Obiora Ifoh, Abuja

Highlights of the latest World Bank Nigeria Development Update NDU has disclosed that the country stand to lose more than five trillion Naira in revenues in 2022 from crude oil sales.

This was part of the revelations during the presentation of the UDU report in Abuja yesterday.

According to the report, “When we launched our previous Nigeria Development Update in November 2021, we estimated that Nigeria could stand to lose more than three trillion Naira in revenues in 2022 because the proceeds from crude oil sales, instead of going to the federation account, would be used to cover the rising cost of gasoline subsidies that mostly benefit the rich.”

Sadly, that projection turned out to be optimistic,” said Shubham Chaudhuri, World Bank Country Director for Nigeria. “With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to five trillion Naira in 2022.”

And that five trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities, to invest in Nigeria’s children and youth, and in the infrastructure needed for private businesses small and large to flourish, grow and create jobs.”

The UDU report explained that the inflation in Nigeria, already one of the highest in the world before the war in Ukraine, is likely to increase further as a result of the rise in global fuel and food prices caused by the war.

The report also argued that Ngeria is in a paradoxical situation as growth prospects improved compared to six months ago but inflationary and fiscal pressures have increased considerably, leaving the economy much more vulnerable,

The World Bank estimates, also said Nigeria is likely to push an additional one million Nigerians into poverty by the end of 2022, on top of the six million Nigerians that were already predicted to fall into poverty this year because of the rise in prices, particularly food prices.

This latest edition of the NDU highlights also said that the inflationary pressures will be compounded by the fiscal pressures Nigeria will face this year because of the ballooning cost of gasoline subsidies at a time when oil production continues to decline.

Hence, Nigeria, for the first time since its return to democracy, and alone amongst major oil exporters, is unlikely to benefit fiscally from the windfall opportunity created by higher global oil prices.

According to the report, Nigeria’s growing macroeconomic challenges in 2022 highlight the continuing urgency of a departure from business as usual, and the need for consensus around a package of robust reforms.

The Report highlights three policy priorities which include, reducing inflation through a sequenced and coordinated mix of exchange rate, trade, monetary, and fiscal policies including the adoption of a single, market-responsive exchange rate; addressing mounting fiscal pressures at the federal and sub-national levels by phasing out the petrol subsidy (estimated to cost up to 5 trillion naira in 2022) and redirecting fiscal resources to investments in infrastructure, education, and health services; increasing “pro-health taxes”, and improving tax compliance; and  catalyzing private investment to boost job creation by improving the transparency of key government-to-business services and eliminating trade restrictions.

“Despite the better-than-expected performance of the services and agriculture sectors and higher oil prices stemming from the war in Ukraine, Nigeria is experiencing a curious case of lower fiscal revenues. This is limiting the government’s ability to expand basic services, support the economic recovery, and protect the poor during this difficult time” said Marco Hernandez, World Bank Lead Economist for Nigeria and co-author of the Report.

In addition to assessing Nigeria’s economic situation, this edition of the NDU also casts a spotlight on the unintended effects of Nigeria’s trade restrictions; the importance of investing in adolescent girls to defuse Nigeria’s demographic timebomb; and the imperative of bringing Nigeria’s out-of-school children back to school.

,”,Unusual’ approach, even more urgently needed to reduce inflation, lessen fiscal pressures, and attract investment for jobs”

The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.

IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $21 billion over the last three years, with about 61 percent going to Africa.

Meanwhile, The Presidential Candidate of the Labour Party for the 2023 general election, Mr. Peter Obi, on Monday stated that the unemployment of 100 m Nigerians was responsible for the widespread poverty in the country.

Obi spoke at a one-day international colloquium in Port Harcourt organised by Christ Church for the presidential candidates of the different political parties, with the theme “What Do Nigerians Want?”.

He said that a country that turned its people into poverty would be faced with crises, unemployment and insecurity.

“There is no way you will have 100m people living in poverty and you will not have crises, we have more people living in poverty than China and Egypt combined, a population of about 1.5 billion.

“There is no where you won’t have this crisis we are going through with 35 to 40 per cent unemployment rate. When compared to the 120 million people who are supposed to be working in Nigeria today, only 40 million are gainfully employed.

“We have 80 million people who are supposed to be working in the country that are not working.

“The consequence is that we have a state, but it is unproductive. Nigeria as a country is unproductive because when we talk about 80 million people that are not working, about 70 percent of them is made up of the youth in their productive age doing nothing and with so much energy.

“The country is not doing anything. It is not working. All the country is doing today is sharing. Everybody is looking for what to share,“ he said.

He said the nation was in crisis because more than 90 percent of its revenue is being used to service debts, noting that no country, or individual could survive with that.

“Last year virtually all the money we spent was borrowed. The first five months of last year, our total revenue was N1.847 trillion. We spent N1.802 trillion into servicing debt, so a total of 200million people were left with N45 billion,” he said.

Obi said that the country needed to be taken back from where it is now and that required a number of things.

He promised to stop the bleeding of the country, if elected in 2023.

He said any money borrowed by Nigeria would be used for investment, adding “our country has to move from sharing formula to production formula.

“We are not productive because our factories are not working. We need to bring back the country by focusing on our micro and small businesses to be able to support them and it is not difficult.

“We need to do something about power. If we get it right and start borrowing for investment, that is when we start pulling people out of poverty. The more we pull people out of poverty, the more we reduce criminality.

“Another is in education.  Our human capital is very low, and it is unacceptable. We are now 152 out of 158 in human capital development,“ Obi said.