Immediate past Agriculture minister and current Chairman, African Development Bank,AFDB, Akinwumi Adesina said the bank will help Nigeria to overcome its recession but emphasized on the for Nigeria to increase taxes and lift hard currency curbs to ease the dollar shortages choking Africa’s biggest economy.
The West African nation has been hammered after a plunge in oil revenues, which make up 70 percent of national income, eroded public finances and currency reserves needed to fund imports.
“Nigeria is too big to fail. The African Development Bank (AfDB) will rally strongly around Nigeria to overcome its recession,” the bank’s chairman Akinwumi Adesina said in an interview late on Monday in London.
In a first step the lender’s board was expected to grant a $1 billion loan at a rate of around 1.2 percent, which Nigeria could use to plug its 2016 deficit of 2.2 trillion naira ($7.1 billion). Nigeria has been trying for months to borrow abroad to fund a record budget to get the economy back on track.
“They have a liquidity problem,” said Adesina, a former Nigerian agriculture minister. “We want to make sure Nigeria gets resilient.”
Nigeria had agreed on several reforms such as increasing its value-added and corporation taxes to offset a loss of oil revenues, he said, adding that the tax-to-GDP ratio was 4 to 5 percent, less than other countries in the region at around 15 percent.
But the government should also lift hard currency curbs imposed by the central bank, Adesina said.
The restrictions effectively ban the import of almost 700 goods Nigeria wants to make at home such as cement or basic food. Dozens of factories across sectors have been forced to close as they cannot import raw materials.