Subsidy: Petrol, electricity, FX spent inefficiently-World Bank

Subsidy: Petrol, electricity, FX spent inefficiently-World Bank

The World Bank report has revealed that Nigeria’s petroleum, electricity, and foreign exchange resources have been consumed by inefficient and regressive subsidiaries.

This was contained in a statement on the bank’s website announcing the launch of the new Nigeria Public Finance Review report, stating that subsidies benefit only rich households and reduce government spending on poor Nigerians.

It added that the subsidies were far more than what was spent on education, health and social protection in 2021.

The statement read, “For years, a large share of Nigeria’s resources have 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 World Bank Group President, David Malpass, was quoted as saying, “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.”