W’Bank asks Nigeria to unify exchange rates, stop fuel subsidy

The World Bank has advised Nigeria to take a decisive action towards exchange rate unification and stabilisation.

The bank also said it was ready to support Nigeria in phasing out fuel subsidy while increasing social assistance for the poor.

President of the World Bank Group, David Malpass, said this on Thursday during a meeting with Vice-President Yemi Osinbajo on Nigeria’s Energy Transition Plan, according to a statement from the financial institution.

Nigeria, Africa’s biggest economy, currently operates a dual exchange rate system. While the investors and exporters (I&E) window is adopted at the official foreign exchange rate market, there is a parallel section of the market, also called black market.

Even though the Central Bank of Nigeria (CBN) has often maintained that the parallel market is not the true reflection of the naira, the sector has grown and continues to serve many Nigerians.

Speaking on the issue, Malpass highlighted the economic benefits of the exchange rate unification and stabilisation for Nigerians.

He also said a unified exchange rate would significantly improve the business enabling environment in Nigeria, attract foreign direct investment, and reduce inflation.

According to the statement, Malpass and Osinbajo also discussed the importance of increasing domestic revenues through broadening Nigeria’s tax base and increasing the efficiency of tax administration.

They also discussed Nigeria’s Energy Transition Plan, where Malpass welcomed country’s commitment to achieving universal energy access and reducing greenhouse gas (GHG) emissions while maintaining reliable base-load.

He emphasised the importance of integrating climate and development, as well as the need for an enabling policy and regulatory environment alongside strengthened institutions in the energy sector.