - -past practice of preallocating set funds to each state. Projects that can satisfy eligibility and implementation criteria will have greater access to funds, and the Federal Government soon brought extension advice to all villages in will need stronger supervisory oversight to these states. They also brought in water pumps administer the process. to replace the shadouf for surface-irrigation sys- Country-wide, the ADP system today tems, and tube-well technology to tap the shal- has some 8,000 village extension agents and low acquifer on fadama lands. The results were 1,200 specialists. It has formed 4,000 wom- impressive: farmers cultivated more off-season en's groups to deal with production, post-har- grains (such as rice and wheat) and high value vest technology, storage, marketing, and sav- perishables (such as tomatoes and onions which ings. Its extension services cost just $2 per were sold both in local and overseas markets). person per year. Among its successes are the At the same time, Nigerian managers and fact that 80 percent of Nigeria's farmers were technicians, mostly trained on the projects, using improved cassava and maize varieties in began to take over the running of the ADPs. intercropping systems by 1993, 70 percent Local private contractors, progressively, were had access to soybeans (a cheap source of pro- hired to carry out rural roadworks, gradually tein), and 35 percent had adopted the relieving the burden on Government. improved miniset yam. In 1986, Nigeria initiated its first Nigerian governments have consistently Multistate Agricultural Development Project shown steadfast commitment to the agricul- (MSADP I). By 1989 there were three such tural sector and to the ADP system, even projects covering 26 states. Unlike earlier agri- when the World Bank hesitated to support 30 + NIGERIA AND THE WORLD BANK rural development managed by parastatal state and federal government budgets, pro- organizations. The Nigerian experience vided vast windfall profits to intermediaries showed that such a program must be nation- in the fertilizer distribution chain, stimulated (or at least state-) wide and cannot be mea- substantial black-market and crossborder sured in terms of five-year projects or financial trading in fertilizer, but have rarely reached self-sufficiency only. It also demonstrated the the intended beneficiaries - at government- need to involve the farmers through on-farm decreed prices - Nigeria's small-scale farm- research and at all stages, and the benefits of ers. As of 1995, the fertilizer subsidy contin- using private local contractors to develop rural ues to absorb more public funds than all infrastructure. As a provider of public services other government support activities to the which is not expected to be financially self- sector combined, yet most agriculture farm- sustaining, the ADP system is a workable and ers must pay many times the official price to effective means of channeling public funds for obtain fertilizer at all. agricultural and rural development to the dis- advantaged non-urban sector. Keys to its sus- TRANSPORT tainability are its cost-effectiveness, the pursuit Getting There by Government of policies that are favorable (or at least not unfavorable) for agriculture Over the years, Nigeria has built up one of and the rural sector, and the transfer to pri- the best trunk-road networks in Africa. vate entrepreneurs and beneficiaries of all Today, however, many of its roads have fall- commercial activities and the operation and en into disrepair for lack of adequate mainte- maintenance of local infrastructure. Under separate projects, the World Bank is also supporting essential activities such as agricultural research, seed production and distribution, livestock health and production, afforestation and forest management, and oil palm production and processing. The Bank has not financed the import ML of fertilizer and its distribution for a number - of years now because of the wide gap between official and market prices which has been the cause of enormous waste of financial and agri- - a cultural resources. The heavy subsidies on offi- Jr cial fertilizer prices have been a huge drain on RURAL ROADS WITHIN ADPS them, improving the road system and its management is absolutely crucial to the Under various ADP projects supported by the Bank since 1980, more than cou nt ic growth. Nigeia's fe country's economic growth. Nigeria's federal 2,000 km of new all-weather resistant rural roads have been built, with highway system is far and away the most bridges and culverts. Another 4,000 km of rural roads have been completely important and comprehensive means of rehabilitated. These roads were in high-priority areas, crucial to facilitate the transport, yet it is rapidly falling into ruin. In efficient movement of farm inputs to farmers and of agricultural produce addition, there are secondary, or state, roads from the villages to markets and towns. By providing good and year-round which connect up to federal highways, all of access to input and output markets and to the health, educational and other which need to be maintained. More than social and economic services available in towns and cities, these roads have three quarters of the $645.9 million the helped improve the lives of millions of people in rural Nigeria. Bank has lent to the transport sector so far (9.6 percent of all Bank lending to Nigeria) nance. With roads being Nigeria's major form has gone into the highway system. of transport, the condition of those roads seri- Since money spent on maintenance has ously affects its economic prospects. the highest rate of return, routine road World Bank support for the transport maintenance should top the transport agen- sector began in 1958 and for the next fifteen da. A roads sector strategy study undertaken years covered a broad cross-section of Nigerian by the Bank in 1989 shows that Nigeria transport: railways, ports, civil aviation, roads, needs to undertake institutional and policy and a general loan to help the country repair reforms, increase its allocations for road the ravages of civil war. From 1973 to 1980, upkeep, involve the population in planning however, Nigeria financed its transport sector and carrying out road projects, agree on pri- entirely from oil revenues. It devoted fully a ority roads in need of rehabilitation, and quarter of its Third Development Plan to take steps to ensure that funds go first to expanding Nigeria's infrastructure to relieve such budgeted activities as routine mainte- traffic bottlenecks caused by the country's sud- nance, resealing, and regravelling. den and unprecedented economic growth. In 1978, Nigeria asked for Bank support to help URBAN DEVELOPMENT reduce the cost of highway construction and to train Nigerians in road maintenance. That support continues today, with ongoing pro- Nigeria's demand for urban infrastructure jects at both federal and state levels. including affordable housing, safe drinking While air, rail and sea transport are water and sanitation has far outstripped sup- important to Nigeria and the Bank is working ply; a policy and financial climate is now with the Federal Government to improve all of needed to encourage state and local govern- 32 * NIGERIA AND THE WORLD BANK ments and the private sector to take over ajin -. r these tasks. So long as government supplies - basic services, the Bank recommends a mix of market pricing (at times offset by subsidies for , the poor), investment in maintenance, simpler and lower-cost technologies, and autonomy - v P; for publicly owned utilities. Nigeria has a long history of urbaniza- tion, and its system of cities plays a vital role i in the national economy. But services in those I - / I X cities have not been able to keep pace with b . the burgeoning population. Because Nigeria funded urban develop- ment out of its oil revenues for many years, the World Bank came late to the sector, A i - which includes roads, housing, sanitation, and water supply. Nonetheless, over the last 25 years, it has supported nine water and sanita- Bank loans to improve its urban housing tion projects- particularly favored because with urban sites-and-services schemes and they benefit the poor directly - at a cost of community improvement schemes, and pro- $757 million and six urban development pro- moted urban land development and better jects for $312.9 million, together accounting drainage and sanitary conditions. In 1990, for 16 percent of the Bank's total lending to the Infrastructure Development Fund Nigeria. Project, working through Nigerian merchant Although Nigeria has spent millions on banks, began financing multisectoral urban water systems, less than half the urban popu- infrastructure in twelve States - with sub- lation and less than a quarter of the rural pop- projects in road improvement, drains, water ulation have access to clean water. Already supply, sanitation, waste collection, markets, these levels of access are grossly inadequate, motor parks, and land development. The and the quality of service is deteriorating. The ongoing Oyo State Project not only took major problem, it appears, is one of inefficient physical measures to improve flood control management and the fact that the service does and solid waste management, it also estab- not pay for itself. And then the all-important lished a line of credit to enable local maintenance cannot be provided. governments to undertake such improve- Throughout the 1980s, Nigeria used ments themselves. NIGERIA: WORKING TOGETHER WITH THE BANK * 33 OIL IS A MIXED BLESSING The Nigerian economy is highly dependent on a - number of external variables beyond the control of policymakers and domestic agents. Most important - amongst those variables is the price of oil, which is highly uncertain and determined in fluctuating international markets. With Nigeria's oil sector accounting for almost all of the country's exports and govermuent revenues, a fairly small price change - - can have a significant impact. A $1 increase in the oil price in the early 1990s increased foreign exchange revenues by about $650 million a year and government revenues by $320 million a year. Nigeria's reliance on oil production for income gen- eration clearly has serious implications for its eco- nomic policy management. In the past, Nigerian policymakers tended to assume that oil price increas- es were permanent and oil price decreases temporary. This assumption has led to a number of difficul- ties. * During oil booms, expenditures have tended to increase with higher revenues, and since expenditure programs are difficult to contain or reduce when booms come to an end, macroeconomic imbalances have been a recurring problem. Given that these imbalances cannot be sustained indefi- nitely, expenditure cuts have been unavoidable, but have frequently been undertaken too late. The effect on the overall domestic economy, because of expanding and contracting public expenditure programs dependent on oil income, has increased the risks faced by investors in non-oil activities. Private investment is lower than it would be otherwise and consequently growth in the non-oil econo- my is reduced. * Oil-boom resources have financed additional, large government expenditure pro- grams that exceeded the public sector's programming, implementation and management capacity. Many investments did not pay for themselves, in large part because with the large number of pro- grams, project selection criteria and procedures became very lax during oil booms. * Properly managing the country's exposure to oil price volatility through an oil stabilization fund to smooth expenditures in line with sustainable income, and through the use of financial mechanisms available in international markets to insure against unanticipated price fluctuations, will be crucial factors in assuring a strong foundation for a sound macroeconomic policy environment. 34 * NIGERIA AND THE WORLD BANK In 1995, Nigeria and the Bank are col- - 's AA.;-:. laborating on a comprehensive Urban Sector -''~ Review on which to base an updated strategy for urban development in the medium term. The study will address the issues mentioned - above. But from the Bank's point of view, to - have a lasting impact, government institutions dealing with the urban sector at the federal and state levels will have to concentrate on regulation, planning, and supervision - leav- ing maintenance, operation, and financial management to autonomous parastatals or to the private sector. As a result, market forces can ensure quality and that the provision of basic services can pay for itself. PETROLEUM Blessing and Curse Nigeria's domestic energy sector today is a Petroleum production is Nigeria's largest and financial and economic drain on the country. most important industrial sector. Yet while the The report concluded that inefficiencies and countrv's upstream petroleum operations - operating problems in the downstream sec- exploration and production -perform well tor are causing financial losses equivalent to (except for environmental problems with almost 10 percent of GDP every year. flared gas), its downstream operations -such Widespread reforms including elimination of as refineries and power generation -need domestic pricing subsidies, and privatization urgent attention. of refining and distribution systems are nec- In 1983, the World Bank conducted for essary for this sector to become commercial- the first time a major review of the country's ly successful and a productive segment of the highly complex energy sector and recom- nation, once again. mended, even at that early date, diversification Since the 1970s, the Bank has provid- of hydrocarbon production. ed support to the petroleum sector. In 1991, In 1992, the Bank reviewed again the the Bank and the International Finance energy sector with the hope of sparking Corporation provided $293 million of reforms. For despite its considerable potential, financing for the $885 million highly suc- NIGERIA: WORKING TOGETHER VITH THE BANK * 35 Nigerians' demand for cessful development of the Oso Condensate reasonable cost of providing reliable service. electricity far exceeds field - a joint venture of the Nigerian National The Bank has supported seven power NEPA's workable Petroleum Company and Mobil Producing projects with $472.5 million of lending (7 capacity. Therefore, Nigeria Ltd. -that will earn some $5 billion percent of the Bank's total lending to many Nigerians buy in net foreign exchange earnings for Nigeria. Nigeria). Much of this was to build the system costly private genera- While other projects such as a refinery and to develop a core of technically compe- tors while many rehabilitation program have not been success- tent staff to manage and operate it. Despite others suffer power ful, the Bank is working with the Federal the progress achieved, the system has become shortages. Government, NNPC and private oil companies increasing unreliable and costly to the econo- to promote the concept of a private sector my. There are several key reasons. The system reforming and marketing strategy. Discussions and its needs are too large for one company with the Bank and IFC support projects that to manage effectively. There is little incentive will use Nigeria's abundant gas resources and to be reliable and efficient without either reduce the flaring of the valuable resource, competition from the market or a system to including the possible development of a West recognize good performance. Tight govern- African regional gas pipeline. The overall objec- mental controls on NEPA management con- tive is to assist Nigeria, over time, like tribute to NEPA's operating problems, for Indonesia and Mexico, to reduce its depen- example with respect to staffing, buying the dence on a pure oil-based economy while materials and services it needs for mainte- increasing its efficiency and productivity. nance, and charging the prices or collecting all the revenues needed to recover costs. Nigerian specialists and World Bank staff POWER Policy First have both assessed the situation and agreed that the power sector needs to be reorganized Nigerians' demand for electricity far exceeds to induce efficiency and attract resources. The NEPA's workable capacity. Therefore, many investment needed to rehabilitate the system is Nigerians buy costly private generators while about $1.5 billion, which would require pri- many others suffer power shortages. Nigeria has vate sector participation. The benefits to spent billions of dollars building the power sys- Nigerians from reorganization and a private tem, but not nearly enough maintaining it. sector involvement would be numerous. The Hence, the power system is deteriorating, and power supply would become reliable, the real important parts of it are perilously close to col- cost of electricity would decrease, and the sys- lapse. Solving this problem means redefining tem would expand faster. the roles of Government, NEPA and the pri- In November 1992, Nigerian and Bank vate investors, and having consumers pay the officials together developed alternative ways of 36 * NIGERIA AND THE WORLD BANK restructuring the power sector along the fol- lowing lines: * Separate and decentralize certain gen- eration, transmission and distribution fuinctions. * Introduce market competition and private investors. * Redefine roles of key actors: the Government sets policy enabling the sector to work and grow, the utilities operate on their own as commercial enterprises selling their services to the . - public, and - where competition is - ^ S - -, lacking regulations - ensure that ser- vice standards and tariffs are in the in atin Amierica. public interest. As lar back as 1069, the Vorld B, i1 * Charge prices which recover the noted that Nitgeria had oile ot he Wor- reasonable costs of supply. access-to-telephone line ratios it the w 1(1 The key challenge now is to select and imple- ToJay -- despite Nigerii's pos tion as . ment a program. ec( onomic leader in Atrica -ti c situati i i, mi ch the \ame. It is rLot for la l; of sta TELECOMMUNICATIONS Niieria's government owned ai td oper. i cd telccommunications authority, NIT'EI. ia, Mlssed Connections approxima.tely 30 employees p. r thous; d W ith only 0.2 lines for every 100 people, dir.ct excliange lines, as comp. red to Nigeria's telecommunications system is defi- Ec iador a\ith 18 and Australia with ah it nitely not getting out the word, but $2-3 bil- se, en. lion is needed to achieve a rate of 1 line per Thc country's present pl )ne seni i.:e 100. This level of investment requires the falls short botlh in quality and I ltantity involvement of the private sector. Efficient Aliiiost: hallf of the insi:alled tel, phone p . - service and competitive prices can best be ty remains to be connected to :ustomc -; achieved by dismantling the government- eq aipment is incompatible, ski led pers, mw 1 owned monopoly and licensing new operators. an few, Dmaintenance practices are poo ai d Private sector success in telecommunications the power supply fitful. Comp cx proct i e- has been amply demonstrated, most recently mr nt and contract approval pr )cedurec :at. ae N GERIA: W( i g TOGETHI E ' H FHE BANK , 37 WMTOP NIGERIA The African Women's VI Management Training & Outreach Program (WMTOP) was initiated in Nigeria in 1990. It aims at building NGO capaci- ty to deliver management train- - ing to local women's organiza- . tions. It focuses on strengthen- - * ing basic business skills of illiter- r ate and semi-literate women F managers of micro enterprises, - and leaders of local women's : - organizations engaged in income-generating activities. WMTOP is also designed to - - develop and field-test manage- ment training materials and L,- methodologies to enhance the capacity of training organizations to design and deliver such training themselves. Over 350 women have received training, with clear impact-reduced costs, new product lines, accurate price setting, timely accounts - and incomes are rising. To their delight, after skeptical interest from their hus- bands, women now report that the men are initiating their own new cooperative schemes spurred on by the women's example. 38 N Ni CERi'. k:\ D THE %VORLD BANK further delays in adding new phone lines. poured into publicly owned enterprises The entrepreneurial In 1990, NITEL and the World Bank which are not viable economically. spirit of Nigeria's agreed to implement a $225-million project The World Bank has lent $352.3 mil- people is arguably to help develop a long-term strategy for the lion for seven projects between 1969 and her greatest econom- sector; improve NITEL's management, finan- 1989, or 5 percent of its total lending to ic asset. Yet policies cial, and technical skills; expand the netwvork, Nigeria, for industrial development. During left over from earlier and rehabilitate existing facilities. The project those years, the World Bank helped set up times continue to failed to meet its objectives -in March 1995 the Nigeria Industrial Development Bank strangle small busi- only $13 million had been disbursed - main- (NIDB) as a vehicle for Bank lending to the ness, while billions ly due to the problems noted above. Major industrial sector but steered away from large are poured into pub- changes are required in the way, the sector is industrial projects, deeming them too ambi- licly owned enter- structured if Nigeria is to have an information tious and poorly planned to work. It did, prises which are not infrastructure which will allow it to compete however, make available lines of credit and viable economically. in the region and globally. A new policy on technical assistance for smaller enterprises private sector participation in the telecommu- and private entrepreneurs. nications industry has been issued and the For the last thirty years, the Nigerian Nigerian Communications Commission has Government has promoted large-scale indus- been established as the regulatory authority. try. Throughout the 1970s, emphasis was Additional sector reforms that foster increased put on downstream petroleum operations; competition and private sector presence in the iron, steel, and cement factories; and pulp provision of basic telephone service will be and paper mills - all government-managed needed to achieve significant improvements. with little commercial success. By the late The importance of rapid movement in 1970s, most traded goods were being this area can hardly be over-emphasized, imported. Government trade and exchange because efficient communications are so im- rate policies, moreover, discouraged the pro- portant to progress throughout the economy. duction of domestic raw materials and inter- mediates in favor of operations that assem- PRIVAT E SECTOR AND bled imported parts. This policy proved dis- INDUSTRIAL DEVELOPMENT astrous when oil prices fell. David and Goliath By the early 1980s, realizing that gov- ernment regulation was stifling industrial The entrepreneurial spirit of Nigeria's people growth, both the Government and the Bank is arguably her greatest economic asset. Yet shifted their focus to macroeconomic policy policies left over from earlier times continue reform. In the second half of the 1980s, to strangle small business, while billions are trade and investment restrictions were liber- NIGERIA: WORKING TOGETHER WITH THE BANK * 39 Social Indicators, 1960 to 1992 government has had some success in privatiz- N I G E R I A 1492 ing and commercializing many of the smaller 1960 1965 1970 19'5 1980 1985 1992 - enterprises, but it continues to invest in large _public enterprises (such as NEPA, NITEL, 68 .9 -= = = and Ajoakuta Steel) despite clear evidence that - iit is losing money on those investments. And -; continued interference from ministries in Plimay School EnRjllmentd 1%) 36 32 37 51 104 112 7 - .- it.- 11 Prima o it 3 32 3 Scommercialized enterprises has made the commercialization program a failure. To turn a Per thousand live births. this situation around the government should b Average number of children a woman would give birth to between ages 15-49. a C Data for perinod closest to specified year. stop initiating new ventures which could be d As a percent of school-age population. e Life expectancy at birth, in years. readily handled by the private sector, Souree: Social Indicators of Development, World Development Report, and staff estimates, dramatically step up the scope and pace of the privatization program, and cease investing in alized, regulations eased, and the country enterprises to be privatized. Moreover, moved to market-determined rates of exchange. any public enterprise scheduled to remain The response to this enabling environment was under the purview of the public sector should clear, and economic growth turned from be allowed to function like a frilly commer- decline to growth. These policies now need to cialized enterprise under private sector be strengthened to encourage private enterprise management. once again. The performance of the public enterprise SOCIAL SERVICES sector was also adversely affected by govern- Help to the People ment policies. On a macroeconomic level, unstable inflation, interest rates, and exchange Nigerians today recognize that the toll of rates made it hard to plan for future invest- human suffering cannot be reduced nor the ments. Direct ministerial interference in the future of their children assured without sub- day-to-day operation of individual enterprises stantially greater investment in the social and has also been harmful, and many have suffered human services. from poor management. Bank support for the social sectors has A privatization and commercialization increased significantly in recent years. To date program was initiated in 1988. This program the Bank has lent Nigeria $617.6 million for was meant to increase the efficiency of opera- programs in education, health and population. tions in the public enterprise sector and thus to Because social problems are systemic and reduce the need for budgetary support. The interrelated, the Federal Government has 40 * NIGERIA AND THE WORLD BANK adopted comprehensive national policies ; , aimed at improving access to and raising the quality of all of Nigeria's social services. EDUCATION Nigeria increased the number of primary school pupils from 4.7 million in 1973 to over 14.5 million in 1982 -an impressive accom- plishment by any standard. Yet since then, the pace of increase in enrollments has slowed and -_" the quality of education has declined. Adult literacy hovers at 51 percent and secondary enrollment at 21 percent. After a period of substantial investment in education, Nigeria now devotes only 9.7 million textbooks into the hands of 14 mil- percent of the total national budget to educa- lion Nigerian school children over a six-year tion. The country's school buildings are run period. down, enrollments have dropped, and half of To improve early child care, and to all students fail the Senior School Certificate help adults become more aware of develop- Examinations. ment issues such as adequate diets, basic lit- Asked to help, the World Bank conduct- eracy, safe water and sanitary conditions, a ed several sectoral studies in the 1980s. It new pilot project in Development then worked closely with Nigeria to make Communication will produce and dissemi- instructional materials available and to nate preschool programs and social mes- improve the country's capacity to plan and sages. manage education at all levels. The 1988 The Bank is working with the Technical Education Project has already Government to increase public funding for enabled three polytechnics to qualify for basic education, while mobilizing private accreditation. The Federal Universities funds for education at higher levels. Development Project has started to provide Efforts are also being made to improve books, laboratory equipment, and staff train- the supervision of teacher training, spend ing to twenty federal universities and proportionately more on instructional mate- improved their financial viability. The 1991 rials, reduce the curriculum, and set high Primary Education Project is aiming to get 90 standards in key subject areas. NIGERIA: WORKING TOGETHER WITH THE BANK * 41 HEALTH Since 1985, the World Bank has sup- While Nigeria has nearly four times as many ported investment of $270.4 million in five doctors per capita as any other Sub-Saharan health projects in Nigeria (including the country, the quality of its health services is National Population Project), or 4 percent of poor, and its rates of mortality and disease high. its total lending to the country. Total govern- Greater investment is needed, along with a shift ment allocations for health, however, are toward primary care. small and largely go to cover wages, leaving Nigeria's National Policy on Health little left over for drugs, supplies, and mainte- stresses primary care as the most effective and nance. The quality of Nigeria's public health least expensive way to prevent illness. Yet for sector is today so poor that relatively few least ~ ~ ~ ~ ~ ~ hos toenlv use it.eet lns e o the past ten years, about one in five children in choose to use it. Nigeria has died bcfore the age of five -a In its effort to assist Nigeria in upgrad- tragic statistic. ing its health system, the World Bank sup- ported a 1990 National Essential Drugs - . -Project to develop an affordable and sustain- able way to supply Nigerians with safe drugs and to train health workers in their correct use. The Health Systems Fund is assisting state governments in rehabilitating existing facilities. A new IDA-fuinded project is being Cd,, proposed which will support the government l \ \, program to reduce the incidence of sexually /,;, transmitted disease and to stem a potential Iw HIV epidemic, and will train participants to gather data needed to control sexually trans- jl t -'mitted disease in the future. e , (. . _ s ATo improve the health of all Nigerians, ;- - Z, the Government recognized that the problems Through extensive V 4 r-- d.t of inadequate access to quality services, unpre- support to both the dictable budget allocations, and inappropriate education and health * - resource distribution must be addressed, and sectors, Nigeria and - "\ the national policy of improving primary care the Bank work r . put into action. The Bank and other donors towards improving are working with the Government to try and basic health services, address these problems. Progress is being especially for women. made but a lot more action is needed. 42 * NIGERIA AND THE WORLD BANK THE POPULATION PROGRAM Nigeria's population is growing at an annual rate of 2.9 percent, with a total fertility rate of six children per woman. While this rate is - __ falling in areas where health and education are above average, less than 10 percent of all eligi- ; (t. ble couples actually use modern family plan- ning methods. A first step is to improve the -' access of girls to education and of women to good health care. In 1989, Nigeria launched a compre- 4- 1 hensive National Population Policy aimed at - improving the quality of life of all Nigerians, . - - - setting ambitious targets for raising the aver- i age age for marriage, reducing the number of , births among women who are too young or . too old for safe motherhood, reducing the . 9 - ' average size of families, and establishing goals for the provision of social amenities to rural health delivery systems that include family areas and for universal access to family plan- planning services. ning. Unclear lines of responsibility, weak Through extensive support to both the leadership, and lack of consensus around a education and health sectors, Nigeria and plan of action with clear priorities have, how- the Bank work towards improving basic ever, hampered the efficiency of the govern- health services, especially for women. As ment population program. women are able to care for their children As part of its contribution to Nigeria's better, infant mortality is reduced, and they overall development, the World Bank provid- learn to space their births according to fami- ed support for the National Population ly preferences. Project in 1991, with an IDA credit of $78.5 million. Presently, the National Population Project is helping the Federal Government implement this policy, while other health pro- jects are working with the states and local government administrations to develop strong NIGERIA: WORKING TOGETHER WITH THE BANK 43 E N V I R O N M E N T A N D bilities among state and central government NATURAL RESOURCES overlap. FEPA's weakness is also reflected in Key to Lasting Development the country's lack of capacity to gather, inter- Nigeria may lose as much as US$5 billion pret, and disseminate environmental informa- worth of natural resources to environmental tion. degradation every year without some form of The Bank Group is also assisting Nigeria remedial action. Nigeria's chief environmental to take measures to address problems in the areas of forestry, solid waste disposal, problems are soil degradation, water contami- ' o nation, and deforestation. While there is much stormwater drainage, gas-flaring reduction, awareness in the country of environmental con- population control, health, coastal zone man- cerns, Nigeria's institutional ability to address agement, and industrial and hazardous waste them remains weak. With population burgeon- management. ing, cities expanding, and ever greater numbers dependent on a shrinking pool of arable land, Boosting Private Enterprise degradation continues to worsen. In 1988, Nigeria issued a National Policy Unlike many developing countries, Nigeria on Environment and established the Federal has a thriving private sector, and through its Environmental Protection Agency, or FEPA. support of small and medium-sized businesses, Following an extensive study of the country's the IFC seeks to encourage its entrepreneurial environmental problems and the costs, benefits, spirit. Yet recent bouts of fiscal and economic and priorities in addressing them, the World instability have discouraged many potential Bank and the Government published Nigeria: investors. Only by reassuring them that the Towards the Development of an Action Plan and Government is dedicated to enforcing respon- incorporated a number of its recommendations sible economic policies can Nigeria woo back into a 1992, $25million, IDA-supported investment in the country's future. Environmental Management Project. Since its first investment in Africa - a In this project, Nigeria seeks to establish a 1964 loan to Nigeria - the World Bank Nigeria may lose as national capacity for formulating environmental Group's International Finance Corporation much as US$5 billion policy and legislation, developing institutions, (IFC) has used a combination of loan and worth of natural data-gathering and analysis, and to raise public equity financing, loan/guarantees, technical resources to environ- awareness levels. It also seeks to ensure that advisory services, and the mobilization of mental degradation there is capacity in the country to take environ- additional financing from private sources to every year without mental considerations into account in invest- encourage Nigeria's private sector. (See inside some form of remedial ment and development planning. Yet FEPA's back cover for IFC address.) action. mission and role remain unclear, and responsi- As of March 31, 1995, IFC has made 44 * NIGERIA AND THE WORLD BANK -- = EL - LOOK BEFORE YOU LEAP: PLANNING FOR THE NIGER DELTA Over-fishing, deforestation, oil pollution, urban wastewater, erosion, and flooding all take their toll on the Niger Delta, one of the largest river deltas in the world. People living in the Delta are faced with a range of environmental problems from health hazards to lack of availability of safe water and arable land. Despite the exploitation of its oil reserves, the Delta has remained underde- veloped and poor, the latter exacerbating environmental degradation. Nigerian government and Bank staff are working together to devise a plan for managing the resources of the Delta in a coor- dinated manner, to ensure sustainability. The aim is to safeguard the area's ecosystems and mini- mize environmental degradation, while promoting economic growth. Major stakeholders make up the urban and rural communities living in the Delta area, industries, federal, state and local gov- ermuents, universities and NGOs. In the meantime, the Bank is helping Nigeria to collect and ana- lyze baseline data on the area's biophysical, social, economic, and institutional needs and is prepar- ing with local and international expertise, an environmental strategy for the Niger Delta. NIGERPA: WORKING TOGETHER WITH THE BANK O 45 IFC stands ready to gross allocations to Nigeria of US $286.5 mil- ments, and helping Nigeria develop its money assist wherever appro- lion (including US$99 million in private cofi- and capital markets. To date, the largest IFC priate opportunities nancing) for 24 commercial ventures. investment in Nigeria was a $75 million can be supported. The current IFC portfolio extends to investment in 1991 for the Oso Condensate companies in the petroleum, agriculture, bank- Project. ing, industry, manufacturing, textiles, transport, For smaller Nigerian enterprises, the and tourism sectors. It also assisted in establish- IFC provides technical assistance and financ- ing one of Nigeria's first discount houses. In ing through its Africa Project Development addition to direct financing, both Government Facility (APDF) and Africa Enterprise Fund and international oil companies have welcomed (AEF). In addition to providing direct fund- IFC's advice on structuring deals and have used ing, the APDF helps firms with the project it as an impartial arbiter. preparation and documentation needed to The IFC is well positioned to expand its apply for financing, including financing from investments and advisory services. It could be the IFC itself. particularly instrumental in promoting small- But while IFC will continue its advisory scale manufacturing for domestic and export role in Nigeria, prospects for an expanded markets, helping enterprises restructure, arrang- investment there depend largely on the per- ing private financing for infrastructure improve- ception of both domestic and foreign investors on the pace and success of govern- > ment policies in ensuring economic and politi- Ai cal stability, reducing the role of the public sector, and expediting the deregulation of the - . 5economy as a whole. Progress on these fronts ~isneeded to restore confidence in the Government's economic management strate- gy. IFC stands ready to assist wherever appro- L X priate opportunities can be supported. BRINGING PARTNERS TOGETHER The Bank in Nigeria Recognizing Nigeria as a major economic force in Africa, the World Bank established a Resident Mission in Lagos in April 1970. The purpose of the Mission at first was to gather economic information, to keep the Bank 46 NIGERIA AND THE WORLD BANK informed on all matters relevant to its activi- ties in Nigeria, and to represent the Bank's view on the Government's development pro- grams and policies. In 1970 the Resident Mission had a total of six staff; there are now over 60, of whom six are non-Nigerians. The ' - x expansion of the number of senior higher- level Nigerian staff reflects the Bank's commit- ment to partnership in local capacity and -- appreciation of national conditions. I In 1988, the IFC opened its Office in t. Lagos to understand better Nigeria's dynamic private sector and to identify suitable projects for financing. Nigerian senior staff and consultants at the Mission - now numbering 19-have progressively taken on responsibility for pro- - ject supervision. They are also involved in pro- ; - ject identification and appraisal, bringing their country knowledge and experience into the close working relations Nigeria has main- process. With the growth in the Bank's active tained with the Bank's Resident Mission lending program to include more state-level since its arrival in Lagos 25 years ago. activities, the number of project implementing Regular visits by teams from Washington agencies has expanded to 131. The Staff of and supervision teams from the Lagos office the Resident Mission play a key role in assist- have struck up excellent professional rela- ing the managers of these agencies. tionships with Nigerian agencies and their In January 1988, the Bank moved to its officials. The steady flow of staff between current facilities on Victoria Island, and in Nigeria and the Bank promotes mutual 1992 established a temporary office in Abuja understanding and appreciation of the poli- to work with government ministries that have cies and perspectives of each. relocated there. Construction is currently The Bank continues efforts to recruit under way on a permanent Resident Mission more young Nigerian women and men in Abuja to be completed in 1995. through its young professionals program, as The upcoming opening of the Bank's well as the direct hire of highly experienced Resident Mission in Abuja is testimony to the Nigerians. NIGERIA: WORKING TOGETHER WITH THE BANK 47 tas a - -| - I * M #, 'se i441.S = t1 - .E| r RYM flP! # {^RZ 114 ip p,, ' fit Iq00t-- - '-- ,&.lf 4 -L r, ! :: I i]' * r 43Is ...... i - t . - - * t| 'I s l ,=,J,sa! -L,.,,--, Lu s . PEOPLE ARE THE FUTURE cated people, I' N . . . .extraordinarv Nigeria is the giant of Africa, with enviable erdn resources. With over 100 million people, it is entrepreneurial the most populous countrv in Sub-Saharan energy, a produc- tive agricultural sector and a well annual oil revenues established trans- of over $6 billion a * ~~portation network :: year. Together the portation network linking the whole combination country, the population has the potential to should produce s return to one of the fastest economic growth economic leader- * ship and dynamic rates exhibited in Africa - which reached an growth. The miss- annual average of 5 percent growth of real ing link is the systematic utilization of these GDP betveen 1986 and 1992. The people arc its precious resource. In resources in a reliable and stable framework. The population is growing at an esti- partnership with its people, Nigeria can grow again. One of Nigeria's partners in its quest mated 2.9 percent pcr vear. To be productive, for development can be the World Bank. people need adequate food, shelter, education, health and employment. This requires invest- A ment, planning and organization. And a har- nessing of Nigerians' own energies. Resources must be invested to enable the people to be productive contributing members of societv - this means access to basic education, T- - prmary health care and clean - r ' water, and to a stable and - accountable sys- - u tem of gover F- -- nance. The people of Nigeria hold the key to its future. With a significant number of edu- NIGERIA: NVORKING TOGETHER WITH THE BANK * 49 NIGERIA ANNEX 1 World Bank Loans and Credits 1958-1995 (US$ MILLION) BOARD YEAR (FY) PROJECT BENEFICIARY STATE(S)/AGENCY(IES) TOTAL LENDING SECTOR 1958 Railway Borno, Yobe, Jigawa, 28.0 Transportation Bauchi, Kano, Kaduna 1963 Apapa Wharf Lagos 13.5 Transportation 1964 Power Transmission 30.0 Power Kainji (NEPA) Kebbi, Niger 82.0 Power 1965 Education 21.4 Education Northern Road 18.5 Transportation 1966 Apapa Road Lagos 17.3 Transportation Western Road Lagos 12.0 Transportation l 1969 Kainji Supplem. (NEPA) Kebbi, Niger 14.5 Power NIDB I 5.7 Industry 1970 Highway Rehabilitation 10.6 Transportation Transport Rehabilitation 24.4 Transportation 1971 NIDB II 6.2 Industry Rehabilitation 80.0 Technical Assistance .Cocoa I Western State 7.2 Agniculture/Rural Development i1972 Education II 17.3 Education Highway V Western State 20.7 Transportation Power IV NEPA 76.0 Power l1973 Educarion III 37.2 Education 1974 Second Lagos Ports NPA 55.0 Transportaton t Cocoa II 19.4 Agriculture/Rural Development 1975 Livestock Development I Federal 20.8 Agriculture/Rural Development Funtua ADP Kaduna 28.4 Agriculture/Rural Development Gusau ADP Sokoto 19.0 Agriculture/Rural Development Rice Development Anambra 16.3 Agriculture/Rural Developmen Gombe ADP Bauchi 21.0 Agriculture/Rural Development MW State Oil Palm Edo, Delta 12.8 Agriculture/Rural Development EC State Oil Palm Imo, Anambra, Enugu 19.0 Agriculture/Rural Development Rivers, Cross River W State Oil Palm Ondo, Ogun, Oyo 6.9 Agriculture/Rural Development 1977 Lafia ADP Plateau 26.8 Agriculture/Rural Development Ayangba ADP Benue, Kogi 34.8 Agriculture/Rural Development 1978 Nudeus Estate Oil Palm Rivers, Delta, Imo, 30.0 Agriculture/Rural Development Edo, Abia NIDB III 51.1 Industry 50 + NIGERIA AND THE WORLD BANK NIGERIA ANNEX 1 (CONTINUED) BOARD YEAR (FY) PROJECT BENEFICIARY SIATES/AGENCY(IES) TOTAL LENDING SECTOR 1979 Bida ADP Niger 23.0 Agriculture/Rural Development llorin ADP Kwara 26.7 Agriculture/Rural Development Forestrv I 30.9 Agriculture/Rural Development Kaduna Water Supply Kaduna 91.6 Urban/Water Supply ARMTI Federal 9.0 Agriculture/Rural Development 1980 Power V Lagos 100.0 Power Urban Development I 13.7 Urban/Water Supply Ovo North ADP Ovo, Osun 24.1 Agiculture/Rural Development Ekiti-Akoko ADP Ondo 14.4 Agriculture/Rural Development Highway VI 72.1 Transportation 1981 Bauchi ADP Bauchi 130.7 Agriculture/Rural Development Kano ADP Kano, Jigawa 137.4 Agriculture/Rural Development Agric. Techn. Assistance Federal 47.0 Agriculture/Rural Development 1982 Anambra Water Supply Anambra, Enugu 67.0 Urban/Water Supply Power VI NEPA 100.0 Power Sokoto ADP Sokoto, Kebbi 147.0 Agriculture/Rural Development 1983 NIDB IV 118.8 Industry 1984 Fertilizer Federal 249.5 Agriculture/Rural Development SME I 26.1 Industry Gas Techn. Assistance 8.6 Oil and Gas N. Integrated ADP Kaduna, Katsina, Kebbi 114.5 Agriculture/Rural Development 1985 Technical Assistance Federal 8.6 Technical Assistance Sokoto Health Sokoto 26.2 Health Borno State Water Supply Borno 68.6 Urban/Water Supply 1986 Urban Development 11 Imo 44.7 Urban/Water Supply Industry Techn. Assistance Federal 2.4 Technical Assistance Lagos Solid Waste Lagos 68.9 Urban/Water Supply Multi-State ADP I Federal, Abia, Akwa-Ibom, 162.0 Agriculture/Rural Development Anambra, Benue, Cross River, Delta, Edo, Enugu, Imo, Ogun, Plateau Transport Parastatals Federal 20.9 Transportation 1987 Livestock Development II Federal 67.0 Acfr1uIr. RL tai Development Borno ADP Federal, Borno, Yobe 24.5 Agriculture/Rural Development Trade Policy & Export Dev. Federal 451.5 Structural Adjustment Forestry II Federal, Bauchi, Borno, 71.0 Agriculture/Rural Development Jigawa, Kaduna, Katsina, Kano, Kebbi, Kogi, Ogun, Ondo, Plateau, Sokoto, Yobe 1988 Urban Infrastructure Dev. Adamawa, Benue, Ondo, 69.5 Urban/Water Supply Fund Taraba Technical Education Federal 23.3 Education Highway Sector Federal 200.0 Transportation ANNEXES 51 NIGERIA ANNEX 1 (CONTINUED) BOARD YEAR (FY) PROJECT BENEFICIARY STATES/AGENCY(IES) TOTAL LENDING SECTOR -7 -..- --- ..........--......-...--.... -- - ... . - -. .. - .- ...- - -.. ..... - 1989 Lagos Water Supply Lagos 173.2 Urban/Water Supply Multi-State ADP II Federal, Adamawa, Kogi, 77.7 Agriculture/Rural Development Ksvara, Niger, Taraba * SME II NBCI 142.0 Industrv Trade & Investment Policy Federal 500.0 Structural Adjustment Health & Population Imo, Abia 27.6 Health Multi-State ADP III Federal, Lagos, Ondo, 100.9 Agriculture/Rural Development Osun, Oyo, Rivers 0 C6 Refineries Rehabilitation NNPC 92 Oil and Gas 1990 Power System Maintenance NEPA 70.0 Power Essential Drugs Federal, Adamawa, Cross 68.1 Health/Population River, Kwara, Taraba, Delta, Edo, Kogi Tree Crops Federal, Abia, Akwa-lbom 56.0 Agriculture/Rural Development National Seeds Federal 14.0 Agriculture/Rural Development Education Universities Federal 40.0 72' Education Telecommunication NITEL 195.0 Telecommunicatons Oyo Urban Project Oyo 50.0 I 1 r 5pi l. 1991 Primary Education Federal 120.0 Education Oso Condensate NNPC 214.5 Oil and Gas National Population Federal 78.0 Health/Population National Water Rehabilitation Federal 256.0 Urban/Water Supply Health Systems Fund Federal, Akwa-lbom, Benue, 54.0 Hath/Population Kaduna, Katsina, Kwara, 5 H Ondo, Oyo, Rivers Nat. Agric. Research Federal 78.0 Agriculture/Rural Development 1992 Fadama ADP Federal, Bauchi, Jigawa, 67.5 i.. ..ari.. Dari Development Kano, Kebbi, Sokoto Environment Federal 25.0 Environment Agric. Technical Support Federal, Bauchi, Jigawa, 42.5 Agriculture/Rural Development Kano, Kebbi, Sokoto Multi-State Water Kaduna, Katsina 101.0 Urban/Water Supply 1993 Multi-State Roads I Jigawa, Kano 68.0 Transportation Economic Management Proj. Federal 20.0 Technical Assistance Dev. Communications FMIC, FMEYD, NTA 8.0 Education Multi-State Roads II Federal, Oyo, Osun 85.0 Transportation Lagos Drainage Lagos State 63.0 Urban/Water Supply 1994 - 1995r FMEYD = Federal Minists of Education and Youth Development NIDB = Nigerian Industrial Development Bank FMIC 5 Federal Ministry of Information and Communication NITEL . Nigerian Telecommmunications, Ltd. FY = Fiscal Year (July 1 - June 30) NNPC = Nigeria National Petrolemu Corporation NBCI = Nigerian Bank for Commerce and Industry NTA = Nigerian Telcvision Authority NEPA = Nigerian Elecric Power Authority 52 # NIGERIA AND THE WORLD BANK NIGERIA ANNEX 2 Ongoing Projects (As of March 31, 1995) (USS MILLION) AGENCY/STATE(S) EFFECTIVENESS CUMULATIVE BALANCE NAME OF PROJECT INVOLVED DATE DISBURSED UNDISBURSED Infrastructure Borno State Water Supply Borno Mav 1986 62.7 5.9 Highwav Sector Federal March 1990 72.0 128.0 Lagos Water Supply Lagos April 1990 99.7 73.6 Urban Infrastructure Dev. Fund Adamawa, Benue, Ondo, Taraba May 1990 27.4 42.1 Ovo State Urban Ovo June 1991 1.9 48.1 Water Rehabilitation Federal August 1992 34.1 221.9 Multi-State Water Kaduna, Katsina May 1993 9.6 105.9 Mult-State Roads I Jigawa, Kano August 1993 2.9 74.2 Lagos Drainage Lagos State April 1994 11.5 56.8 Multi-State Roads II Federal, Ovo, Osun May 1994 1.4 94.1 Agriculture & Environment Livestock Development II Federal Apil 1987 57.9 9.1 Multi-State ADP I Federal, Abia, Akwa-Ibom, June 1987 161.9 0.1 Anambra, Benue, Cross River, Delta, Edo, Enugu, Imo, Ogun, Plateau Forestry II Federal, Bauchi, Bomo, September 1987 63,1 7.9 Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Ogun, Ondo, Plateau, Sokoto, Yobe Multi-State ADP II Federal, Adamawa, Kogi, November 1989 72.6 5.2 Kwara, Niger, Taraba Multi-State ADP III Federal, Lagos, Ondo, March 1990 88.7 18.1 Osun, Oyo, Rivers National Seeds Federal December 1990 8.9 5.1 Tree Crops Federal, Abia, Akwa-Ibom July 1991 11.9 44.1 Nat. Agric. Research Federal June 1992 15.6 74.1 Fadamna ADP Federal, Bauchi, Jigawa, February 1993 17.5 50.0 Kano, Kebbi, Sokoto Environmental Management Federal March 1993 0.9 28.3 Agric. Technical Support Federal, Bauchi, Jigawa, June 1993 9.4 33.1 Kano, Kebbi, Sokoto ANNEXES 53 p NIGERIA ANNEX 2 (CONTINUED) AGENCY/STATE(S) EFFECTIVENESS CUMULATIVE BALANCE NAME OF PROJECT INVOLVED DATE DISBURSED UNDISBURSED Population & Human Resources Technical Education Federal March 1989 20.7 2.7 Health & Population Imo, Abia December 1989 6.1 21.4 National Essential Drugs Federal, Adamawa, Cross September 1990 20.4 47.7 River, Delta, Edo, Kogi, Kwara, Taraba University Education Federal October 1990 18.1 28.8 National Population Federal February 1992 5.9 77.8 Primary Education Federal March 1992 6.8 133.4 Health Systems Fund Federal, Akwa-Ibom, Benue, March 1992 6.3 47.7 Kaduna, Katsina, Kwara, Ondo, Oyo, Rivers Dev. Communication Pilot Federal July 1994 0.5 8.7 Industry & Energy SME II NBCI July 1989 103.2 38.8 j Power System Maintenance NEPA November 1990 51.9 18.1 Economic Management TA Federal March 1993 2.0 20.7 * NIGERIA ANNEX 3 Lending and Disbursements 1987 - 1994 [FISCAL YEARS] 1200 1000 n knding | * Disbursements 800 z 600 400 200 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 54 NIGERIA AND THE WORLD BANK NIGERIA ANNEX 4 Recent Economic and Sector Reports SECTOR REPoRTs Strategy for Food and Nutrition Security No. 9040-UNI Strategic Options for Redressing Industrial Pollution June 1991 r No. 13892-UNI February 1995 Urban Transport in Crisis No. 8974-UNI Social Sectors Strategy Review February 1991 No. 11781-UNI November 1994 Road Sector Strategy Paper No. 7844-UNI Issues and Options in the Energy Sector January 1991 No. 11672-UNI July 1993 Towards the Development of an Environmental Action Plan Land Resource Management: No. 9002-UNI Technology, Policy and Implementation December 1990 No. 10694-UNI June 1992 Implementing the National Policy on Population ECONOMIC REPORTS No. 9306-UNI Macroeconomic Risk Management: May 1992 Issues and Options No. 11983-UNI Health Care Cost, Financing and Utilization August 1994 No. 8382-UNI October 1991 Structural Adjustment Program: Policies, Implementation and Impact The Financial Sector: Issues and Options No. 13053-UNI No. 9864-UNI October 1993 F October 1991 Towards a Gender Strategy for Nigeria: Integrating Secondary Education Sector Report: Women's Issues Into the Development Agenda A Study in Contrasts No. 8791-UNI No. 9564-UN1 April 1992 August 1991 ANNEXES + 55 NIGERIA ANNEX 5 List of Addresses in Nigeria Where World Bank Publications Can be Obtained IBADAN NSUKKA Nigerian Institute of Social and Economic University of Nigeria Research (NISER) Nnamdi Azikiwe Library P.M.B. 5 Attn: Mrs. E.N. Unamba-Oparah U I Post Office Special Collections Librarian Attn: Mr. J.A. Akisanya Tel: (234-42) 771444, 77191 Ext. 59 Chief Librarian Tel: (234-22) 400-501/5 Ext. 1551/5 SOKOTO Telex: 31119 NISER NG The Polytechnic of Sokoto State College of Administration KANO P.M.B. 2126 Bayero University Library Attn: Mr. Moh'd Umar B/ AlMali P.M.B. 3011 College Librarian . Attn: Dr. H.I. Said n D. Tel: (234-60) 232-190 University Librarian Tel: (234-64) 601-280 Ext. 202 LAGOS Nigerian Industrial Development Bank NIDB House 63-71 Broad Street P.O. Box 2357 Attn: Mr. S.A. Abiola Acquisitions Librarian Mrs. M.O. Adeyinka library Controller Tel: (234-1) 663-470 56 * NIGERIA AND THE WORLD BANK HEADQUARTERS The World Bank 1818 H Street, N. l p - ' Washington, D.C. 20433 USA Central Phone Number (202) 477-1234 - Nigeria Unit Office Phones (202) 473-4878 (202) 473-4895 (202) 473-4865 . Ali Central Cable Address INTBAFRAD Central Telex Number (World Bank) 248423 Central Facsimnile Number (202) 477-6391 l . ; Nigeria Unit Facsimile Number (202) 473-5454 , . PUBLIC INFORMATION CENTER - - - The World Bank 1776 G Street, NW TEMPORARY ABUJA OFFICE Future World Bank Offices, Room G C1-300 The World Bank Abuja. Washington, D.C. 20433 USA Nicon Noga Hilton Hotel Office Phone (202) 458-5454 Suites 112 to 116 Facsimile Number (202) 522-1500 P.O. Box 81 Abuja, Nigeria NIGERIA OFFICE Office Phone (234-9) 523-0568 The World Bank Office Phone/Facsimile Number (234-9) 523-0569 1st Floor Plot PC-10 IFC NIGERIA OFFICE Engineering Close, off Idowu Taylor Street International Finance Corporation Victoria Island, Lagos, Nigeria 3rd Floor Office Phone Plot PC 10 (234-1) 2616016, 2616044, 2618956, 2616196, 2613989 Engineering Close, off Idowu Taylor Street Cable Address INTBAFRAD Victoria Island Telex Number 28848 Lagos, Nigeria Facsimile Numbers (234-1) 2611074 Office Phone (234-1) 612081, 611400, 2617164 Cable Address CORINTFIN Telex Address 21174 Facsimile Number (234-1) 2617164 - - c \ ' l I N - M .,--' * ' ,. i ~ tw, ' v , X .~ as: