Nigeria’s battle against poverty has surged to unprecedented levels in the wake of recent economic and fiscal reforms, as revealed by the latest World Bank report. The report underscores the impact of key reforms such as the removal of petrol subsidy and the restructuring of the foreign exchange market rate, emphasizing the necessity of these bold measures in safeguarding Nigeria’s fiscal stability, despite the accompanying temporary hardships.
The repercussions of these policies have, however, exerted significant pressure on the cost of living, catapulting 104 million Nigerians into hardship, surpassing the previous figure of 95 million in 2021 and 100 million in 2022. This alarming increase contrasts sharply with the Nigerian Bureau of Statistics’ earlier estimations of 82.9 million in 2019 and 85.2 million in 2020.
In its “World Bank Nigeria Development Update” titled ‘Turning the Corner: Time to Move From Reforms to Results’, the report underscored the imperative of sustaining the reform momentum and addressing the societal costs of these measures. It highlighted the enduring record-high inflation of 27.3 per cent Year-on-Year in October 2023, primarily attributed to the one-off price impacts of the gasoline subsidy removal. The report also stressed the volatility of the FX market and the urgent need for transparency concerning oil revenues, specifically related to the Nigerian National Petroleum Corporation Limited (NNPCL) and the subsidy arrears.
Shubham Chaudhuri, World Bank Country Director for Nigeria, commended the pivotal steps taken with the petrol subsidy and FX management reforms, emphasizing the crucial need for coordinated fiscal and monetary policy actions in the near future. The report put forward recommendations to mitigate inflation, achieve fiscal consolidation, and address structural barriers to growth, envisioning an average annual economic growth rate of 3.5 per cent in 2023-2026 as a result of sustained macroeconomic stabilization reforms.
The report further emphasized the imperative of Nigeria’s full economic recovery, urging public scrutiny of NNPCL’s Statement of Accounts and transparent disclosure of its revenue inflows. This aligns with the Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun’s call for a comprehensive audit of NNPCL’s accounts, addressing the longstanding issue of revenue inflows.
Furthermore, the report unveiled plans for a salary review in 2024, in adherence to the Salaries and Wages Commission Act. Moreover, the Minister of Finance highlighted the prevalence of substantial foreign exchange liquidity in Domiciliary bank accounts held by affluent Nigerians, signaling the government’s intention to encourage investment by providing attractive incentives for these funds.
At the heart of the discussions, the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, emphasized the priority of reducing inflation through price stability, demonstrating a nuanced approach to monetary policy. Meanwhile, the Minister of Industry, Doris Uzoka-Anite, countered the World Bank’s position on power subsidy, advocating for its role in supporting production and export.
In essence, Nigeria finds itself at a critical juncture, navigating the multifaceted challenges posed by economic reforms while striving for a more robust, stable, and inclusive economic landscape.
As Nigeria charts its course, the global community keenly observes these developments, recognizing the significance of Nigeria’s trajectory in shaping broader narratives of economic resilience and transformation.
