The contents of this report constitute technical advice provided by the staff of the IMF to the authorities of Nigeria in response to their request for technical assistance. Unlocking the potential of a rapidly growing population requires substantial improvements in human and physical capital. Nigeria is Africa’s most populous country and its largest economy. Recognizing challenges, Nigeria has embraced the Sustainable Development Goals (SDGs) Agenda. The Economic Recovery and Growth Plan 2017–2020 gives prominence to economic, social and environmental issues. This report assesses additional spending associated with making substantial progress along the SDGs. The report focuses on critical areas of human and physical capital. For each sector, the report documents progress to date, assesses Nigeria relative to peers, highlights challenges, and estimates the spending to make substantial SDG progress. Nigeria has shown gradual improvements in education. A gradual and strategic approach should be considered given the relatively large additional spending.

Abstract

The contents of this report constitute technical advice provided by the staff of the IMF to the authorities of Nigeria in response to their request for technical assistance. Unlocking the potential of a rapidly growing population requires substantial improvements in human and physical capital. Nigeria is Africa’s most populous country and its largest economy. Recognizing challenges, Nigeria has embraced the Sustainable Development Goals (SDGs) Agenda. The Economic Recovery and Growth Plan 2017–2020 gives prominence to economic, social and environmental issues. This report assesses additional spending associated with making substantial progress along the SDGs. The report focuses on critical areas of human and physical capital. For each sector, the report documents progress to date, assesses Nigeria relative to peers, highlights challenges, and estimates the spending to make substantial SDG progress. Nigeria has shown gradual improvements in education. A gradual and strategic approach should be considered given the relatively large additional spending.

Executive Summary

Making progress in the SDGs requires substantial additional resources. Concomitant with the reform priorities identified by the United Nations, World Bank, European Union, and other international development institutions, the mission estimates additional spending of 18 percentage points of GDP by 2030—a level higher than the average low-income and developing countries. Relative to other low-income and developing countries, additional spending is higher in education and water and sanitation, and lower in health, electricity, and roads (Figure).

Given scarce resources, a long-term vision is imperative. Given scarce resources, a long term vision is imperative. The authorities have made important progress in developing long-term plans in sectors such as health, electricity, and water and sanitation.

  • Education—increasing access and improving quality. The relatively low resources devoted to education are insufficient to deliver quality education for all. With 50 percent of the population in school-age, we estimate that total annual spending in education would need to increase by 7.7 percentage points of GDP by 2030. A pragmatic approach should be taken depending on resource availability. For example, expanding enrollment could be done at a more modest cost of some 1 percentage points of GDP.

  • Health—tackling inefficiencies. Nigeria should deliver better outcomes at its current level of spending. Rebalancing the system, with an emphasis on primary care with public support, is critical. In the medium-term, additional annual spending of 4 percentage points of GDP would be needed to expand health workers, improve infrastructure, and improve health outcomes.

  • Electricity—rehabilitating and expanding power infrastructure. Annual investments of 1 percent of GDP are needed to expand electricity access and keep up with population growth. Rehabilitating the existing capacity can help meeting part of these investments. Mini-grids can play an important role in mobilizing capacity to remote and vulnerable communities.

  • Roads—expanding the road network. Increasing access roads from 26 to 75 percent of the rural population will cost 2 percent of annual GDP. It is critical to outline the road network and identify projects with high economic and social returns. The private sector can play an important role in this sector, supported by strong oversight to ensure value for money.

  • Water and sanitation—picking low-hanging fruit. A priority is improving access for the most vulnerable. Ending open defecation and expanding basic water and sanitation can be achieved at a modest annual cost of 0.6 percent of GDP. In the medium-term, providing safely managed water and sanitation for all will cost an additional 2.5 percent of annual GDP.

Beyond resources, improving coordination and strengthening governance is critical to delivering on the SDGs. The federal administration through its Office of the Senior Special Assistant to the President on Sustainable Development Goals (OSSAP-SDGs) is committed to advance towards the 2030 goals. In line with policy options outlined by the World Bank and the United Nations, progress in these sectors requires a whole-of-government approach, supported by strong coordination between the federal, state, and local administrations. While development partners and the private sector can help, the government should be in the driving seat of these efforts. To support decision-making based on evidence, one priority is to collect and analyze data to inform best practices and better target scarce resources.

Spending in Critical SDG Sectors

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations.

I. Introduction

1. Nigeria faces serious development gaps. Half of the student-age population is enrolled in schools. Healthy life expectancy is 49 years, placing Nigeria among the bottom six countries in the world. Some 54 percent of the population is connected to an electricity grid that collapses about once a month. Roads are in precarious condition. Less than 4 percent of the population have access to safely managed water. Overall, Nigeria’s indicators of human and physical capital are worse than countries with lower GDP per capita.

2. Unlocking the potential of a rapidly growing population requires substantial improvements in human and physical capital. Nigeria is Africa’s most populous country and its largest economy. Its population is projected to grow by 30 percent—about 60 million people—between now and 2030. To raise living standards, reduce poverty, and provide better opportunities for the growing youth, Nigeria needs to invest more on its people—education and health—and its infrastructure—roads, electricity, and water and sanitation.

3. Recognizing these challenges, Nigeria has embraced the Sustainable Development Goals (SDGs) Agenda. The Economic Recovery and Growth Plan 2017–2020 gives prominence to economic, social and environmental issues. An important step was the establishment of a special office within the presidency responsible for coordination, planning, communications, and advocacy around the SDGs agenda.2 The federal government has included specific programs to support the SDGs in the budget. The nation is recognizing that an all-government approach (including federal, state, and local governments) is required to make progress along the SDGs.

4. This report assesses additional spending associated with making substantial progress along the SDGs. The report focuses on critical areas of human (education and health in Section II) and physical (electricity, roads, and water/sanitation in Section III) capital. For each sector, the report documents progress to date, assesses Nigeria relative to peers, highlights challenges, and estimates the spending to make substantial SDG progress.3 For education and health, we report additional spending in percentage points of GDP, corresponding to the difference between the share of GDP in spending consistent with high performance in 2030 and the current level of spending as a share of GDP. For physical capital, additional spending in percentage points of GDP corresponds to the annualized spending required to close infrastructure gaps between 2019 and 2030. A set of appendices discuss the main assumptions, data, and methodological issues for each sector (appendices I to VI).

II. Human Capital

A. Education

5. Nigeria has shown gradual improvements in education. The share of literate adults increased from 55 percent in 2003 to 62 percent in 2018 (Figure 1.a). In the same period, increases in enrollment raised the average number of years of schooling by 2 years (Figure 1.b). To boost outcomes, the authorities launched in 2018 a strategic four-year plan, which focuses on improving access and quality.4

Figure 1.
Figure 1.

Trends in Educational Outcomes

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations using World Development Indicators and UNDP (2019).

6. The education system is falling short. Like many other low-income and developing countries, Nigeria faces the challenge of educating large numbers of children in relation to the population.5 Today, over half of the population is of school-age, compared to 36 percent in emerging economies and 25 percent in the advanced economies (Figure 2.a). Nigeria is failing this demographic challenge. Half of the school-age population (Figure 2.b) —nearly 50 million Nigerian children and youth—are not receiving any formal education.

Figure 2.
Figure 2.

Demographics and Enrollment

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff estimates.

7. Furthermore, the education system seems to deliver poor quality to those enrolled. Nigeria ranks low in quality measures among low-income countries. For example, only 20 percent of pupils that complete primary school can read a three-sentence passage fluently or with little help, compared with 50 percent in Ghana and 80 percent Rwanda and Tanzania.6 Among 44 economies in Africa, Nigeria is in 39th place in harmonized tests scores.7 This lower quality is equivalent to losing about 4 years of schooling.8

8. The lack of funding explains part of these deficiencies. While other factors—security, distrusts in government, access to other basic services—hinder outcomes, the resources devoted to education seem insufficient to deliver universal and high-quality education. At 1.6 percent of GDP, the combined spending on education by the public and private sectors is relatively low (Figure 3.a). School infrastructure is inadequate, and teachers lack materials. Most math and language teachers fail to achieve 80 percent in tests aimed at ten-year-old pupils.9 Overall, Nigeria’s score in the index used to measure education SDG performance falls far below the median for low-income and developing economies (Figure 3.b).

Figure 3.
Figure 3.

Education Inputs and Outcomes Comparison

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff estimates using Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. (2019): Sustainable Development Report 2019.Note: Peers include Cameroon, Ghana, India, and Zimbabwe.

9. To address these challenges and make meaningful progress toward SDG4, Nigeria would need substantial additional resources. To match the strong performers among Nigeria’s peers, we estimate that total spending in education would need to increase by 7.7 percentage points of GDP by 2030 (Table 1). This reflects the need to boost enrollment, increase the share of capital in total spending, reduce class size, and raise teacher wages.

  • Increasing enrollment rates and improving infrastructure. Nigeria could aim at raising enrollment to 80 percent of the school-age population by 2030, i.e., universal coverage for two years of pre-primary, full primary and secondary education, and two years of tertiary education.10 To cope with higher enrollment—and refurbish current facilities—a larger share of the increase in education spending would need to be directed to infrastructure.

  • Increasing the quantity and quality of teachers. While Nigeria has smaller class sizes than LIDC, we find that further reductions would be needed to match the student per teacher ratio of 16.5 in good performing countries today. This is particularly important in public schools which today have an average of 33 students per teacher. In addition, to attract more qualified teachers, the compensation of teachers would have to increase at a pace faster than GDP.

Table 1.

Nigeria: Additional Spending for High Performance in Education SDG

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Source: IMF staff estimates.

10. A gradual and strategic approach should be considered given the relatively large additional spending. One priority is to increase enrollment rates. We estimate that, assuming the current level of spending per student, this increase in enrollment would require additional spending of 1 percentage points of GDP (Figure 4). This policy could be accompanied by larger commitments to school infrastructure, which would demand an additional 0.7 percentage points of GDP in spending. Smaller class sizes would require an additional 2.3 percentage points of GDP. Finally, higher wages to attract qualified teachers, would require an additional 3.9 percentage points of GDP.

Figure 4.
Figure 4.

Decomposition of Additional Spending in Education

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations.

11. Beyond resources, it is critical to address disparities across genders, regions and public and private services. An equitable education system has positive effects on economic growth, helps alleviate poverty, and improve income distribution in the medium term.11

  • Disparities remain between the education received by girls and boys.12 By ensuring equal educational opportunities to all children, regardless of gender, Nigeria could boost economic growth. For example, increasing the share of women with secondary education by one percentage point will boost annual per capita growth by 0.3 percentage points.13

  • Geographical disparities in outcomes are significant, driven by various factors, including security, economic barriers and low trust in formal education in some areas, especially for girls.14 While 78 percent of Southwest children can read part or whole sentences, only 17 percent of Northeast children are able to do so.15 Addressing these gaps in access is critical for economic growth—for every nine children, five live in the North.

  • Disparities between public and private schools have been documented in terms of class size, teacher’s quality, adequacy of facilities, curriculum practices, stability of academic activities.16 Narrowing these gaps, particularly in primary and secondary education, could improve opportunities for the most vulnerable. In the medium-term, addressing these inequities would also help reducing the relatively high level of private spending in education.

12. Nigeria made progress on its information system, but more efforts are needed. Detailed information on the number of students, teachers, and schools is available, but little is known about the spending on education by the different government levels or the private expenditure on education.17 Much less is known at the school level. To support decision-making based on evidence, one priority is to collect spending data linking it to the provision of education services. For example, includes spending per capita and outcomes by region would help to inform best practices and better target scarce resources.

B. Health

13. Nigeria has made some strides in health outcomes yet lags far behind peers. Mortality rates of children under five years old dropped from 211 to 120 deaths per 1,000 live births in 1990–2018, a 60 percent reduction (Figure 5.a). Progress has also been made in maternal mortality, which declined by 24 percent from 1990 to 2018. Yet, health outcomes lag those in countries with comparable per capita income (Figure 5.b). Across indicators, Nigeria fares poorly. Infant mortality is the third highest in the world, far higher than countries with lower income per capita. Healthy life expectancy is just 49 years, placing Nigeria among the bottom six countries in the world. With a disproportionate share of out-of-pocket health expenditures— about 70 percent of the health expenditures—most households are financially vulnerable to health shocks. The World Health Organization ranks Nigeria’s healthcare system at 187 among 190 countries.18

Figure 5.
Figure 5.

Health Outcomes

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Sources: IMF FAD Expenditure Assessment Tool; World Development Indicators. Note: Peers include Cameroon, Ghana, India, and Zimbabwe.

14. Health care spending is inefficient. Overall, Nigeria’s score in the index used to measure health SDG performance falls far below the median for low-income economies (Figure 6.a).19 This low performance, however, does not seem to be explained by the level of spending. At 4 percent, the share of the GDP devoted to health in Nigeria is shy of that in India, Ghana, and Cameroon—countries with substantially better outcomes—albeit lower than the median for low income and developing countries (Figure 6.b). In Purchased Power Parity dollars, Nigeria spends more on health per person than other low-income economies (Figure 6.c). At this level of spending per capita, Nigeria could achieve substantially better outcomes. In many countries, including Angola, Kenya, Rwanda, and Senegal, spending per capita is lower yet healthy life expectancy is substantially higher than in Nigeria (Figure 6.d).

Figure 6.
Figure 6.

Health Spending and Performance

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff estimates.Note: In panel d, the dotted lines show the averages for countries with GPD per capita under $3,000. Healthy life expectancy computes the number of years of life expected to be lived in full health.

15. Addressing inefficiencies while increasing spending would be needed to make significant progress in the health SDGs. Under the current resource envelope, addressing inefficiencies should remain a priority—Nigeria should be delivering outcomes commensurate to its current level of spending. Nevertheless, in the medium-term, we estimate that more resources would be needed, including raising the share of health care workers in the population. We estimate to replicate the input/output mix in the good performers among peer countries today, Nigeria would need to increase health expenditure by 4.3 percentage points of GDP between now and 2030 (Table 2).

  • Raising the number of health workers. To reach the standards of well performing countries, the number of doctors per 1,000 population needs to increase from 0.2 to 0.4 while the number of other health personnel per 1,000 population needs to increase from 2 to 4.

  • Making wages more competitive. At 6 times GDP per capita, doctors’ wages are low in GDP per capita terms relative to strong performers. There is scope to raise wages in the health sector at a faster pace than GDP growth, albeit gradually. This could contribute in reducing pressures for Nigerian doctors to migrate abroad.20

Table 2.

Nigeria: Estimated Spending Needed for High Performance in Health SDG

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Source: IMF staff estimates.

16. A rebalancing of the system, with the government playing a larger role in financing primary care seems necessary. The combined spending in health by the government (federal, state, and local) is just 0.6 percent of GDP. Over 85 percent of total health expenditures come from the private sector, of which the majority corresponds to out-of-pocket payments from households.21 This stands in contrast to the strong performing countries, whose median private share in health spending is 48 percent. The reliance on payments at the point of service is a high barrier to access health care for many and leads to more expensive care for both the patient and the system.22 Catastrophic health events result in substantial loss of income for many families, with an additional 3.5 percent of the population falling into poverty every year.23 This suggests ample scope for government interventions geared at expanding affordable access to health care for the most vulnerable. A starting point could be to strengthen the primary health care network, which can be effective in improving health care outcomes.24 The government had set a medium-term plan to reduce the financial barriers to accessing the healthcare system.25

17. Plans toward a universal health care insurance seem promising, but more political commitment is needed. Nigeria’s insurance system is available only for formal workers.26 Steps to expand access to insurance have been taken in the past few years. The National Health Act of 2014 established the legal framework for the creation and functioning of the Basic Health Care Provision Fund, which aims at providing financing for the most vulnerable to access to basic care.27 However, more political and budgetary commitments are needed—the resources allocated to the fund thus far have been minimal.

18. Beyond financing, weaknesses in governance and financial management could be addressed. Responsibilities for health care are shared across all layers of government—about one-third of public spending is carried by subnational governments. This allows for the localities to attend their constituencies in a direct way. The shared responsibilities, however, raise the need for coordination to prevent inefficiencies in the use of government resources and attend regional disparities. And the large footprint of the private sector in health care means that coordination should go beyond government resources. The adoption of the SDGs in national development plans provides an enormous opportunity for greater coordinating in public and private efforts in improving the health outcomes of Nigerians. Beyond a few programs and interventions that cross across governments, a global approach is needed in linking the overall health strategy with the total resource envelope available for health care.

III. Physical Capital

A. Electricity

19. The share of the population with electricity access increased from 40 percent in 2015 to 54 percent in 2020.28 During the same period, the installed available generation capacity connected to the grid increased from 4,000MW to 7,500MW, the nominal transmission capacity increased from 5,000MW to 8,000MW, and the dispatch capacity increased from 3,500MW to 5,500MW.29 The Nigerian Rural Electrification Agency (REA)—tasked with electrification of rural and unserved communities—connected about 100,000 households, impacting 500,000 people and providing more than 5,000 jobs.30 In 2019, the number of total system collapse was reduced to 10, down from an average of 15 per year in 2010–18.31

20. Nigeria’s electricity consumption amounts to about half of what would be expected at its current level of GDP per capita. The electricity supply chain—generation, transmission, and distribution—faces substantial challenges due to years of underinvestment. Only 7,500MW of the 13,500MW on-grid installed generation capacity is functional. Transmission is the system’s bottleneck, dispatching 50 percent below its nominal capacity—less than 4,000MW is end-to-end operational through the grid. Of this, about 10 percent of on-grid electricity demand is unmet. Deficient on-grid supply forces consumers into costly off-grid alternatives, which account for 52 percent of electricity consumption.32 Accounting for on- and off-grid provision, the electricity consumption per capita of 348kWh is below peers (Figures 7 and 8).33

Figure 7.
Figure 7.

Electricity Consumption per Capita

(kWh in 2019 or latest year)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations based on data from the World Bank.
Figure 8.
Figure 8.

Income and Electricity Consumption

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

21. Large investments are needed in the power sector to increase access and keep up with population growth. Between 2018 and 2030, the population is projected to increase from 196 to 263 million. In this period, GDP per capita in U.S. dollars is projected to increase marginally. Electricity consumption per capita is estimated to grow from 348 kWh in 2019 to 635 kWh by 2030 driven by increased access (Figure 9). To expand installed capacity by 22.4GW, at a unit cost of US$2,184 per kW (including generation, transmission, and distribution costs), Nigeria will have to invest an aggregate of US$49 billion in 2020–30, which on an annual basis is equivalent to 1 percent of GDP, including replacement costs (Table 3).34

Figure 9.
Figure 9.

Economic and Electric Power Consumption Statistics

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations.Note: The cost of meeting electric power demand is calculated as a function of increased access, GDP per capita growth, investment cost per additional kW (including generation, transmition, and distribution), and replacement costs. The capacity factor of 70 percent reflects the safety capacity needed to meet pick demand and avoid unmet demand and blockouts.
Table 3.

Nigeria: Additional Investment in Electric Power Capacity Requirements

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Source: IMF staff calculations.Note: The cost of meeting electric power demand is calculated as a function of increased access, GDP per capita growth, investment cost per additional kW (including generation, transmition, and distribution), and replacement costs. The capacity factor of 70 percent reflects the safety capacity needed to meet pick demand and avoid unmet demand and blockouts.

22. In the short term, efforts to rehabilitate and upgrade generation and transmission capacity should be a priority. The Transmission Company of Nigeria is aiming at stabilizing the grid, coordinating procurement and investment, and closing the gap between demand and supply. The Federal Government of Nigeria and Siemens recently signed an implementation agreement for the Nigeria Electrification Roadmap.35 As a first step, rehabilitating the existing infrastructure can boost end-to-end capacity to 7,000 MW. Solving network bottlenecks will enable full use of existing generation and distribution capacities, bringing the systems operational capacity to 11,000 MW. Finally, the plan includes upgrades and expansions in generation, transmission, and distribution to 25,000 MW. Rehabilitating and upgrading the existing capacity could be a cost-efficient way of meeting part of the required investment to meet electricity demand.

23. The Sustainable Energy for All (SE4ALL) program envisions the increase in renewable sources in the energy mix. Nigeria is among the top 50 CO2 emitters.36 The government plans to increase capacity in a more sustainable way. The SE4ALL program encompasses the Vision 30–30-30—i.e., boosting capacity to over 30GW with a share from renewable sources of 30 percent by 2030 (Table 4).37

Table 4.

Nigeria: Current and Target Energy Matrix

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Source: IMF staff calculations using the “Sustainable Energy for All Action Agenda (SE4ALL-AA)” (2016), National Council on Power, Federal Republic of Nigeria.Note: The cost of installed capacity per MW is calculated as the weighted average by type of source. The cost of generation and distribution is assumed to be 50 percent of generation cost each.

24. Mini-grids can play an important complementary role. Nigeria presents excellent conditions for sustainable solar energy generation. Mini-grid sustainable solutions can complement the capacity supply in the lack of on-grid provision. Mini-grids can quickly mobilize scalable capacity and provide electricity to remote and vulnerable communities. The Rural Electrification Agency (REA) is defining the terms and standards for 250 new mini-grids in the country, while the World Bank and the European Union provide financing to its development.38

25. Reforming the electricity sector can have a large impact on equitable access. Increasing affordable electricity access can have positive effects on the most vulnerable. Off-grid electricity provision comes at cost to final consumers. For example, low-income households regularly dedicate 9 percent of their expenditures to energy (e.g., charging cell phones in kiosks with a kerosene generator for a fee).39 Also, a significant share of income is spent by off-grid households on candles and fuel lamps.

B. Roads

26. The current administration has made significant investment in road infrastructure; nonetheless, a large proportion of Nigeria’s 195,000 road network is in unsatisfactory condition due to insufficient maintenance.40 The World Bank estimates that about 16 percent of the roads are federal, 16 percent of state, and 68 percent of rural.41 While no reliable government assessment of the road network quality is available, the condition of many roads seems deficient (Figure 10).42

Figure 10.
Figure 10.

Quality of Roads Perception

(1=extremely poor to 7=extremely good)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: World Economic Forum, 2019, The Global Competitiveness Report 2019.

27. Only 26 percent of Nigeria’s rural population have access to all-weather roads within two kilometers (Figure 11). Nigeria’s road density is low in comparison to other countries. Nigeria’s 22 km per 100 square km is below India (208 km per 100 square km), a country with a similar per capita GDP. Southern states have relatively higher accessibility than the Northern states. In 2014, the Rural Access Index (RAI) of Imo State was significantly higher (50 percent) than Adamawa State (12.8 percent).43

Figure 11.
Figure 11.

Rural Access Index

(percent of rural population with access to roads within two kilometers)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: The World Bank, Measuring Rural Access: Update 2017/18, February 2019 and Mikou, M., Rozenberg, J., Koks, E. E., Fox, C. J. E., and Peralta Quiros, T. (2019). Assessing Rural Accessibility and Rural Roads Investment Needs Using Open Source Data. The World Bank, Policy Research Working Paper 8746.

28. Nigeria will have to invest a significant share of its GDP to improve road access. While construction costs vary by type (i.e., number of lanes and type of surface) and region, we estimate an average cost per kilometer of about US$550 thousand. Thus, extending the road network by nearly 180 thousand kilometers will require an aggregate investment of almost US$100 billion over 2020–30, which on an annual basis is equivalent to 2 percent of GDP, including depreciation (Figure 12 and Table 5). Furthermore, we estimate that, on top of the 2 percent of GDP per year on new road infrastructure, Nigeria will have to invest at least up to 0.5 percent of GDP per year in refurbishing and modernizing its existing road infrastructure.

Figure 12.
Figure 12.

Main Road Statistics

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations.Note: See Appendix IV for a calculation of road length needed in 2030.
Table 5.

Nigeria: Additional Investment in Roads

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29. The institutional governance of the road network could be strengthened. Crossing competences between government levels (i.e., federal, state, and local administrations) and functional competences within administrations (i.e., ministries, department, and agencies) impose coordination challenges.

  • Partnerships with the private sector need scrutiny to ensure value for money. The government is championing solutions with the private sector as a key player in the development of road infrastructure. While these partnerships can encourage private funding, without a strong institutional regulatory setup they may exacerbate governance problems. For example, road-for-taxes programs could be used to bypass budgetary scrutiny.

  • Scope for greater coordination. Road construction has been largely driven by ad-hoc programs with little prioritization. Appropriations for road construction lack funding, resulting in unfinished works and poor maintenance. At minimum, the federal government could take the leadership in outlining a national network with consideration of increasing maintenance of existing road assets as well as enhancing monitoring and accountability of ongoing projects.

C. Water and Sanitation

30. Nigeria has made some recent progress in water and sanitation provision. Water and sanitation indicators worsened in the 1990s and 2000s, reflecting years of poor maintenance and low investments in water and sanitation assets.44 Partly because of this neglect, the current federal administration declared a state of emergency in water and sanitation. The gradient of progress has been noticeable. Between 2010 and 2018, access to basic sanitation increased from 32 to 42 percent of the population, an achievement given the rapid population growth. In the same period, access to basic water increased from 79 to 87 percent of the urban population and from 46 to 60 percent of the rural population.

31. Yet substantial challenges remain. 47 million people still practice open defection. A third of the population do not have access to basic water services. Access to basic and safely managed sanitation services is even lower (Figures 13). Only 3.7 percent have access to safely managed water services (Figures 14). These deficiencies are higher in rural than urban areas, with disparities across regions and wealth quintiles (Figure 15).45 For example, access to basic water and sanitation is above 50 percent of the population in Anambra and Imo and below 10 percent of the population in Borno and Ebonyi. The federal government is making efforts to coordinate programs effectively and co-share expenses with the states through targeted programs.

Figure 13.
Figure 13.

Access to Safely Managed Sanitation

(Percent of population)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations based on data from the World Bank.
Figure 14.
Figure 14.

Access to Safely Managed Water

(Percent of population)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: IMF staff calculations based on data from the World Bank.
Figure 15.
Figure 15.

Access to Basic Water and Sanitation Services

(Percent of population)

Citation: IMF Staff Country Reports 2020, 177; 10.5089/9781513545202.002.A001

Source: “National Outcome Routine Mapping of Water, Sanitation and Hygiene Service Levels—Nigeria. Summary of Survey Findings 2018.” National Bureau of Statistics, Nigeria, in collaboration with the European Union, UKaid, the World Bank, and UNICEF.

32. The government is prioritizing efforts and setting achievable goals. The authorities are committed to end open defecation by 2025.46 The campaign “Clean Nigeria: Use the Toilet” launched in 2019 is based on dissemination of technical instructions for the construction of toilets and behavioral nudging aimed at sensitizing the population and mobilizing public and private resources. The program identifies the location, resources needed (US$2.7 billion), and responsibility (75 percent households, 25 percent government and PPPs) for the construction of 20 million toilets (Table 6). Following WHO recommendations, the government is taking a gradual approach to close the gap by reducing the distance to basic water and sanitation services from 30 to 15 minutes roundtrip. 47

Table 6.

Nigeria: Targets and Estimated Budget in the “Clean Nigeria: Use the Toilet” Campaign

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Source: Federal Ministry of Water Resources and IMF calculations.

33. Nigeria can achieve high-impact basic coverage of water and sanitation at a moderate cost. We estimate the cost to provide universal safely managed access to water and sanitation following the World Bank’s methodology.48 Overall, meeting basic water and sanitation needs will require an aggregate of US$23 billion over 2020–30, i.e., only 0.55 percent of annual GDP including depreciation (Table 7).49 Providing safely-managed water and sanitation will require an additional 2.5 percent of annual GDP, including depreciation.

Table 7.

Nigeria: Additional Investment in Water and Sanitation

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Source: IMF staff calculations, based on 2018 WASH NORM and 2016/2017 MICS reports.Note: The methodology follows Hutton and Varughese (2016) and accounts for GDP growth and depreciation. Rural and urban cost per capita are assumed to be similar for basic services, and urban cost per capita are assumed to be three times larger than in rural areas for safely-managed services. Depreciation rate is assumed to be the inverse of seven years for basic toilets, 12 years for basic services, and 15 years for safely-managed services.

34. Making substantial progress in the water and sanitation SDG can have a positive impact on equity. The World Bank estimates that annual losses from poor sanitation—access time, premature death, productivity losses, and healthcare—are equivalent to 1.3 percent of GDP per year.50 These costs tend to be higher for the most vulnerable. Improving water and sanitation systems, although initially costly in fixed costs, would have a positive impact on the poor. For example, ending open defecation could cut the time spent finding a private location to defecate (estimated at about 2.5 days a year).

35. Beyond mobilizing financial resources, institutional and technical capacity constraints need to be addressed.51 The amount of resources and skilled labor required to address the construction of toilets, pipes, and facilities are large. On the other hand, these needs are likely to create business and employment opportunities, particularly in rural areas, attracting capital and skilled labor.

Nigeria: Technical Assistance Report-Additional Spending Toward Sustainable Development Goals
Author: International Monetary Fund. Fiscal Affairs Dept.