The World Bank has urged the Nigerian government to use a portion of the funds saved from removing fuel subsidies to alleviate the suffering of its citizens, which has been exacerbated by the negative consequences of this policy.
In their latest Nigeria Development Update report, titled “Seizing the Opportunity,” the World Bank highlighted that without measures to mitigate the adverse effects of subsidy removal, an additional 7.1 million Nigerians could be pushed into poverty.
The World Bank emphasized that the removal of fuel subsidies and the implementation of foreign exchange (FX) management reforms are crucial steps towards rebuilding fiscal space and restoring macroeconomic stability.
They advised the government to seize this opportunity to take further necessary policy reform measures and establish a solid foundation for sustainable and inclusive growth, ultimately transforming the lives of millions of Nigerians.
The report also stressed the importance of implementing a comprehensive reform package that includes a range of complementary measures, such as a new social compact, to protect the poor and most vulnerable segments of society. By adopting these measures collectively, the impact on economic growth, job creation, and poverty reduction can be maximized.
In the first part of 2023, Nigeria’s economic growth weakened, with real Gross Domestic Product (GDP) growth declining from 3.3% in 2022 to 2.4% year-on-year (y-o-y) in the first quarter of 2023. The report acknowledged the challenging global economic context but highlighted that domestic policies play a significant role in determining Nigeria’s economic performance and resilience to external shocks.
