91620 IDA at Work Nigeria: Macroeconomic Stability and Delivering Services for the Poor O ver the last five years, Nigeria has been carrying an ambi- tious reform agenda. The most far reaching of those was to base the budget on a conservative price for oil, with excess saved in special Excess Crude Account. The economy responded with strong growth between 2003 and 2010—averaging 7.6 percent. Growth has been resilient during the recent global financial crisis with GDP growing by 7 percent and non-oil growth remaining buoy- ant at 8.3 percent in 2009. Nigeria has also achieved progress in recent years on corruption and public resource management as seen in improvements in CPIA ratings, passage of the Procure- ment, Fiscal Responsibility, and EITI Laws in 2007, the publication of a large percent of federal government’s contract awards above a threshold, and the establishment of the Bureau of Public Procure- ment in 2008. Challenge Despite Nigeria’s strong economic track record, poverty is sig- nificant, and reducing it will require strong non-oil growth and a focus on human development. Constraints have been identified to enhancing growth, including the investment climate; infrastructure, incentives and policies affecting agricultural productivity; and quality and relevance of tertiary education. Employment remains the major issue for Nigeria with an estimated 50 million of underemployed youths. In spite of successful initiatives in human development, Nigeria may not be on track for meeting most of the Millennium Development Goals (MDGs) (more will be known after the analysis of the recently completed NLSS). Underpinning these challenges is the core issue of governance, in particular at the state level. Fiscal decentralization provides Nigeria’s 36 Results states and 774 local governments consider- able policy autonomy, control of 50 percent of Through the combination of instruments sup- government revenues, and responsibility for ported by IDA, between 2004 and 2010, IDA delivery of public services. Capacity is weak supported Nigeria to achieve the following: in most states, and improving governance will be a long-term process. Maintain non-oil growth averaging 9 per- cent per year from 2003-2009. The growth Approach was driven by agriculture, trade, telecom- munications, and manufacturing sectors. The Starting in FY05, IDA identified three broad 2nd National Fadama Development Project challenges: (i) improving service delivery for contributed to agricultural growth. The pro- human development; (ii) improving the envi- ductive assets component enabled the ben- ronment for non-oil growth; and (iii) enhanc- eficiaries to acquire 75,599 pieces of equip- ing transparency and accountability for better ment through 7,766 subprojects involving government. It deployed a combination of 3.4 million beneficiaries. By end of project, lending, analytical work, technical assistance, average increase in real income of project and multi-donor trust funds reflecting two key beneficiaries was 63 percent. The Community elements. First, it focused on areas where IDA Driven Development (CDD) projects such as could have “quick wins” to establish its role, Local Empowerment and Environmental Man- after a relatively modest presence in Nigeria agement Project (LEEMP) Community Based between 1999 and 2003. Second, it directed Poverty Reduction Project (CPRP) provided investments to states with strong programs boreholes and motorized pumps, rural/feeder and committed leaders, which could serve as roads, rural electrification, rural markets, incentives for other states to improve their crop processing benefitting over 6 million governance. The State Education Sector Proj- poor people. The Privatization Support Proj- ect is the first project in Nigeria focusing on ect (PSP) and the Medium, Small and Micro strengthening the education system at state Enterprise (MSME) project expanded private level. The Lagos Eko, Urban Water Sector sector investment through 109 completed Reform Project, and Lagos Urban Transport privatization transactions and catalyzing over 1 projects are setting out examples to other $30 million in private capital to support the states, which are now learning from the growth of commercial microfinance in Nige- results achieved. To support the government ria. The Medium, Small and Micro Enterprise of Nigeria’s top three priorities—power sec- (MSME) project reached 385,000 borrowers tor, diversified economy and job creation— and 1.2 million customers, and improved the the recent flagship projects are the Nigeria investment climate with the establishment of Energy and Gas Improvement Project, Com- commercial courts and the licensing of three mercial Agriculture Development Project, and Credit Bureaus that are now operational and Growth and Employment in States. The issue starting to improve consumer credit history. of growth and employment is at the heart of An impact study of Business Development the Employment and Growth Study (2010); Services concluded that firms that received the study served as one of the key inputs for the services increased their employment by the government’s Vision 20:2020 strategy. more than 40 percent. The Privatization Sup- 2 port Project also helped increase the private Deliver water to 2.6 million people in six sector participation in infrastructure through states through Bank projects National Urban the reform of port sector and the concession- Water Sector Reform Program I (P071075) ing of 24 port terminal, a series of industry and National Urban Water Sector Reform regulations that helped creating one of the Program II (P071391) between 2004 and 2009. most competitive telecommunications mar- The Projects support rehabilitation of water kets in the world, and supporting two major facilities in the 6 states, including building of steps in the establishment of pro-competitive 16 water treatment plants, laying of approxi- and transparent markets in the power sector mately 1,200 km of pipes, development of (Electricity Power Sector Reform Bill in 2005 state water policies and engagement of the and inaugurating National Energy Regulatory private sector to manage delivery of water Commission as new independent agency). services. The result is 40,000 new and 121,000 Growth performance also benefited from rehabilitated household water connections. the wide range of macroeconomic reforms implemented by the government informed by Increase prevention of HIV. The IDA-financed Bank’s AAA and policy notes. project HIV/AIDS Program Development in addition to strengthening the government’s Improve human development indicators capacity to plan and implement HIV/AIDS through CDD projects (Local Empowerment programs, focused on behavior change and and Environmental Management Project access to counseling, testing and care services (P069892); Community Based Poverty Reduc- to reduce the transmission of the infection tion Project (P069086), State education and its impact. The project has contributed to sector project (P096151). Maternal and child the reduction in the national HIV prevalence mortality decreased on average by about 10 of 5.2 percent in 2003 to 4.6 percent in 2008 percent in 500 communities through construc- and an increase in the percentage of women tion and provision of equipment to primary (15-49) reporting the use of condom the last health care centers. Literacy rate improved time they had sex with a non-marital, non- by 25 percent through construction and pro- cohabiting sexual partner from 6.5 percent in vision of equipment to primary and secondary 2002 to 33.4 percent in 2008. school classrooms in over 1000 communities. In Kano, Nigeria’s most populous state, access Strengthen governance and management to quality education increased by 25 percent of the dominant oil and gas sector in the between the period from 2006 to 2010, and country (Nigeria Extractive Industries more importantly, over the same period, the Transparency Initiative, NEITI). Nigeria EITI ratio of girls to boys increased from 75 percent Management/Gas & Oil Sector policy and to 90 percent. In Kaduna, the primary comple- Nigeria Extractive Industries Transparency tion rate tripled from 2006 to 2009. The IDA Initiative supported the commissioning and credit P096151—the state education sector publication of in-depth financial, process and project—provided grants to schools based on physical audits of the Nigeria petroleum sec- school development plans, introduced school tor revenues from 1999-2005, which placed based management committees, provided comprehensive financial information about new text books, improved the supply of class- the petroleum sector revenues in the public rooms, and trained the teaching force. domain for the first time. By integrating civil 3 society and media in NEITI, public awareness human development comprise almost two and engagement in O&G sector governance thirds of the lending portfolio. In addition to and management was enhanced. IDA and the lending, IDA administers for Nigeria 53 active multi donor trust fund also supported the trust funds and grants, totaling about US$150 legal framework for the extractive revenues million. transparency (one of only two globally) with the signing of the NEITI Act in 2008. Partners Increase access to malaria plus package IDA has maintained close partnership with interventions. The percentage of households other partners, particularly Department for with at least one insecticide treated bed net International Development (DFID). Based on (ITN)/long lasting insecticide treated nets good experience under the previous country increased from 2.4 percent in 2006 to 89.7 partnership for FY05-09, the new strategy for percent in 2010 in the seven project states FY10-13 includes the Bank Group, DFID, United covered under the Malaria Control Booster States Agency for International Development project. The percentage of children under (USAID), and the African Development Bank 5 years with fever treated with an effec- (AfDB). The Country Partnership Strategy tive anti malarial medicine within 24 hours (CPS) partners account for over 80 percent from onset of symptoms increased from 3.7 of Nigeria’s development assistance. IDA percent in 2006 to 6.9 percent in 2010 and worked with partners to identify an appropri- percentage of children less than 5 years that ate division of responsibility based on each slept under an insecticide treated bed nets agency’s comparative advantage and lever- increased from 3.6 percent in 2006 to 41.8 aged partner resources for higher impact. For percent in 2010. The increase in coverage example, in the energy sector, DFID financed stem from the 12.4 million bed nets and 7.5 Energy Policy Notes enabled policy dialogue million doses of malaria medicine procured in this key sector and influenced the design of and distributed through project funds. In IDA’s lending intervention. In education, DFID, addition, the project supports the strength- USAID, and IDA are currently supporting girls’ ening of health systems in the seven project education in Northern Nigeria, each focusing states, particularly procurement and supply on a different aspect. IDA’s diagnostic work chain management, monitoring and evalua- and deployment of sectoral experts in highly tion, and communications. technical areas supported the implementa- tion of Nigeria’s vision 2020 for the financial IDA Contribution sector and a multi donor trust fund provided technical assistance for the Nigerian EITI ini- As of March 1, 2011, IDA’s lending portfolio tiative. In addition to financial assistance and in Nigeria consists of 25 active projects with policy advice, IDA played a strong convenor total commitments of US$3.93 billion in vari- role in both Malaria and HIV/AIDs for estab- ous sectors including agriculture, rural devel- lishing a broad platform for coordinating opment, education, energy, health, social development assistance and implementing protection, private sector development, and sector strategies. public sector governance. Infrastructure and 4 Moving Forward ing and grants. In states that have a relatively good track record on public sector reforms, The new Country Partnership Strategy (CPS) a reasonably strong fiduciary system and low for FY09-13 makes governance a core and debt levels, IDA will consider the use of state a cross-cutting theme, an integral part of level development policy operations, pos- virtually every form of support. Governance sibly twinned with Technical Assistance (TA) support will be addressed in five areas: (i) operations. Maintenance of non-oil growth transparency and accountability; (ii) partici- involves innovative interventions in: (i) pation; (iii) sector governance; (iv) capacity infrastructure to support growth clusters development; and (v) judicial reform and and (ii) technical and vocational education democratic governance. All partners will to address the skills gap in employment- engage in strengthening government systems intensive value chains (subsectors). Support to improve outcomes in human development for human development will aim to improve and growth, but in the interest of selectivity, access and utilization of services and focus only DFID and USAID will focus on judicial on health systems development; support for reform and democratic processes. Lending vertical disease programs will be on a more instruments will be tailored to the condi- modest scale than in the previous strategy. tions of each state. In states with poor human development indicators, but with Last Updated April 2011. weak public sector, for example, the partner- http://www.worldbank.org/ida ship will continue to use project-based lend- 5