World Bank Warns Nigeria, Other African Nations Over Subsidies, Spending

By: Ande Patience

The World Bank has warned Nigeria and other African leaders to shun excessive public spending in order to ensure positive development and upheld the principles of accountability.

According to the report released recently by the Bank, the warning is aimed to ensure accountability in public expenditure by Nigeria and other developing countries over the risks associated with subsidies and excessive public spending.

In a publication titled: ‘Leveling the Playing Field: Addressing Structural Inequalities to Accelerate Poverty Reduction in Africa;’ in order to ensure transparency and accountability in the nation’s spending, the World Bank issued out the warning and advise.

The Bank highlighted that, these fiscal practices are creating long-term economic vulnerabilities, which could hinder growth, increase public debt, and exacerbate inequality.

Nigeria and it African counterpart should shift their economic focus away from costly subsidies and excessive public spending.

The institution emphasized the need for governments to prioritize strengthening social safety nets as a more effective means of combating poverty and reducing inequality.

Accordingly the report underscores the urgent need to tackle structural inequalities across the continent to drive meaningful progress in poverty reduction across Africa countries.

It emphasized that addressing these disparities is essential not only for lifting millions out of poverty but also for increasing productivity and earnings, thereby fostering greater fairness in economic growth.

This deepening inequality, according to the World Bank, is driven by several structural factors, including inadequate and inequitable public investments, market failures, and differential exposure to high and uninsurable risks such as conflict and Climate Change.

The World Bank report also reveals that poverty reduction in Africa has stalled since the mid-2010s, with the extreme poverty rate remaining at 38% as of 2022.

African region is high vulnerability to shocks, including conflict, Climate Change, and global economic disruptions, has made it difficult for many African countries to make sustained progress in reducing poverty.

The Institution report presents a hopeful outlook for Africa; describing the continent’s current situation as an opportunity for transformative change.

It points to Africa’s immense talent potential, particularly its youth population, which is expected to grow by 8 to 11 million new entrants into the labour market each year between 2020 and 2050.

This surge in young workers, if harnessed effectively through investments in education, skills development, and job creation, could drive significant economic growth and help tackle the challenges of poverty and inequality

The report further say that to capitalize on Africa’s youth potential and green mineral resources, the institution advise African leaders to develop a policy framework that fosters a more inclusive, competitive, and stable economic environment.

This framework should focus on several key areas to unlock the continent’s growth potential and accelerate poverty reduction: Safeguarding Property Rights, Preventing Undue Privilege, Strengthening Economic and Institutional Foundations,Promoting Macro-economic and Fiscal Stability and Eliminating Barriers to Competition.