The World Bank has stressed the need for Nigeria to fix issues with fuel prices and improve non-oil revenue. It noted that if these issues are not fixed, Nigeria might lose the benefits of its economic reforms and face increased financial problems.
In its Macro Poverty Outlook for Nigeria for April 2024, the Washington-based lender predicts that Nigeria’s economy will grow by averagely 3.5% annually from 2024 to 2026. This growth is faster than the increase in the population. However, this growth depends on the country continuing its current economic reforms.
The World Bank expects the non-oil parts of the economy to grow slowly. The oil sector should become more stable with a slight increase in production and a decrease in prices. However, to see better growth rates, Nigeria needs to make more changes in its economy.
The report mentions that inflation, or the rise in prices, will stay high at 24.8% in 2024 but should slowly decrease to 15.1% by 2026. This decrease will come from stronger rules on money and stabilizing the exchange rate. But, during this time, more people might fall into poverty, stabilizing only by 2026.
The report read:
The bank further noted that Nigeria should see less pressure from debts because it will earn more money in dollars and improve other revenues. The amount of money needed for paying debts should drop from 97% of revenues in 2024 to 61% by 2026.
The World Bank suggests that changing how exchange rates are managed will help both the government’s finances and the country’s trade balance. The trade balance should show a surplus, meaning the country will earn more from its exports than it spends on imports. This could help attract more foreign investment if the economy stays stable.
The World Bank’s report emphasizes the need for Nigeria to keep up with its economic reforms to ensure a stable and growing economy. It warned that if Nigeria stops its reforms or goes back on changes, it could face more economic problems. Weak policies on money might not control inflation well or attract foreign money, leading to more financial instability.
Not fixing fuel prices and not increasing other revenues could also hurt the country’s financial health. Other problems like growing insecurity, bad weather, and people unhappy with high prices could harm Nigeria’s economic recovery.
The report concluded:
