By Emma Ujah, Abuja Bureau Chief

The World Bank has warned that Nigeria’s fragility would worsen if urgent steps were not taken to ensure fiscal adjustment for better and sustained results.

In its report, titled: “Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustained Results,” launched in Abuja, yesterday, the organization said, “Macroeconomic and fiscal reforms are urgently needed to lift Nigeria’s development outcomes, which are severely constrained by inefficient use of resources.”

According to the report, huge resources had been spent on subsidies that largely favoured wealthy families, coupled with corruption to the detriment of the general populace who continued to wallow in poverty.

“It said, “For years, a large share of Nigeria’s resources had financed inefficient and regressive subsidies for petrol, electricity, and foreign exchange. Not all these subsidies are accounted for in the budget, which makes them difficult to track and scrutinize.

“However, available data suggest that these subsidies, which accounted for more than the amount spent on education, health, and social protection in 2021, benefit primarily wealthy households.

“They also distort incentives, discourage investment, and crowd-out spending on pro-poor programs, thereby hindering progress in Nigeria’s social development.”

The report noted that Nigeria had one of the lowest public expenditure and revenue levels in the world, undermining the Government’s ability to improve service delivery.

“Between 2015 and 2021, total public spending in Nigeria averaged 12 percent of gross domestic product (GDP), less than half the world average of 30 percent,” it said.

In his remarks on the report, the President of the bank, Mr. David Malpass said, “Nigeria’s government urgently needs to strengthen fiscal management, create a unified, stable market-based exchange rate, phase out its costly, regressive fuel subsidy and rationalize preferential trade restrictions and tax exemptions.

“These would lay the groundwork for the increases in public revenues and spending needed to improve development outcomes.

“Decisive moves would significantly improve the business enabling environment in Nigeria, attract foreign direct investment, and reduce inflation. The World Bank is ready to increase support to Nigeria as it designs and implements these critical reforms.”

Similarly, the bank’s Country Director for Nigeria, Mr. Shubham Chaudhuri, said, “Nigeria is at a critical historical juncture and has a choice to make.

“A child born in Nigeria today will be only 36 percent as productive when she grows up as she could be if she had access to effective public education and health services, and has a life expectancy of only 55 years.

“These stark indicators illustrate the urgency for action by Nigeria’s policymakers to improve the macroeconomic and fiscal framework, so as to sustainably enhance the quality of spending and public services at Federal and State levels.”

Discussing the report as a panelist, the Director-General (D-G) of the Budget Office of the Federation, Mr. Ben Akabueze, said that the country must tax the rich appropriately, in order to enhance revenue generation.

His words, “We need to tax the rich.  We have extremely wealthy people existing side-by-side with extremely poor people.  I describe it as ‘elite conspiracy’ not to distribute a fair share of the nation’s resources.

“If you own a private jet, that is fantastic. If you buy one for yourself, buy one for the country by paying 100 per cent tax on it.   This is not an area of debate.

“Certain sectors that are growing very well also need to pay taxes.  The creative and media- you have all these folks assaulting us daily with their show of their news cars and of these.  I don’t see any other option.  We have to tax the rich.  They should pay taxes commensurate with their earnings.”

Also speaking, the Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, said that she would prefer to have all Nigeria’s external borrowings as concessional facilities.

She noted however, that the concessional sources were limited and as such others had to be explored.

The D-G harped on the need to raise more tax revenues, as well as, source funds from the nation’s assets, rather than ignoring them.

In his contribution, the Chief Economic Adviser to the President,  Dr. Doyin Salami, agreed with the DG of DMO, as according to him, Nigerians must work to raise revenue through taxation or be forced to pay higher interest rates on borrowed funds.

“If you don’t pay tax, you will pay high interest rates because if you don’t pay tax, we have to go borrowing and if we borrow, we have to repay the loans with higher interest rates.

He noted that the income disparity between the wealthy and the poor in the country was “frighteningly” wide, adding, “we have to raise more taxes from the rich for social balance.”

He disagreed with the position that the nation’s foreign exchange market should be left to the vagaries of the market.

According to him, no nation ever leaves its currency totally to market forces, but added that there should be a balance between the two extremes of total control by monetary authorities and leaving it totally to market forces.