World Bank Urges Nigeria to Deepen Economic Reforms, Enforce Fiscal Discipline, and Strengthen Transparency
The World Bank has called on the Nigerian government to sustain its current wave of economic reforms by tightening fiscal and monetary policies, improving transparency in public finance, and maintaining the momentum of key measures such as the removal of fuel subsidies and the unification of foreign exchange rates. In its latest Nigeria Development Update report, released on Wednesday, the global lender commended Nigeria’s “substantial stabilisation progress” since 2023 but warned that the benefits could quickly erode without strong institutional discipline and credible policy communication.
The report, titled “From Policy to People: Bringing the Reform Gains Home,” outlines detailed recommendations to ensure Nigeria’s fragile recovery translates into lasting growth and inclusive development. The World Bank urged the Central Bank of Nigeria (CBN) to maintain a tight monetary stance with positive real interest rates and avoid the monetisation of fiscal deficits. It further advised the CBN to keep the exchange rate flexible, describing it as a crucial “shock absorber” for external pressures, while publishing monthly statements of assets and liabilities to enhance transparency.
On fiscal matters, the World Bank advised Nigeria to expand non-oil revenues by modernising its tax system, implementing e-invoicing, strengthening audits, and introducing property tax reforms at state levels. It also recommended gradually increasing Value Added Tax (VAT) to align with ECOWAS standards and conducting a comprehensive forensic audit of the Nigerian National Petroleum Company Limited (NNPCL). The report urged the government to clear outstanding federal audits from 2022 to 2024 and reduce non-essential spending—such as vehicle purchases and foreign training—to promote fiscal prudence.
In one of its most striking observations, the World Bank criticised Nigeria’s revenue-generating agencies for excessive self-retention of funds, calling the system “fiscally inefficient and opaque.” It noted that agencies like the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) retain between 2% and 7% of collected revenues—far above what similar institutions in Kenya, Ghana, and South Africa receive. The report urged the federal government to overhaul this model to strengthen accountability and ensure that all revenues flow transparently into the national budget.
Despite acknowledging Nigeria’s progress in foreign exchange unification, rising exports, and improved current account balance—recording a six percent surplus of GDP in early 2025—the World Bank warned that inflationary pressures and global interest rate disparities could threaten competitiveness. It called for consistent communication from the CBN on foreign exchange interventions and strategic efforts to diversify export earnings beyond oil. The Bank concluded that Nigeria’s economic recovery will only be sustainable if fiscal discipline, transparency, and reform continuity remain at the heart of government policy.
source: Punch