Again, World Bank Urges Nigeria, Others to Remove Subsidies

•Says Africa accounts for 60% of people living in poverty globally

Nume Ekeghe

The World Bank has urged Nigeria and other Sub-Saharan African (SSA) countries to focus on policies that would enhance long-term growth as well as support inclusive growth.

This, it stated was necessary in order to lift their citizens out of poverty.

The Brentwood institution noted that Africa now accounts for 60 per cent of all people living in extreme poverty which it pegged at 389 million, more than any other region globally.

The World Bank further estimated that by 2030, nearly 600 million people would struggle on less than $2.15 a day.

In a statement, World Bank Group President, Mr. David Malpass explained: “Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth.

“Of concern to our mission is the rise in extreme poverty and decline of shared prosperity brought by inflation, currency depreciations, and broader overlapping crises facing development. It means a grim outlook for billions of people globally.

“Adjustments of macroeconomic policies are needed to improve the allocation of global capital, foster currency stability, reduce inflation, and restart growth in median income. The alternative is the status quo slowing global growth, higher interest rates, greater risk aversion, and fragility in many developing countries.”

Specifically commenting on Africa, it stated: “Sub-Saharan Africa now accounts for 60 per cent of all people in extreme poverty 389 million, more than any other region.

“The region’s poverty rate is about 35 per cent, the world’s highest. To achieve the 2030 poverty goal, each country in the region would need to achieve per-capita GDP growth of nine per cent per year for the remainder of this decade.

“That’s an exceptionally high hurdle for countries whose per-capita GDP growth averaged 1.2 percent in the decade before COVID-19.”

It emphasised that national policy reforms could help restart progress in reducing poverty.

It advised African countries to, “avoid broad subsidies, increase targeted cash transfers: Half of all spending on energy subsidies in low- and middle- income economies goes to the richest 20 per cent of the population who consume more energy.

“Cash transfers are a far more effective mechanism for supporting poor and vulnerable groups.

“Focus on long-term growth: High-return investments in education, research and development, and infrastructure projects need to be made today. In a time of scarce resources, more efficient spending and improved preparation for the next crisis will be key.”

“Mobilise domestic revenues without hurting the poor. Property taxes and carbon taxes can help raise revenue without hurting the poorest. So can broadening the base of personal and corporate income taxes.

“If sales and excise taxes do need to be raised, governments should minimise economic distortions and negative distributional impacts by simultaneously using targeted cash transfers to offset their effects on the most vulnerable households,” it states.

The World Bank’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill stated: “Over the next decade, investing in better health and education will be crucial for developing economies, given the severe learning losses and health-related setbacks they suffered during the pandemic. In a time of record debt and depleted fiscal resources, this will not be easy. Governments will need to concentrate their resources on building human capital and maximising growth.”