" There is no shortcut to economic transformation"
Nigeria's path to economic transformation hinges on its ability to sustain critical reforms for at least 15 years, Indermit Gill, senior vice-president of the World Bank Group, has said.
Speaking Monday at the 30th Nigerian Economic Summit in Abuja, the official underscored the need for consistent political will and policy implementation to address the country's deep-rooted structural challenges, which continue to hinder long-term growth and development.
"There is no shortcut to economic transformation. Nigeria must stay the course for another 10 to 15 years of focused reforms. The difficult decisions taken today will not yield immediate results, but they will set the foundation for a more prosperous and stable Nigeria," he said.
The warning comes amid mounting public discontent following the removal of petrol subsidies and the unification of the country's multiple exchange rates.
While these reforms have triggered inflationary pressures and exacerbated the cost of living for many Nigerians, the World Bank official insisted that backtracking would have disastrous consequences for the nation's economic future.
Opportunity and risk
He said Nigeria faces a unique moment of both opportunity and risk. The recent changes to the exchange rate regime and the elimination of fuel subsidies are widely viewed as necessary steps to stabilise the economy, reduce the fiscal deficit, and attract foreign investment.
However, these measures, he said, have also intensified hardship
for millions of Nigerians, leading to fears that political pressure may force a reversal of the reforms.
According to Mr Gill, Nigeria must avoid the temptation of short-term fixes.
The official pointed to the country's past experiences with mismanaged oil revenues during the 1970s and 1980s as cautionary tales.
"Periods of poor oil wealth management have left Nigeria trapped in cycles of boom and bust, with painful consequences for millions of citizens that have lasted for generations," he said.
He noted that during the brief reform window from 2003 to 2007, Nigeria managed its oil wealth more prudently, introducing fiscal responsibility laws, building up external reserves, and implementing measures that led to the country's first-ever sovereign credit rating.
These steps, combined with the banking sector reforms, he said, attracted substantial foreign direct investment and laid the groundwork for growth.
"The lessons of those years are clear: when Nigeria commits to reforms, the rewards can be substantial," he said.
Inflation control and FX management
At the core of Nigeria's current economic predicament is inflation, which has soared to its highest levels in nearly two decades.
With food prices rising and the cost of transport increasing sharply after the removal of fuel subsidies, the country's poorest citizens are bearing the brunt of the reforms.
The World Bank official emphasised that the Central Bank of Nigeria (CBN) must focus on controlling inflation while maintaining a competitive exchange rate.
"The Naira's real exchange rate is now at its most competitive in 20 years. This is a crucial moment for Nigeria's private sector to step up and expand non-oil exports, which are essential for creating jobs and stabilising the economy," he said.
He cautioned against using temporary measures, such as short-term capital inflows, to stabilise the Naira.
"Artificially supporting the Naira with short-term inflows is not sustainable. Nigeria must rebuild its foreign exchange reserves to serve as a buffer against future oil price volatility."
The CBN has been grappling with exchange rate volatility following the unification of the Naira in June, a move aimed at eliminating the distortions created by multiple exchange rates.
While the policy has created initial turbulence, the World Bank believes it will pay off in the long run if Nigeria remains committed to building a more stable and transparent foreign exchange market.
Supporting the poor
With the removal of petrol subsidies, which previously cost the government over N10 trillion annually, the Nigerian government has been under pressure to expand its social safety net programmes.
The World Bank praised the current administration's cash transfer initiative, which has reached several million households, but called for further expansion to cushion the impact of inflation on the most vulnerable.
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"Cash transfers are essential in the short term to mitigate the negative effects of inflation, especially on food prices. But they must be accompanied by broader efforts to create jobs and improve infrastructure in the medium to long term," the official said.
The World Bank estimates that Nigeria will need to create at least 12 million jobs over the next decade to absorb the growing number of young people entering the labour market. Attracting large-scale private investment, particularly in the non-oil sectors, will be key to achieving this goal.
The role of Nigeria's elites
The World Bank official warned that the success of the reform agenda will ultimately depend on whether the country's leadership can unite behind it.
He said Nigeria's elites have a critical role to play in supporting reforms that may be politically unpopular but are essential for the nation's future.
"The challenge now is to resist the pressure for quick fixes and to focus on the long-term vision. In doing so, they will not only secure the future of Nigeria but also that of their children and grandchildren," the official said.
