By Milcah Tanimu

A recent World Bank report has highlighted a further increase in Nigeria’s poverty level, reaching 104 million people, as a result of recent economic and fiscal reforms. Notable reforms include the removal of the petrol subsidy and restructuring of the foreign exchange market rate. While acknowledging the Federal Government’s efforts in implementing what it considers ‘bold reforms’ to avert a fiscal crisis, the World Bank emphasized the temporary challenges posed by these measures.

According to the report, the number of poor people in Nigeria has risen from 95 million in 2021 to 100 million in 2022, and now stands at 104 million. The Nigerian Bureau of Statistics (NBS) recorded figures of 82.9 million in 2019 and 85.2 million in 2020.

The World Bank’s Nigeria Development Update titled ‘Turning the Corner: Time to Move From Reforms to Results’ stressed the importance of maintaining reform momentum and addressing the associated costs. The report noted that inflation remains high, reaching 27.3% Year-on-Year in October 2023, partially driven by the one-off price impacts of petrol subsidy removal.

The report recommended specific actions to sustain and maximize the benefits of the implemented reforms, including controlling inflation, improving foreign exchange market stability, achieving fiscal consolidation, and addressing structural barriers to growth.

Shubham Chaudhuri, World Bank Country Director for Nigeria, commended the petrol subsidy and foreign exchange management reforms but urged coordinated fiscal and monetary policy actions in the short to medium term. He emphasized that continued reform implementation would lead to increased fiscal space for development spending, supporting infrastructure and human capital development.

The World Bank also called for transparency from the Nigerian National Petroleum Company Limited (NNPCL) in disclosing its revenue inflows, especially related to the subsidy removal. The report highlighted expected fiscal savings of around N2 trillion in 2023, rising to over N11 trillion between 2023 and 2025 due to subsidy reform.

Finance Minister Wale Edun affirmed the need for scrutiny of NNPCL’s accounts and announced a forthcoming salary review in 2024, in compliance with the Salaries and Wages Commission Act. Additionally, the Minister disclosed plans to encourage holders of domiciliary accounts with significant foreign currency holdings to invest in attractive instruments.

During the presentation, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, defended the unconventional approach of not convening Monetary Policy Meetings frequently. He highlighted the importance of addressing inflation through price stability and emphasized the increased use of Open Market Operations to manage liquidity.

However, there was a divergence of views as the Minister of Industry, Doris Uzoka-Anite, disagreed with the World Bank’s stance on power subsidy, asserting the necessity of supporting production in the power sector through subsidies.