World Bank to Give Nigeria Additional $4.5 Billion Through 2021

The World Bank will give Nigeria $4.5 billion in funding through 2021 to help the power industry, health sector, and governance projects.

The institution, which lends money to countries for economic development, has invested an estimated $10 billion in the country, and is currently funding 30 projects in it.

Hafez Ghanem, the World Bank’s new vice president for Africa, said he wants the business to finance more power sector and social protection developments, and predicts it will start $2.5 billion worth of tasks in the next 18 months.

“Non-oil tax collection in Nigeria is presently very weak and well below the levels of structural and regional peer countries,” he told Bloomberg. “Nigeria needs to increase its non-oil revenue collected at both the federal and state level across the main type of taxes; income, VAT, excises and customs, and states’ internally generated revenues.”

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Ghanem said that this would be possible with tax reforms and an increase in compliance rates, as well as higher rates on alcohol and tobacco. He’d also like to see changes to policies regarding the oil industry, a key element of the Nigerian economy.

“The near doubling of gasoline prices on the world market since early 2016 has put pressure on a number of countries that subsidize petrol, including Nigeria,” he said. “It’s very important that as these policies are phased out, social protection measures are phased in to help those who will be hit hardest by the rise in prices.”

Nigeria’s President Muhammadu Buhari signed the country’s largest budget in June, at NGN 9.1 trillion ($25 billion). The budgets will increase infrastructure projects and economic recovery. The International Monetary Fund predicts Nigeria’s economy to grow 2.1% this year. Budget documents obtained by Bloomberg show that Nigeria’s deficit is slightly more than the budget itself, at NGN 2 trillion. The news outlet reports that the country will borrow more than half of the shortfall to help fix the issue.

In addition, Nigeria has general elections coming up in February. Buhari is eyeing reelection, and election spending is something that concerns the World Bank’s new Africa vice president, even though he thinks it will not spur the nation’s growth.

“We are concerned about potential delays in implementation of government programs due to the focus on elections,” Ghanem said. “We urge the government to remain focused on implementing the Economic Recovery and Growth Plan, which includes the power-sector recovery plan.”

The World Bank had $61.8 billion in assets under management as of December 2017.

Tags: Hafez Ghanem, Nigeria, World Bank

Milliman’s top 100 US pension funds took a light hit in the second quarter, losing $23 billion in funding.

The average funded status of the Milliman 100 Public Pension Funding Index went from a 71.4% funded status to 71.2% in the period ended June 30. The investment returns reaped only 0.70% for the quarter, just barely picking up the slack of Q1’s 0.75% loss.

Total investment values at the end of the period rose to $3.577 trillion. While returns were barely positive as the 100 pension plans collectively earned $45 billion in contributions, they were offset by $28 billion in benefits payments.

Becky Sielman, the index’s author, said that it would be tough for the pensions to progress “without the strong investment performance we saw in 2017.” She added that benefit payouts exceeding contributions lead to greater market reliance in order to “buttress funding.”

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The total debt for the 100 funds is at $1.448 trillion, the largest since September 2016, when the index was created. In addition, total pension liabilities broke $5 trillion for the first time, at $5.025 trillion.

One plan’s funded status fell under 90%, bringing the total funds in the index below 90% to 14. Of the top 100 US public pensions, 60 are between 60% and 90% funded, and 26 are under 60%.

Sielman would not disclose which fund dipped under 90%.

Tags: Funded Status, Milliman, Milliman 100 Public Pension Funding Index, Pension