On Thursday, the World Bank emphasized that Nigeria needs to eliminate government waste, allocate funds to targeted poverty alleviation programs, and adhere to realistic budgets to prevent unplanned expenditures. These insights were part of the World Bank’s latest Nigeria Development Update (NDU) Report, titled “Staying the Course: Progress Amid Pressing Challenges,” which was released in Abuja.
Alex Sienaert, the World Bank’s Lead Economist for Nigeria, noted that the report underscores the importance of maintaining strict monetary policies while enhancing the effectiveness of various policies until a consistent reduction in inflation is achieved. He highlighted that alongside these fiscal measures, addressing structural issues is crucial for combating inflation and fostering long-term investment, growth, and job creation.
Sienaert provided further recommendations, including the unification of the exchange rate to better reflect market conditions and the expansion of the foreign exchange market. He also pointed out the necessity of reducing debt risks by focusing on several key areas. These include phasing out fuel subsidies, improving transparency within the oil sector, and enhancing non-oil revenue through effective tax policies. Additionally, he stressed the need to protect vulnerable populations by expanding cash transfer programs and strengthening social safety nets.
He expressed optimism that these recommendations would support Nigeria’s macro-critical reforms and stimulate growth and employment opportunities. According to the report, GDP is projected to grow by 3.3 percent in 2024 and average 3.7 percent from 2025 to 2027. Although headline inflation is expected to peak at 31.7 percent in 2024 due to previous naira depreciation and rising gasoline prices, adhering to the current policy framework could lower inflation to 14.3 percent by 2027.
Ndiame Diop, the World Bank Country Director for Nigeria, added that macro-fiscal reforms are already yielding positive results, with revenue growth and improvements in the foreign exchange market. He stressed the need for the government to ensure that these benefits translate into tangible improvements in the everyday lives of Nigerians.
Diop also highlighted the importance of capitalizing on Nigeria’s competitive exchange rate, which is a significant development after 40 years. Moving forward, he underscored the necessity of consolidating the positive fiscal outlook and enhancing support for the poorest households while creating more growth opportunities, particularly for the youth. He noted Nigeria’s potential in the service sector, stating that the country possesses a valuable resource: its people.
The NDU is a biannual report series from the World Bank that analyzes Nigeria’s recent economic and social developments, placing them in a broader global context while also addressing key economic and policy issues and medium-term development challenges.