By Christine Lagarde
Managing Director, International Monetary Fund
Roundtable Discussion with Stakeholders
Eko Hotel, Lagos
It is a privilege to be here with you today. My thanks goes to the Nigerian Government for arranging this event, and to you all for taking the time to join us.
I would also like to express my gratitude to Ngozi Okonjo-Iweala, the Coordinating Minister for the Economy and Minister of Finance, and Central Bank Governor Sanusi Lamido Sanusi. Both have been instrumental in pursuing Nigeria’s economic transformation.
This is my first official visit to Nigeria—indeed my first visit to Africa—as IMF Managing Director. I can think of no better place to begin my discussions with the region and to work toward a stronger partnership.
To borrow some words from Ngozi:
This is the Africa of opportunity… the Africa where people take charge of their own futures… the Africa where people are looking for partnerships…
Nigeria—with its abundant resources, its wealth of people, and its vast potential—embodies this spirit of opportunity and Africa leadership.
Yet, these are challenging times for the global economy. The dark clouds of risk are gathering, and Nigeria and others in Africa will need to watch them carefully.
So, let me talk about four things today:
- First, the state of the global economy and the policies needed by countries at the heart of the crisis.
- Second, the growing risks for Nigeria and the region.
- Third, the importance of pursuing Nigeria’s Transformation Agenda both to guard against these risks and to promote shared growth for all Nigerians.
- And, fourth, how the IMF can help Nigeria and Africa face these challenges.
1. Global Outlook and Policies
As I have said many times, the world economy has been poised in a dangerous phase. In our last forecast, we still saw global growth at 4 percent for this year and next. But, today, the growth outlook is much dimmer. And, worse, there are severe downside risks.
A collective crisis of confidence is at the heart of the problem.
Adverse developments in the real economy and the financial sector keep feeding off each other, propelling each other down. And, as we have seen in Europe, there has been a loss of market confidence in both governments and banks.
Governments have been adjusting—in some cases with the help of IMF programs—but some not convincingly enough to regain market confidence. On top of this, unemployment remains unacceptably high in too many countries.
What does this mean for the policy path forward?
The advanced countries, especially those in the Euro Area, are at the center of the crisis. And they must be at the center of any solution.
In recent months, eurozone leaders have started to outline the key pillars of a solution. But, what is needed now is implementation.
Policies also need to focus on the bigger picture—the need to restore stability and growth, lasting growth.
The advanced economies need to strike an appropriate balance between fiscal and monetary policy to promote growth and stability. It means forging ahead with structural policies that focus squarely on boosting competitiveness, growth, and jobs. And, it means strengthening financial sector regulation to ensure a safer and more stable financial sector that is better able to support growth.
While these problems might seem a world away, without action, the world economy could be swept into a downward spiral of collapsing confidence, weaker growth, and fewer jobs.
And in today’s interconnected global economy, no country and no region is immune to these risks.
2. Implications for Nigeria and the Region
This brings me to my second point: how might these escalating global risks affect Africa and Nigeria?
Let me first acknowledge the progress in Sub-Saharan Africa, and here in Nigeria, over the past decade. Naturally, challenges remain. But the starting point for our discussion has shifted—shifted for the better.
Good economic policies have provided a platform: for higher growth, for more investment, for less poverty. Growth across the region averaged 5-6 percent or more over the past decade and, although it varies from country to country, this is significant. And the poverty rate declined from nearly 60 percent to just over 50 percent in the 10 years up to 2005.
That’s not to say the crisis didn’t hurt. The food and fuel crisis of 2008, and the global financial crisis that followed, took a toll on efforts to reduce poverty.
But, when the crisis hit, policymakers responded effectively. Most countries were able to maintain critical spending on health, education and infrastructure. And we saw countries in the region recover quickly, with growth rates now returning to levels enjoyed in the mid-2000s.
This is a testament to the hard work and dedication of policymakers and people across the region. Before the crisis, they reduced budget deficits and public debt; they brought down inflation, and built up foreign exchange reserves. In short, they put their economies on a fundamentally stronger footing.
Nigeria is no exception. Reforms initiated 6-7 years ago helped mitigate the impact of the global crisis. Nigeria’s economy continued to grow by 6 percent despite the crisis—and above the current regional average.
Growth looks set to continue at a healthy pace into next year. But, spillovers from the advanced economies threaten that outlook. Nigeria’s resilience is being tested again.
The trade and financial links, so critical to moving the economy forward in good times—ironically—become the interconnections that carry today’s escalating economic risks.
A sustained slowdown in advanced countries will dampen demand for Africa’s exports. And, together with continued financial market uncertainty, this will likely inhibit private financing flows, remittances, and concessional financing.
The potential for greater volatility in commodity markets could cause further disruptions, with winners and losers within the region. The risk of a drop in world oil prices if global demand weakens is the key watch point for Nigeria.
Faced with these risks, my main worry is that many countries do not have as much capacity to absorb shocks as they did three years ago. Added to that, the global slowdown could be more pronounced this time around.
Policies need to tread a fine line between defending against the global slowdown in the near-term, while also preserving fiscal resources for investment in much-needed infrastructure that will help promote employment and growth.
But, for the main part, policymakers need to focus on restoring the fiscal buffers that served the continent and Nigeria so well during the last downturn. It will be important to be prepared.
As Ben Okri, the Booker Prize-winning Nigerian novelist and poet, once said: “Life throws stones at you, but your love and your dream change those stones into the flowers of discovery.”
With the right vision, the right actions, today’s global risks need not become Nigeria’s reality.
3. Nigeria’s Transformation Agenda
Which brings me to my third point: how reforms underway in Nigeria are the key to guarding against risks, and securing more inclusive and lasting economic growth. At the outset, let me say that I am confident that Nigeria is on the right track.
Earlier this year, President Goodluck Jonathan described the goals of the government’s Transformation Agenda: “Nigeria needs to build a more inclusive society where every Nigerian would have equal access to economic and developmental opportunities.”
These echo the goals for many other countries in the region.
Yet this is not an easy task. In addition to growing global risks, the reform agenda also must contend with some serious local challenges.
Infrastructure gaps, particularly in the power sector, are also holding Nigeria back from its full growth potential. Nigeria’s electricity generation capacity, for example, is just 10 percent that of South Africa’s, while Nigeria’s population is more than 3 times greater.
And high unemployment is also a critical economic and social issue. This is especially true for Nigeria’s young people for whom the rate of unemployment is over 35 percent.
So, economic growth alone will not suffice. Job creation will be critical to ensuring that growth is both economically and socially sustainable.
There are three aspects of the government’s agenda that I see as crucial to this endeavor.
One, better managing Nigeria’s vast natural resource wealth.
Establishing the Sovereign Wealth Fund and emphasizing the use of oil revenues for stabilization and investment are important advancements. Pressing ahead with these reforms is particularly important given the external environment—namely, the need to rebuild fiscal buffers.
It will also help ensure that natural resource revenues are channeled more effectively toward the infrastructure investment needed for growth and jobs.
But, prudent management of natural resource revenues will also create room for other critical public spending. Given the distance still to go to reach the Millennium Development Goals, increasing the resources available to build stronger social safety nets is particularly important, including in areas such as maternal and child care.
Two, structural transformation.
Promoting a more diversified economy will help Nigeria better withstand shocks. It will also provide for more broad-based growth, with opportunities and jobs for the entire population.
There is huge, untapped potential here. Nigeria is an enormous market for investors. A market where telecommunications grew, with the explosion of mobile phone subscribers, from 60,000 in 2000 to 125 million today.
But much could still be done to improve Nigeria’s business environment. This will require investment to address infrastructure bottlenecks, to raise education levels, and to help development the agricultural sector.
It also means more reliable policies that can help promote macroeconomic stability and investor confidence.
Three, financial sector reform.
Nigeria’s banking system experienced a severe crisis in 2009, as over one third of banks became insolvent or seriously undercapitalized. But there has been an impressive record of reform. And actions to resolve the banking crisis are nearly complete.
Looking ahead, continued refinements in regulatory and supervisory practices should focus on preserving financial stability and improving access to credit.
This is a broad and challenging agenda. And, perhaps, what is most impressive is that it is an agenda for Nigeria, driven by Nigerians.
4. Role of the Fund
The IMF is here to support you and be a better partner for you. This is my final point.
I am committed to a deeper, more fruitful dialogue, with the IMF listening even more carefully to your needs. This will help us serve you even more effectively.
Nigeria is a thought leader in the region. And I am here to listen.
We have also been working hard to reform the IMF’s governance structure so that emerging market and developing countries have a greater voice in the institution. And, so we can be truly representative of our membership.
For those countries that need it, we have boosted our concessional lending capacity and made our lending instruments more flexible, with greater protections for social spending.
We are also redoubling our efforts to provide quality technical advice. The IMF has technical expertise to offer, expertise that can help African countries achieve their social and economic objectives; we have an active program of technical assistance with Nigerian public institutions. We can also play an important role, through our four, and soon to be five, regional technical assistance centers in Africa, of facilitating a sharing of expertise between countries.
Let me conclude with a thought from renowned Nigerian novelist Chinua Achebe. In Things Fall Apart, he wrote: “The sun will shine on those who stand, before it shines on those who kneel under them.”
There are challenges ahead. And this is the time for policymakers to stand up. To turn away from the global economic storm clouds and turn to the sun.
It is a time for action; a time for African leadership, Nigerian leadership. With continued action, Nigeria can be a source of growth, for itself, for the continent, and for the world.
U.S. inauguration turns poet Amanda Gorman into best seller
WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.
Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.
“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.
Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.
While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.
“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”
Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.
“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.
“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”
The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.
“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.
A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.
She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.
Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.
“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.
Gorman’s books are both due out in September.
Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.
(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
Why brands harnessing the power of digital are winning in this evolving business landscape
By Justin Pike, Founder and Chairman, MYPINPAD
Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.
As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.
As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?
Digital is an essential survival tool, and even more so in a COVID world
No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.
In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.
Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.
The challenges that rapid digital transformation brings to businesses
Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.
Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.
The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.
As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.
But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.
A digital world post-COVID
Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.
There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.
Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.
Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.
Brexit responsible for food supply problems in Northern Ireland, Ireland says
LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.
British ministers have sought to play down the disruption of Brexit in recent days.
“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.
The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.
(Reporting by Guy Faulconbridge; Editing by Tom Hogue)
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