W’Bank calls for urgent reforms in Nigeria’s macroeconomic management
The World Bank has recently urged Nigeria to implement immediate structural changes in its macroeconomic management, emphasising the need to enhance revenue collection and financial management.
In its Country Policy and Institutional Assessment (CPIA) for 2022, the international financial institution stressed the importance of creating a conducive business environment to attract investment and foster sustainable economic growth.
Nigeria received a score of 3.2 points in the CPIA, the same as the previous year’s assessment. The World Bank’s report highlighted the country’s performance, stating that overall macroeconomic management had weakened.
This was attributed to an inconsistent monetary policy framework that failed to effectively curb inflation. Additionally, the absence of a more predictable, transparent, and flexible exchange rate management system was identified as a deterrent to private investment.
The World Bank’s call for immediate reforms underscores the critical role of macroeconomic stability in Nigeria’s economic development.
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.”
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 the assessment of four economic indicators namely, Policy for Social Inclusion and Equity, Public Sector Management and Institutions, Economic Management, and Structural Policies
On the scoring 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 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.”
