CBN’s Policies Continue To Damage Nigeria’s Business Environment, Says World Bank

In a document titled ‘Nigeria Development Update (June 2022): The Continuing Urgency of Business Unusual’, the World Bank has stated that the Central Bank of Nigeria’s (CBN) multiple exchange rates, trade restrictions, and the financing of the public deficit continue to damage the business environment.

The World Bank believes that CBN’s persistent intervention would weaken revenue mobilisation, foreign investment, human capital development, infrastructure investment, and governance.

It stated that amid heightened risks, the government has kept a “business-as-usual” policy stance that hinders prospects for economic growth and job creation.

“Multiple exchange rates, trade restrictions, and financing of the public deficit by the Central Bank of Nigeria (CBN) continue to undermine the business environment.

"These policies augment long-standing weaknesses in revenue mobilisation, foreign investment, human capital development, infrastructure investment, and governance.”

The Bank said Nigeria lost a key moment that would have been prime for subsidy removal.

“Notably, during 2020 and 2021, when oil prices were much lower, the government lost an opportunity to address one of the primary sources of fiscal vulnerability by choosing to maintain the subsidy for premium motor spirit, more commonly known  as petrol—a subsidy that is unique, opaque, costly, unsustainable, harmful, and unfair.”

The Bank added: “Due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal time bomb.”