The recent commentary by Indermit Gill, Senior Vice President of the World Bank Group, at the Nigeria Economic Summit Group (NESG) in Abuja sheds light on Nigeria’s pressing economic challenges. While the World Bank has rightly highlighted the staggering loss of N10 trillion in revenue to fuel subsidies and multiple exchange rates in 2022, it has failed to grasp the full impact of these policies on everyday Nigerians. The narrative presented by the World Bank reflects a disconnect between the institution’s lofty analysis and the dire reality faced by millions of Nigerians struggling to make ends meet.
Gill’s assertion that Nigeria’s government has been haemorrhaging funds due to misguided subsidies is not up for debate; it is a painful truth. However, the crucial oversight in the World Bank’s commentary is the failure to recognize that this economic hemorrhage has not just drained the coffers of the government—it has directly impoverished businesses and households across the country. As businesses buckle under the weight of the currency crisis, the losses have cascaded down to the very citizens the government is supposed to protect.
In August, The Guardian reported that five major companies—MTN, Nestlé, Guinness Nigeria, Oando, and Nigerian Breweries—collectively recorded a staggering loss of N723 billion in the first half of 2024 due to the foreign exchange crisis and other factors. MTN, for example, saw its profits nosedive from hundreds of billions of naira to over N600 billion in losses. This shift from government loss to corporate loss highlights a critical flaw in the World Bank’s analysis: the idea that only the government suffers when subsidies fail. The reality is that the burden of economic mismanagement is being shouldered by ordinary Nigerians and the businesses they rely on.
The World Bank’s failure to grasp this fundamental reality is reminiscent of a well-meaning driver navigating a good car on a treacherous road, blissfully unaware of the potholes and hazards ahead. While Gill and his colleagues may propose structural reforms to curb subsidy losses, they neglect to consider the immediate suffering of the Nigerian populace, who are left grappling with soaring prices and diminished purchasing power. In an import-dependent economy, the consequences of a failing exchange rate ripple through every aspect of daily life.
Economic thinkers like Joseph Stiglitz have long warned that “markets are not efficient, and government intervention is often necessary.” Yet, Nigeria’s government has intervened poorly, failing to cushion the blows dealt to its citizens by volatile market conditions. The predicted exchange rate of N750/$ touted by the World Bank has not materialized, leading to an estimated loss of over N100 trillion in purchasing power for the average Nigerian. It is the citizens who suffer the consequences of ill-timed interventions, and it is they who are left to absorb the shock of economic policy failures.
Moreover, the inflation rate in Nigeria reached a staggering 32.70% in September, primarily driven by rising petrol prices. This is not just an alarming statistic; it represents a significant erosion of the quality of life for millions. High inflation exacerbates poverty, pushes families deeper into debt, and makes basic necessities unaffordable. As Dudley Seers famously stated, “The real measure of a country’s success is not merely economic growth but the improvement in the quality of life of its citizens.” The current trajectory in Nigeria raises serious questions about the effectiveness of the World Bank’s advice and the government’s adherence to it.
The World Bank must take a hard look at its own role in this economic disaster. By focusing primarily on fiscal metrics and overlooking the human impact of its policies, the institution has become complicit in perpetuating a system that punishes the vulnerable. Instead of merely highlighting the financial losses incurred due to subsidy policies, the World Bank should prioritize the urgent need for meaningful reforms that address corruption and mismanagement within the subsidy framework.
In a country where corruption runs rampant, the World Bank’s approach should involve not only financial oversight but also a commitment to fostering transparency and accountability in governance. It should advocate for a more equitable distribution of resources, ensuring that subsidies genuinely benefit the people they are designed to help, rather than becoming tools for political patronage.
To illustrate, consider the impact of fuel subsidies in Nigeria. These subsidies, originally intended to shield consumers from volatile fuel prices, have instead fostered an environment where corruption thrives. Money that should be directed toward infrastructure development, healthcare, and education is siphoned off, enriching a select few while the majority continue to suffer. The World Bank should be on the front lines advocating for comprehensive reforms that eliminate the opportunities for graft and ensure that public funds are used to uplift the citizenry rather than enrich corrupt officials.
While the World Bank has brought critical issues to the forefront, its analysis must go deeper. It must acknowledge that the challenges facing Nigeria are not just fiscal; they are fundamentally human. The plight of ordinary Nigerians cannot be reduced to mere numbers on a balance sheet. The loss of N10 trillion is not just a statistic; it represents the dreams, aspirations, and livelihoods of millions who are struggling against the tide of economic mismanagement.
Ultimately, the World Bank must adjust its approach, focusing not only on the quantitative aspects of economic recovery but also on the qualitative improvements in the lives of Nigerians. The institution should not only serve as a watchdog over fiscal policies but also act as a champion for the voiceless, advocating for changes that prioritize the well-being of the populace over the convenience of financial institutions and political elites.
The time has come for the World Bank to step up and take responsibility for the advice it dispenses. Nigeria is not just a case study; it is a nation in crisis. If the World Bank is to be seen as a genuine partner in Nigeria’s development, it must align its policies with the needs of the Nigerian people, championing reforms that lead to real, tangible improvements in their lives. The road ahead is fraught with challenges, but without a commitment to meaningful change, the future looks bleak for Nigeria and its citizens
Mr Aliyu writes from 43 Ashiru Road, Unguwan Dosa New Extension, Kaduna
