The World Bank has urged the Federal Government of Nigeria to adopt immediate policy adjustments—particularly reducing elevated import tariffs and eliminating selected import bans—to curb the country’s persistently high inflation and prevent further deterioration in household welfare. The recommendation was made by the World Bank Country Director for Nigeria, Mathew Verghis, during an interview with Arise TV on Thursday, where he raised strong concerns about the nation’s inflation trajectory and the deepening impact on poverty levels.
Verghis explained that Nigeria’s inflation remains alarmingly high, with food inflation hovering near 20 percent. This level of sustained price pressure, he stressed, continues to erode the purchasing power of low-income households, pushing millions closer to poverty. According to him, the Bank’s economic modelling indicates that poverty in Nigeria may continue to rise throughout 2025 and could extend into 2026 unless urgent action is taken to tame inflation and stabilise real household incomes.
He noted that while Nigeria has embarked on a series of structural reforms—including exchange rate liberalisation and the removal of petrol subsidies—these measures must be complemented with short-term policy tools that deliver faster relief to vulnerable citizens.
“Nigeria has high tariffs and, in some cases, import bans on goods consumed by the poor. One way of lowering inflation quickly is to reduce some of these tariffs and take away some of these import bans,” Verghis said, emphasising that such reforms align with Nigeria’s commitments under ECOWAS and global trade norms.
Sustaining long-term reforms while pursuing immediate relief
Verghis acknowledged that Nigeria’s broader reform programme is moving in the right direction, but warned that reforms cannot be episodic. He referenced countries such as India and China, which, he said, were only able to achieve economic stability and sustained growth after decades of uninterrupted structural reform. Nigeria, he argued, must learn from these global examples and maintain consistency across fiscal, monetary, and trade policies.
At the same time, he highlighted opportunities for policy adjustments that could deliver faster results. Reducing import tariffs on essential goods, improving customs efficiency, and removing certain import bans would lower the cost of key commodities, thereby dampening inflation and reducing the financial strain on households. He added that these measures would also help reduce smuggling and market distortions created by restrictive trade policies.
Exchange rate stability must be driven by investment, not control
On Nigeria’s exchange rate challenges, Verghis cautioned against attempts to artificially stabilise the naira. Instead, he advocated for a market-driven exchange rate supported by rising export earnings and higher inflows of foreign direct investment (FDI).
“The best way to keep the naira stable is to make sure that your exports are increasing and your foreign direct investment is increasing,” he said.
He added that the objective should not simply be a stable exchange rate but an economic environment that promotes private-sector activity, encourages long-term planning, and enhances investor confidence.
Verghis praised Nigeria’s recent progress in diversifying its revenue base, noting that the country is now less dependent on oil revenues than in previous years—thanks to a more realistic exchange rate regime and elimination of petrol subsidies. This trend, he said, is improving the country’s fiscal outlook and helping to reduce the debt-to-revenue ratio for the first time in years.
However, he warned that fiscal discipline remains essential. Borrowing, he said, must be tied to productive investments: “If borrowed money is not utilised wisely, then eventually the country will face a debt problem.”
Concerns about Nigeria’s social safety nets
The World Bank recently expressed concern about the effectiveness of Nigeria’s social protection programmes. In its report, “The State of Social Safety Nets in Nigeria,” the institution noted that although 56 percent of beneficiaries of government social programmes are poor, only 44 percent of total benefits reach poor households. This inefficiency, the Bank warned, undermines efforts to cushion vulnerable populations against rising prices.
According to Verghis, improving social protection, stabilising inflation, and reforming trade policies must all work together to set Nigeria on a sustainable path toward inclusive growth.
