World Bank. PHOTO: Eric Baradat/AFP/Getty Images
…Sees modest recovery in remittances to Nigeria
…Nigeria, South Africa, Côte d’Ivoire, Uganda main destinations of growing intraregional movement
Limited transparency will delay critical debt reconciliation and restructuring of the poorest countries, the World Bank Group President, David Malpass, has warned.
He argued that improving debt transparency required a sound public debt-management legal framework, integrated debt recording and management systems, as well as improvements in global debt monitoring.
He added that international financial institutions, debtors, creditors, and other stakeholders, such as credit-rating agencies and civil society have a key role to play in fostering debt transparency.
The advice comes at a time the World Bank said Nigeria stood a chance of gaining more from its migrants in the form of higher remittances to the countries.
In its latest report of migration, the Bank said Nigeria, which received about 50 per cent of remittance flows to sub-Saharan Africa, could receive $19 billion this year. While the institution admitted that the figure would be a modest improvement on last year’s $17 billion, it noted that the projection is a far cry from the $23 billion received in the pre-COVID-19 era.
It also noted a gradual adoption of formal channels of remittances in Nigeria and stressed that the trend would stimulate recovery in sub-Saharan Africa.
“Despite easing economic growth in host regions of the world, and continued uncertainty regarding the course of the pandemic, remittance receipts in sub-Saharan Africa are projected to accelerate in 2022, on the back of a gradual movement toward the use of official channels for inflows to Nigeria.
“Following the country’s substantial adjustment of 2020, there are now signs that recent policy changes may be achieving some traction. For example, an increase in official remittances of 2.5 per cent in the first half of 2021 contrasted with the same period of 2020. An anticipated 7.3 per cent increase in remittances during 2022 would carry Nigerian receipts to $19 billion, still well below the average $23 billion that characterised the immediate pre-pandemic period,” it noted.
The bank observed tightening immigration requirements in the United States and the European Union, African nationals have continued to move to other countries at a quick pace. “Between 2010 and 2018, the African-born population in the United States surged by 52 per cent to more than two million versus 12 per cent growth for the total foreign-born population. Immigrants to the United States have included refugees from conflict-ridden countries, and highly skilled workers and students from Ghana, Kenya, Nigeria and South Africa,” the report said.
The document also that sub-Saharan African intraregional immigration has surpassed international migration with “70 per cent of immigration in Africa from within.” It picked South Africa, Côte d’Ivoire, Uganda, Nigeria and Ethiopia as leading destinations of the intraregional movement.
On debt, the President of the Bretton Woods institution noted that at a time when sovereign borrowings of poorest countries have surged to dangerously high levels, global and country-by-country systems for tracking it are proving to be inadequate.
“These gaps make it harder to assess debt sustainability and for over-indebted countries to restructure debt promptly and generate a durable economic recovery,” David Malpass, was quoted in a new World Bank report as saying.
The report, ‘Debt Transparency in Developing Economies’, marks the first comprehensive assessment of the global and national systems for monitoring sovereign debt.
The report finds that debt surveillance today depends on a patchwork of databases with different standards and definitions and different degrees of reliability, cobbled together by various organizations. Such inconsistencies lead to large variations in publicly available tallies of debt in low-income economies – the equivalent of as much as 30 per cent of a country’s GDP, in some instances.
The study finds that 40 percent of low-income countries have not published any data about their sovereign debt for more than two years – and that many of those that do publish it tend to limit the information to central government debt.
Many developing countries are relying increasingly on resource-backed loans – in which governments secure financing by putting up future revenue streams as collateral.
Resource-backed loans accounted for nearly 10 percent of new borrowing in Sub-Saharan Africa between 2004 and 2018. More than 15 countries have such debt, but none provide details on the collateral arrangements.
Central banks are also using monetary-policy tools, such as repos and swaps, to facilitate government borrowing from foreign creditors. But such borrowing is neither clearly identified in the central banks’ balance sheets nor captured in the databases of international financial institutions.
The report finds that just 41 percent of these economies use market-based auctions as the main channel to issue domestic debt. And those that use auctions divulge only spotty information to investors, which shows that domestic debt markets in the poorest economies are opaque.
The World Bank Group has long considered debt transparency a crucial step in countries’ development process, because transparency facilitates new investments, improves accountability, and helps reduce corruption.
The Bank’s global Debtor Reporting System remains the single most important source of verifiable information on the external debt of low- and middle-income countries.
All countries that borrow from the World Bank – more than 100 – are required to report details of external debt owed by public agencies.