World Bank President, David Malpass has said Nigeria’s generalised subsidies have significant negatives.
Malpass made the remark to the World Bank media at the ongoing hybrid spring meetings of the International Monetary Fund and the World Bank in Washington DC.
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Speaking on the complexities of Nigeria’s subsidies, he said: “One is that they are expensive because they go to everyone and they are often taken more by people with upper incomes than by people with lower incomes so they are not targeted.
“So, we encourage that when there needs to be a subsidy for either food or for fuel, that it be carefully targeted for those most in need. And so, we have encouraged Nigeria to rethink its subsidy effort.”
Also, speaking on the exchange rate regime of the country, Malpass said: “Two other things I would mention about Nigeria is that it runs a multiple exchange rate system, which is complicated and is not as effective as it would be if there were a single exchange rate.
“The most useful thing for developing countries is to have a single exchange rate that is market-based, that is stable over long periods of time as that attracts investment and it also means that there’s a discipline within the country’s fiscal policy so that would help.”
He said Nigeria also has trade barriers that distort trade flows, and that could be improved substantially in order to help the people in Nigeria move forward.
He said: “I would take note of the complicated situation that they face where there are weapons flowing into northern Africa that find their way into non-Nigerians that create violence in Nigeria. This is a very challenging situation that the government faces.
“Nigeria has huge opportunities because of its natural resources and because of its people, and I think it could see its growth accelerate with improvements in policy.”
Similarly, the International Monetary Fund (IMF) has stressed the need to boost agricultural productivity in Sub-Saharan Africa and get farmers to produce more, even as it said 20 countries in the region are either in debt distress or very close to debt distress.
Speaking at the opening press conference of the ongoing World Bank/IMF 2022 spring meetings, the Managing Director of the Fund, Kristalina Georgieva, said it is working on debt restructuring for the countries.
She said: “in Sub Saharan Africa, 20 countries are in bed distress or very close to debt distress, with interest rates going up. This burden of debt is intolerable. So, working to get that restructuring currently, this is a priority for us. And this is why I talked about the common framework.”
Whilst noting that the high and rising food prices are particularly concerning, especially in poor countries where there is a growing risk of a food crisis, she said an international action to avoid it is critical.
Sunday Michael Ogwu who is in Washington DC