The World Bank has said the macro stabilisation pursued by the Central Bank of Nigeria (CBN) is essential but insufficient for the country to reach its growth potential.
The Bretton Woods institution which raised the concerns in its latest Macro Poverty Outlook, released in October, said sustained efforts and a credible track record are necessary to achieve sustained progress because of the mismatch of economic and population growth which has contributed to poverty, exacerbated by double-digit inflation.
The Central Bank of Nigeria (CBN) maintains a tighter monetary policy and a unified, market-driven exchange rate in addition to the government’s temporary, targeted cash transfers to support 15 million recipients and their families through NGN 75,000 in three tranches (directly benefiting over 67 million Nigerians) following the worsening food insecurity and high food inflation that have increased poverty.
The World Bank, however, said that despite macro stabilisation and the cash transfer, Nigerians’ incomes have not kept pace with development, pushing an additional 14 million Nigerians into poverty in 2024.
It therefore urged Nigeria to address structural constraints that impede inclusive growth, including weak governance, poor infrastructure, limited access to electricity and connectivity, insecurity, significant trade restrictions, and poor human development outcomes sustainability of policies.
The report noted that growth slowed from 3.3 per cent in 2022 to 2.9 per cent in 2023, due to weak crude oil production, policy missteps including currency demonetisation in Q1-2023, and spillovers from 2022 floods.
It said the H1-2024 growth was modest at 2.9 per cent with services, especially financial and telecommunications, continuing to drive growth.
“The oil sector also contributed to growth although production remains significantly below potential. With rising inflation, the CBN raised the monetary policy rate by 850 basis points between February and September 2024, increased the cash reserve ratio from 32.5 to 50 per cent, conducted open market operations, and halted deficit financing. Year-on-year inflation thus declined from 33.4 per cent in July 2024 to 32.15 per cent in August.
The report also noted that the federal government’s fiscal deficit narrowed from 6.2 per cent of GDP in H1-2023 to 4.4 per cent in H1-2024 driven by higher non-oil revenues due to the removal of implicit foreign exchange subsidies and reforms enhancing revenue transparency and accountability from Government Owned Enterprises and Ministries, Departments and Agencies.
Despite this, public and publicly guaranteed debt is projected to rise from 49 per cent of GDP in 2023 to 51 per cent in 2024 due to FX unification which affects external debt valuation but noted public debt levels will remain sustainable, though susceptible to shock
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