World Bank reminds Tinubu, Nigeria needs urgent structural reforms to attract investment

World Bank reminds Tinubu, do away with inconsistent monetary policy framework

By Jeph Ajobaju, Chief Copy Editor

Concerns have been raised by the World Bank over Nigeria’s macroeconomic management and is seeking urgent structural reforms to improve revenue mobilisation and financial management, among other measures.

The bank argued such reforms are vital for the much “needed enabling business environment to attract investment and foster sustainable economic growth.”

The counsel is contained in the World Bank Country Policy and Institutional Assessment (CPIA) for 2022 where it scored  Nigeria 3.2 points, the same score as in the assessment for 2021.

“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 bank said.

“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 World Bank CPIA for Africa is an annual diagnostic tool for Sub-Saharan African (SSA) countries 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.   

The World Bank said:

• The average overall CPIA score for Sub-Saharan Africa remained unchanged at 3.1 points in 2022.

• 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.

• Nigeria’s highest performing  cluster was policy for social inclusion and equity with 3.5 points, its lowest performing cluster was Public Sector Management and Institutions  with 2.8 points.

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Improvements in their overall CPIA scores across SSA

“Despite global economic challenges, more countries in Sub-Saharan Africa saw improvements in their overall CPIA scores compared to the previous year,” the World Bank added, according to reporting by Vanguard.

“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.”