2023: World Bank Recommends Mixed Reforms To Reduce Nigeria’s Economic Shocks

The World Bank has said Nigeria can consider reforms in three key areas in order to mitigate the impact of a slowing global economy occasioned by the Russia-Ukraine conflict, Covid-19 and other global and external shocks.

The bank, in its December 2022 Nigeria Development Report, said findings indicate that reforms can be made in three key areas namely:

“Restoring macroeconomic stability through measures to reduce the domestic and external imbalances.”

This according to the World Bank, will require a coordinated mix of exchange rate, trade, monetary, and fiscal policies, notably including adopting a single, market-responsive exchange rate, eliminating the petrol subsidy, and increasing oil and non-oil revenues.

The second reform it says involves: “Boosting private sector development and competitiveness by eliminating structural constraints that hinder productivity;

And lastly, “Expanding social protection to protect the poor and most vulnerable.”

The bank said Nigeria’s economic growth has slowed on the back of declining oil output and moderating non-oil activity.

“Real gross domestic product (GDP) rose by 3.1 per cent year-on-year (y-o-y) in the first three quarters of 2022, little more than the annual population growth of 2.6 per cent. Nigeria’s growth performance, and its fiscal and external buffers, have decoupled from high oil prices, and macroeconomic vulnerabilities have increased,” the report added.

Thus, the bank stressed that the country needs to urgently address the key drivers of the “decoupling and make reforms to strengthen Nigeria’s macro-fiscal framework.

The World Bank commended some of the reforms of the government calling them the right step to take, while urging their sustainability.

“The Strategic Revenue Growth Initiative (SRGI) of the federal government is a welcome first step, reversing the previously declining trend in non-oil revenues as a share of GDP. This initial success needs to be sustained and built upon.”