The International Monetary Fund (IMF) has said that Nigeria’s economic reforms are yet to benefit many poor citizens. The Fund noted that while the country has made progress, millions of Nigerians still face poverty and hunger.
The IMF shared this in an article posted on its website on Monday. The article was written by Axel Schimmelpfennig, the IMF Mission Chief to Nigeria, and Christian Ebeke, the Fund’s Resident Representative in Nigeria.
“Nigeria lacks an effective social safety net to cushion the impact of shocks on the most vulnerable. Scaling up the existing cash transfer system is key to making growth more inclusive,” the IMF said.
The Fund explained that “although reforms like removing fuel subsidies and allowing the naira to float have helped the economy, the average Nigerian is yet to feel the relie”f.
The IMF said “President Bola Tinubu inherited a struggling economy marked by weak growth and high poverty. Between 2014 and 2023, Nigeria’s real per capita income dropped by 0.7% every year, and about 42% of Nigerians lived in poverty in 2023.”
Some reforms have brought improvements, the IMF said. Foreign exchange is now more available through official channels, Nigeria has returned to the international capital market, and international reserves are growing.
Still, the Fund warned that “the country faces major problems. Inflation remains high—above 20%—and poor electricity supply continues to hold back growth. It also noted that oil revenues, which make up about 30% of government income, remain unstable due to global price changes.”
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The IMF listed three urgent steps Nigeria must take:
“Support the Poor: The government should expand cash transfers to help the most vulnerable Nigerians deal with rising living costs.
“Improve Budgeting: A better budgeting system is needed to increase spending on roads, power, schools, and hospitals.
“Raise More Revenue: Nigeria needs to collect more taxes to fund vital sectors like agriculture, energy, and climate projects.”
The IMF said the current tax reforms are necessary to improve revenue and tax compliance. It added that once cash transfer programs are working well, the country could adjust its tax rates to match those of nearby countries.
The IMF also urged Nigeria to ensure that money saved from the fuel subsidy removal is spent on projects that directly help the people.
“Nigeria’s potential is beyond doubt. But achieving it will require continued reforms and an effective social safety net to carry the most vulnerable along,” the IMF said.