This was disclosed by the World bank in a document titled ‘Nigeria Development Update (June 2022): The Continuing Urgency of Business Unusual‘.
The World Bank said it believes that CBN’s persistent intervention would cause weaknesses in revenue mobilization, foreign investment, human capital development, infrastructure investment, and governance.
The World Bank stated that amid heightened risks, the government has kept a “business-as-usual” policy stance that hinders prospects for economic growth and job creation.
“Multiple exchange rates, trade restrictions, and financing of the public deficit by the Central Bank of Nigeria (CBN) continue to undermine the business environment. These policies augment long-standing weaknesses in revenue mobilization, foreign investment, human capital development, infrastructure investment, and governance,” the bank said.
The Bank said Nigeria lost a key moment that would have been prime for subsidy removal. “Notably, during 2020 and 2021, when oil prices were much lower, the government lost an opportunity to address one of the primary sources of fiscal vulnerability by choosing to maintain the subsidy for premium motor spirit, more commonly known as petrol—a subsidy that is unique, opaque, costly, unsustainable, harmful, and unfair.”
The Bank added that “Due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal time bomb.”
According to the World Bank, an additional 1 million Nigerians falling into poverty as a result of the Ukraine war is a challenge that is addressing macroeconomic vulnerabilities when (i) elections encourage higher spending; (ii) high inflation is pushing millions of Nigerians into poverty; and (iii) higher global interest rates deter private investment.