The World Bank yesterday highlighted the strategies for revamping the nation’s economy..
It noted that high “inflation shocks’ pushed additional eight million Nigerians into poverty in less than two years.
The bank said Nigeria has the worst Revenue-to-Gross Domestic Product (GDP) ratio among 115 countries monitored by it.
These formed highlights of its November 2021 Nigeria Development Update released yesterday.
The bank’s suggestions on how to boost the economy include: removal of subsidy on petroleum products, reduction of Central Bank of Nigeria (CBN) overdrafts or loans to the government, hike in “sinful goods’ taxes and implementation of a levy on electronic money transfers.
Others are increase in excise duty; enhancement of the “flexibility and reduction in “delays in border and port clearance” as well as full opening of all land borders.
According to the Brettonwoods institution, the government could raise over N3 trillion yearly if the ideas are implemented. The sum, it added, could be used to finance primary health, basic education and rural connectivity projects.
The bank however noted that with general elections drawing closer, the Muhammadu Buhari administration might find them challenging to “politically implement”.
It described the Nigerian PMS(premium motor spirit) subsidy as exceptionally generous, saying that in October 2021, pump price in the country was “the seventh-lowest among 168 economies surveyed at just ?495 per litre.”
Adducing further reasons why subsidy should be removed, the bank argued that “the poorest 40 per cent of Nigerians” use less than three percent of the total PMS consumption in the country.
The bank called on the government to to protect the poor when subsidy is removed by implementing a large-scale (covering 25 per cent to 50 per cent of the population) and time-bound targeted cash-transfer programme to mitigate the impacts of high inflation.”
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It noted that the plans to spend N3,000 per person per year on health in 2022 while fuel subsidies could cost N13,000 per person per year in the same year.”
The report partly reads “Nigeria is the only country in the world with a universal price subsidy that applies exclusively to PMS. Universal price subsidies for liquid fuels are almost always regressive, as the rich consume far more fuel than the poor.
“PMS subsidies are especially regressive because PMS is used primarily in light- and medium-duty motor vehicles, which are rarely owned by the poor. Since raising PMS prices tends to have minimal adverse effects on poor households, governments worldwide have typically prioritised eliminating PMS subsidies over those that apply to other fuels.