The World Bank has decried Nigeria’s huge subsidy payments, and how subsidy benefits only rich households and diminishes government spending on poor Nigerians.
What led to the bank’s comment?
The bank expressed its fiscal concerns for Nigeria in a statement on its website announcing the launch of the new Nigeria Public Finance Review report. According to the bank, Nigeria’s inadequate resources are being consumed by inefficient and regressive subsidiaries on petrol, electricity and foreign exchange. The world bank highlighted the link between the humongous, and largely unaccounted subsidy payments and Nigeria’s revenue shortfall, as well as the impact of this on the country’s development.
What’s the impact?
The international lender noted that Nigeria had one of the lowest revenue and public expenditure levels in the world, which explains the government’s inability to improve service delivery. “Available data suggest that these subsidies, which accounted for more than the amount spent on education, health, and social protection in 2021, benefit primarily wealthy households. They also distort incentives, discourage investment, and crowd-out spending on pro-poor programs, thereby hindering progress in Nigeria’s social development”, the statement read.
The bank’s Nigeria Country Director, Shubham Chaudhuri, who spoke at the launch in Abuja on Monday, said, “Nigeria is at a critical historical juncture and has a choice to make. A child born in Nigeria today will be only 36 percent as productive when she grows up as she could be if she had access to effective public education and health services, and has a life expectancy of only 55 years. These stark indicators illustrate the urgency for action by Nigeria’s policymakers to improve the macroeconomic and fiscal framework, so as to sustainably enhance the quality of spending and public services at Federal and State levels.”