Nigeria: World Bank Raises Concerns Over Nigeria’s Macroeconomic Management

The World Bank has raised concerns over Nigeria’s macroeconomic management, calling for an urgent need for structural reforms to among other things improve revenue mobilization and financial management.

The Bank said this would be imperative for the much “needed enabling business environment to attract investment and foster sustainable economic growth.”

This is contained in the Bank’s Country Policy and Institutional Assessment, CPIA, for 2022 where it scored Nigeria 3.2 points, same score as in 2021 assessment.

In its highlights on the country’s performance, the World Bank stated: “Overall macroeconomic management weakened due to an inconsistent monetary policy framework which did not effectively curb inflation, as well as the absence of a more predictable, transparent, and flexible exchange rate management system, which was a deterrent to private investment.

“The weak fiscal position is exacerbated by low revenue generation, and limited progress in diversifying the economy away from oil dependency, contributing to a high debt service-to-revenue ratio”.

The CPIA for Africa is an annual diagnostic tool for Sub-Saharan African countries that are eligible for financing from the International Development Association (IDA).

The report provides an assessment of the quality of policies and institutions in all 39 IDA-eligible countries in Sub-Saharan Africa for calendar year 2022.

According to the World Bank, the average overall CPIA score for Sub-Saharan Africa remained unchanged at 3.1 points in 2022.

It noted that the scores for Nigeria emerged through assessment of four economic indicators namely: Policy for Social Inclusion and Equity, Public Sector Management and Institutions, Economic Management, and Structural Policies.

According to the World Bank, Nigeria’s highest performing cluster was policy for social inclusion and equity with 3.5 points, while its lowest performing cluster was Public Sector Management and Institutions with 2.8 points.

On the score trend, the World Bank said: “Despite global economic challenges, more countries in Sub-Saharan Africa saw improvements in their overall CPIA scores compared to the previous year. In Western and Central Africa (AFW), the overall score increased for eight countries– Benin, Cape Verde, Côte d’Ivoire, The Gambia, Guinea, Guinea-Bissau, the Republic of Congo, and Togo.

“The overall score increased for four countries in Eastern and Southern Africa (AFE)– Burundi, the Democratic Republic of Congo, Mozambique, and Zambia. In contrast, the overall score decreased for eight countries–Chad, the Comoros, Eritrea, Ethiopia, Ghana, Malawi, São Tomé and Príncipe, and Sudan.

‘The countries with improved scores made notable advancements in the economic management, policies for social inclusion, and governance clusters. Conversely, the countries with declining scores faced economic management and governance challenges.

“For the most part, the countries that received downgrades were positioned toward the lower end of the scale, while the upgraded countries, generally, had overall scores above three, indicating a growing divergence in scores across the region in 2022.”