The World Bank has issued a stern warning that an additional increase in the price of Premium Motor Spirit (petrol) may jeopardise the fragile economic recovery following the removal of fuel subsidies in Nigeria.
The caution is detailed in the October edition of its Africa’s Pulse report.
Since President Bola Tinubu officially announced the end of petrol subsidies in May 2023, prices have skyrocketed from N175 per litre to over N1,000 nationwide. The report notes, “While the inflationary effects stemming from a weakened naira in the early months of this year and the removal of the gasoline subsidy in the latter half of 2023 appeared to be gradually subsiding, a further increase in gasoline prices by 40-45 percent in September could reverse this disinflationary trend.”
Looking ahead, Nigeria’s economic growth is projected at 3.3 percent in 2024 and 3.6 percent in 2025-26, as macroeconomic and fiscal reforms begin to take effect. The report highlights that inflation peaked in June 2024 at 34.2 percent year-on-year but has since decelerated to 33.4 percent in July and further to 32.2 percent in August. It emphasizes that the consolidation of these reforms should foster higher growth rates in 2025.
Additionally, the report points out that the naira has emerged as one of the worst-performing currencies in Sub-Saharan Africa in 2024. By the end of August 2024, the naira had depreciated by approximately 43 percent year-to-date, positioning it among the region’s weakest currencies alongside the Ethiopian birr and the South Sudanese pound. This depreciation is attributed to a surge in demand for U.S. dollars in the parallel market, coupled with limited dollar inflows and delays in foreign exchange disbursements by Nigeria’s central bank.
Meanwhile, the Federal Government, on Wednesday, responded to the World Bank’s forthright counsel regarding the economy, acknowledging its enriching nature while remaining silent on the steps for implementation.
At the conclusion of the 30th anniversary celebration of the Nigerian Economic Summit Group (NESG#30), President Bola Tinubu described the World Bank’s advice as both enriching and exhilarating.
Nonetheless, he refrained from addressing the details of how this guidance would be implemented. He said: “Our engagements in the last three days have been enriching and rewarding, particularly with the speech of the Vice President of the World Bank Group, Mr. Indermit Gill.
“He admonished us to stay the course in the implementation of the current reforms,” Tinubu, who was represented by the Minister of Budget and Economic Planning, Senator Atiku Bagudu, said.
The president noted that the discussions at the summit were candid and characterised by unfiltered submissions.
“I was also thrilled by the frank discussions and no-holds-barred submissions made by the panelists at the plenaries. It is also reassuring to note that some state governors, ministers, permanent secretaries, directors-general of government agencies, directors of federal and state MDAs, civil society organizations, development partners, as well as captains of industry participated actively in this year’s summit. Without a doubt, the summit, as has been the case in the past, lived up to its billing,” he said.
He added that the summit, without doubt, attracted experts from diverse backgrounds who helped to deepen and formulate government policies.
“I note with satisfaction that participation in the annual summit attracted experts from diverse backgrounds and helped deepen and broaden citizens’ collaboration and ownership in formulating government policies. This indicates that all stakeholders are committed to working closely with the government to take collaborative action for growth, competitiveness, and stability.
“From the inception of our administration, we understood and accepted that partnership with the private sector was essential for the country’s economic growth and development. Over the last three days, this summit has facilitated deep and meaningful conversations among public, private, and civil society leaders.
Together, we have created an environment of mutual respect and dialogue. This understanding has informed our engagement with the summit process, which has generated many policy recommendations for government action.
“Like the previous summits, the 30th Summit was a huge success not because of the high turnout of delegates but because the plenary and concurrent sessions addressed the key issues that will guide our economic growth and development.
“I am confident this year’s summit report will articulate the critical issues exhaustively discussed in the various sessions, especially the interactive panel sessions, expert forums, high-level panels, CEO Roundtable sessions, and Insight Sessions.
On Monday, the World Bank painted a gloomy picture of Nigeria’s economy, saying that it would require 10 to 15 years of consistent implementation of the right policies and painful transparency before the economy would recover. (Daily Sun)
