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IMF Country Report No. 23/94

NIGERIA

SELECTED ISSUES

February 2023

This Selected Issues paper on Nigeria was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on January 12, 2023.

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Title Page

NIGERIA

SELECTED ISSUES

January 12, 2023

Approved By

the African Department

Contents

• FOOD INSECURITY IN NIGERIA: FOOD SUPPLY MATTERS

• A. Background

• B. Stylized Facts About Food Insecurity in Nigeria

• C. Agricultural Production and Consumption in Nigeria

• D. Drivers of Food Security Over Time: Role of Demand, Supply, and Price Factors

• E. Government Efforts and Effectiveness in Securing Food Availability

• F. Conclusions

• BOXES

• 1. Definitions of Food Security Benchmarks

• 2. Agricultural Policies of Successful Comparator Countries

• FIGURES

• 1. Location of High Food Risk Areas Across Nigerian States

• 2. Urban and Rural Inflation Differential and World Wheat Price Inflation

• 3. IFPRI Global Hunger Index vs EIU Food Insecurity Index

• 4. EIU Food Insecurity Index Score (2019 vs 2022)

• 5. Stylized Facts of Nigeria's Agricultural Sector Over the Past Decade, 2010-21

• 6. Import Dependence of Major Staples in Nigeria

• 7. Consumption per Capita of Key Staples

• 8. Relationship Between Fertilizer Application and Yield

• 9. Relationship Between Share of Irrigated Land and Yield

• 10. Rainfall and Real Agricultural GDP

• 11. Farm Machinery Per Unit of Agricultural Land

• 12. Change in Food Import Ratios Over Time

• 13. Import Dependency

• 14. Domestic and International Prices of Staples Across Some States in Nigeria

• TABLES

• 1. Choice of Comparator Countries and Indicators for Food Security Analysis

• 2. Determinants of Food Security an Absence of Hunger

• 3. Staple Yields

• 4. Role of Credit in Agricultural Production Growth

• ANNEX

• I. Variable Definitions and Sources for Econometric Specifications

• References

• NIGERIA'S TAX REVENUE MOBILIZATION: LESSONS FROM SUCCESSFUL REVENUE REFORM EPISODES

• A. Nigeria's Tax Revenue Mobilization and Tax Capacity

• B. Lessons from Successful Revenue Reform Episodes in SSA

• C. Implications: Nigeria's Tax Reform Path Forward

• BOXES

• 1. Mauritania Case (2010-14): A Package of Reforms that Combine Indirect Tax Reforms with Redistributive Measures and Fuel Subsidy Reform

• 2. Rwanda Case (2010-15): Reforms Focusing on Raising the Rates of Indirect Taxes and Removing Tax Exemptions

• 3. The Gambia Case (2010-15): A Package of Reforms on Indirect Taxes and Tax Administration with the Elimination of Fuel Subsidies

• 4. Uganda Case (2013-17): Reforms on Indirect Taxes and PIT Based on Comprehensive National Revenue Plans Supported by Strong Political Will

• FIGURES

• 1. Revenue: Nigeria and Peers

• 2. Nigeria's Revenue Trends

• 3. Tax Rates: Nigeria and ECOWAS Countries

• 4. VAT C-Efficiency Ratios: Nigeria and Peers

• 5. Results of Tax Morale Survey

• 6. Tax Expenditure: Nigeria and Peers

• 7. Nigeria's Tax Potential: Estimates of Tax Frontier for SSA Countries

• TABLES

• 1. Identified Episodes of Successful Tax Revenue Mobilization in SSA

• 2. Excise Duty Rates

• References

• NIGERIA—FOSTERING FINANCIAL INCLUSION THROUGH DIGITAL FINANCIAL SERVICES

• A. Financial Inclusion: Achievements and Challenges

• B. Evolution of Digital Financial Services

• C. Policy Options for Fostering Financial Inclusion

• D. Conclusions

• BOXES

• 1. Policies Promoting Gender Equality in Access to Financial Services

• 2. Mobile Money Policies in Kenya and Tanzania

• 3. Financial Inclusion Policies in Kaduna State—A Blueprint for Nigeria?

• FIGURES

• 1. Progress in Financial Inclusion

• 2. Nigeria: Inclusion Goals

• 3. Financial Inclusion in the Region

• 4. Inclusion Gaps

• 5. Reasons for not Having an Account

• 6. Low Financial Capability

• 7. Low Financial Awareness

• 8. Inclusion by Educational Attainment

• 9. Benefits of Digital Finance

• 10. Made a Digital Payment

• 11. Mobile Money Account

• 12. Mobile Money Transactions

• 13. Gaps in Mobile Money Account Ownership

• 14. Financial and Digital Literacy in Reginal Comparison

• 15. Digital Financial Services Usage by Financial Capability Levels

• 16. eNaira Wallet Downloads

• 17. eNaira Transactions

• TABLES

• 1. Reasons for not Having a Mobile Money Account

• 2. Priority Policy Options for Fostering Financial Inclusion

• References