The President of the World Bank, David Malpass, has urged Nigeria to reconsider its fuel subsidy regime and multiple exchange rates policy.
Malpass said this on Wednesday during a media briefing at the ongoing World Bank/International Monetary Fund Spring Meetings in Washington DC while responding to a question on the earlier suggestion that Nigeria should end petrol subsidy.
About N4trillion have been budgeted for subsidies in 2022.
He noted that generalized subsidies have significant negatives because they are expensive and benefit even people with upper incomes.
“When there needs to be a subsidy for either food or for fuel, it should be carefully targeted for those most in need. And we have encouraged Nigeria to rethink its subsidy effort,” he said.
The chief stated that Nigeria’s exchange rate is knotty and not as productive 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 so that would help,” he said.
Malpass said such an approach attracts investment and also means that there is discipline within the country’s fiscal policies.
“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.
“I do take note of the complicated situation that they face. There are weapons flowing in through northern Africa that find their way to non-Nigerians that create violence in Nigeria.”
Malpass, however, called for understanding of the fragility facing the world, especially the Sahel and Sub-Saharan African nations where weapons from outside the continent are “putting a grave burden on governments”.