By Milcah Tanimu
The World Bank has raised concerns about the effectiveness of the Central Bank of Nigeria’s (CBN) approach to controlling inflation through monetary policy tightening.
In its Global Economic Prospects report released on Wednesday, the World Bank highlighted a significant risk to Nigeria’s economic growth: the potential ineffectiveness of the CBN’s tightening measures in curbing inflation.
“Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation,” the World Bank stated.
Despite the CBN’s aggressive interest rate hikes, inflation continues to be a major issue in Nigeria. Since February, the monetary policy rate has surged by 750 basis points, reaching 26.25 percent in May.
The World Bank cautions that these measures may not suffice to tackle inflation. The report forecasts that Nigeria’s economic growth will remain modest, projecting a growth rate of 3.3 percent for this year and 3.5 percent for 2025.
While the non-oil sector is expected to experience steady growth, the oil sector is anticipated to stabilize as production recovers.
Additionally, the World Bank pointed out the issue of public debt in sub-Saharan Africa, which is projected to stay high during the forecast period. The report warns that persistently high global interest rates could elevate debt-service costs for countries in the region, increasing the risk of government debt distress.