91605 IDA at Work Nigeria: Building Macroeconomic Stability and Delivering Services for the Poor N igeria boasts a strong and resilient economy, thanks to rapid growth in both its oil and non-oil sectors over recent years. Yet poverty remains pervasive and the International Development Association (IDA) is working with Nigeria to address the fundamen- tal causes of this problem, and to ensure that all its effort take into account the need to improve governance at all levels. As a result, IDA projects have seen positive results in education, health, and the delivery of clean water. Challenge Nigeria’s economic performance in this decade has been strong. The non-oil economy grew at about 9 percent a year in 2003-08, in contrast to 3.5 percent per year between 1997 and 2000. Central to the turnaround in the economy was success in de-linking the budget from the fluctuations in oil revenues and strong growth in agriculture. Growth has been resilient during the recent global financial crisis with gross domestic product (GDP) growing by an estimated 6 percent in real terms in 2008 and non-oil growth remaining buoyant at 9 percent. Despite Nigeria’s strong economic track record, poverty is signifi- cant, and reducing it will require strong non-oil growth and a focus on human development. Barriers include the investment climate, infrastructure, incentives and policies affecting agricultural produc- tivity, and the quality and relevance of tertiary education. In spite of successful initiatives in human development, Nigeria may not be on track for meeting most of the Millennium Development Goals (MDGs) by 2015. Underpinning these challenges is the core issue of governance, in particular at the state level. of outcomes. Beneficiaries were able Fiscal decentralization provides Nigeria’s 36 to acquire 75,599 pieces of equipment states and 774 local governments consider- through 7,766 subprojects involving 3.4 able policy autonomy, control of 50 percent of million people. By the end of the project, government revenues, and responsibility for average increase in real income of proj- delivery of public services. Capacity is weak ect beneficiaries was 63 percent. Three in most states, and improving governance will community-driven development (CDD) be a long term process. projects provided boreholes and motorized pumps, rural/feeder roads, rural electrifi- Approach cation, rural markets, and crop processing benefitting over 6 million poor people. Starting in fiscal year 2005, IDA identified IDA’s Medium Small and Micro Enterprise three broad challenges: (i) improving service project reached 385,000 borrowers and 1.2 delivery for human development; (ii) improv- million customers and catalyzed more than ing the environment for non-oil growth; and US$30 million in private capital to support (iii) enhancing transparency and account- the growth of commercial microfinance in ability for better government. It deployed Nigeria. The project improved the invest- a combination of lending, analytical work, ment climate with the establishment of technical assistance and multi-donor trust commercial courts and the licensing of funds reflecting two key elements. First, it three credit bureaus that are now opera- focused on areas where IDA could have “quick tional and starting to improve consumer wins” to establish IDA’s role, after a relatively credit history. An impact study of business modest presence in Nigeria between 1999 development services concluded that and 2003. Second, it directed investments firms that received the services increased to selected states with committed and employment by more than 40 percent. capable leaders, and which was to serve as More than 88 percent paid for the services incentives for other states to improve their received and more than 60 percent had a governance. repeat purchase after the initial project support, which bodes well for sustainability. Results Growth performance also benefited from the wide range of macroeconomic reforms Between 2004 and 2009, IDA has utilized a implemented by the government informed mix of approaches in its support to Nigeria, by Bank’s technical assistance. helping to: ▪▪ Improve human development indicators through CDD projects and a state educa- ▪▪of Maintain non-oil growth at an average tion sector project. Maternal and child 8 percent. The growth was driven by mortality decreased on average by about agriculture (accounting for 40 percent of 10 percent in 500 communities through GDP) that grew at 7 percent and services construction and provision of equipment to that grew at 13 percent (representing 30 primary health care centers. Literacy rate percent of GDP. An IDA program targeting improved by 25 percent through construc- the agricultural sector yielded a number tion and provision of equipment to primary 2 and secondary school classrooms in over ▪▪of Strengthen governance and management 1,000 communities. In Kano, Nigeria’s most the dominant oil and gas sector in the populous state, access to quality education country. Two Bank projects supported the increased by 25 percent between the period commissioning and publication of in-depth from 2006 to 2010, and more importantly, financial, process, and physical audits of over the same period, the ratio of girls the Nigeria petroleum sector revenues from to boys increased from 75 percent to 90 1999-2005, which placed comprehensive percent. In Kaduna, the primary comple- financial information about the petroleum tion rate tripled from 2006 to 2009.An IDA sector revenues in the public domain for credit provided grants to schools based the first time. By integrating civil soci- on school development plans, introduced ety and media into the project, public school-based management committees, awareness and engagement in oil and gas provided new text books, improved the sector governance and management was supply of class rooms and trained the enhanced. IDA and the multi-donor trust teaching force. fund also supported the legal framework ▪▪ Deliver water to 2.6 million people in for the extractive revenues transparency six states through Bank projects between initiative (one of only two globally) with 2004 and 2009. The projects supported the signing of the Nigeria Extractive Indus- rehabilitation of water facilities in the six tries Transparency Initiative Act in 2008. states, including construction of 16 water ▪▪Increase access to “malaria plus” pack- treatment plants, the laying of approxi- ages. The percentage of households with mately 1,200 km of pipes, development at least one insecticide treated bed net of state water policies and engagement of or long-lasting insecticide treated nets the private sector to manage delivery of increased from 2.4 percent in 2006 to 89.7 water services. The result is 40,000 new percent in 2010 in the seven project states and 121,000 rehabilitated household water covered under a Bank project. The percent- connections. age of children under 5 years with fever ▪▪ Increase prevention of HIV. In addition to treated with an effective anti-malarial strengthening the government’s capacity medicine within 24 hours from onset of to plan and implement HIV/AIDS programs, systems increased from 3.7 percent in 2006 a Bank project focused on behavior change to 6.9 percent in 2010 and the percentage and access to counseling, testing and care of children less than 5 that slept under services to reduce the transmission of the an insecticide treated bed nets increased infection and its impact. The project has from 3.6 percent in 2006 to 41.8 percent contributed to the reduction in the national in 2010. The increase in coverage stemmed HIV prevalence of 5.2 percent in 2003 to from the 12.4 million bed nets and 7.5 4.6 percent in 2008 and an increase in the million doses of malaria medicine procured percentage of women (ages 15-49) report- and distributed through project funds. In ing the use of condom the last time they additions the project support the strength- had sex with a non-marital, non-cohabiting ening of health systems in the seven project sexual partner from 6.5 percent in 2002 to states particularly procurement and supply 33.4 percent in 2008. chain management, monitoring and evalu- ation and communications. 3 IDA Contribution agency’s comparative advantage and lever- aged partner resources for higher impact. As of May 9, 2010, IDA’s lending portfolio in For example, in the transport sector, the Nigeria consists of 23 active projects with AfDB and IDA are co-financing the rehabilita- total commitments of US$3.56 billion in tion and maintenance of the Federal road various sectors including: roads, energy, linking Nigeria to Cameroon. In the energy education, health, social protection, private sector, DFID financed Energy Policy Notes sector development, and rural development. enabled policy dialogue in this key sector Infrastructure and human development and influenced the design of IDA’s lending comprise almost two-thirds of the lending intervention. In education, DFID, USAID, and portfolio. In addition, there are two Global IDA are currently supporting girls’ educa- Energy Fund grants for US$11 million and a tion in Northern Nigeria, each focusing on a guarantee of US$400 million. The govern- different aspect. IDA’s diagnostic work and ment and the Country Team have also been deployment of sector experts in highly tech- restructuring potential problem projects and nical areas supported the implementation of reallocating resources. In addition to lending, Nigeria’s Vision 2020 for the financial sector as of June 2009, 37 trust funds are supporting and a multi-donor trust fund provided tech- Nigeria, of which 22 are managed by IDA and nical assistance for the Nigerian Extractive 15 by recipients. The total grants amount to Industries Transparency Initiative. In addition US$99 million, of which US$50 million is cur- to financial assistance and policy advice, IDA rently available for disbursement. Trust funds played a strong convener role in both malaria support the promotion of good governance, and HIV/AIDs for establishing a broad platform health issues, infrastructure, and rural for coordinating development assistance and projects, provided co-financing, and funded implementing sector strategies. free-standing complementary activities, such as the first sub-national investment climate Moving Forward reviews in Sub-Saharan Africa. The new Country Partnership Strategy for Partners FY09-13 makes governance a core and a cross-cutting theme, an integral part of IDA has maintained close partnership with virtually every form of support. Governance other partners, particularly the UK’s Depart- support will be addressed in five areas: (i) ment for International Development (DFID). transparency and accountability; (ii) partici- Based on good experience under the previous pation; (iii) sector governance; (iv) capacity country partnership for FY05-09, the new development; and (v) judicial reform and strategy for FY10-13 includes the World Bank democratic governance. All partners will Group, DFID, the US Agency for International engage in strengthening government systems Development (USAID), and the African Devel- to improve outcomes in human development opment Bank AfDB). The Country Partnership and growth, but in the interest of selectivity, Strategy partners account for over 80 percent only DFID and USAID will focus on judicial of Nigeria’s development assistance. IDA reform and democratic processes. Lending worked with partners to identify an appropri- instruments will be tailored to the condi- ate division of responsibility based on each tions of each state. In states with poor 4 human development indicators, for example, and (ii)  technical and vocational education but with weak public sector, the partnership to address the skills gap in employment- will continue to use project-based lending intensive value chains (subsectors). Support and grants. In states that have a relatively for human development will aim to improve good track record on public sector reforms, access and utilization of services and focus a reasonably strong fiduciary system and on health systems development; support for low debt levels, IDA will consider the use of vertical disease programs will be on a more state level development policy operations, modest scale than in the previous strategy. possibly twinned with Technical Assistance (TA) operations. Maintenance of non-oil Last updated September 2010. growth involves innovative activities in: http://www.worldbank.org/ida (i) infrastructure to support growth clusters 5