World Bank Calls for Immediate Import Tariff Reduction in Nigeria
The World Bank has urged the Nigerian government to take swift action on trade policy, warning that without intervention, poverty rates will continue climbing through 2025 and possibly into 2026. The recommendation comes as Nigeria grapples with persistent inflation that’s steadily eroding household incomes across the country.
Mathew Verghis, World Bank Country Director for Nigeria, delivered this stark assessment during a recent television interview. His message was clear: the current trajectory is unsustainable, particularly for the nation’s most vulnerable populations, who are bearing the brunt of soaring prices.
Food Inflation Remains at 20% Despite Economic Reforms
Food inflation hovers around 20%, creating what Verghis describes as enormous pressure on Nigerian households. This figure is particularly alarming because food represents a significant portion of spending for low-income families.
“The reason we are projecting poverty to continue rising is that inflation remains high enough that it’s undermining household incomes, especially for the poor,” Verghis explained. “Food inflation remains at around 20%, which is placing enormous pressure on households.”
The purchasing power of millions of Nigerians has been steadily declining, making it increasingly difficult for families to afford basic necessities. This erosion of buying power is the primary driver behind the World Bank’s poverty projections for the coming years.
World Bank Says Lifting Import Bans Could Provide Quick Relief
The World Bank‘s prescription is straightforward: reduce tariffs on key imported goods and reconsider import bans, particularly on items consumed by low-income Nigerians. Verghis argues this approach would deliver more immediate results than waiting for long-term structural reforms to take effect.
“One way of lowering inflation quickly is to reduce some of these tariffs and take away some of these import bans,” Verghis suggested. He noted that high tariffs on basic goods disproportionately affect the poor, who spend the bulk of their income on food and everyday essentials.
Beyond the immediate humanitarian benefits, lifting these trade barriers would also align Nigeria with its ECOWAS commitments to promote free trade within the West African region. The move could lower import prices and help curb the escalating cost of living that’s squeezing households across the income spectrum.
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World Bank Advises Market-Driven Approach for Nigeria’s Exchange Rate
Verghis also weighed in on Nigeria’s volatile exchange rate, cautioning against artificial mechanisms to prop up the Naira. Instead, he advocated for a market-driven exchange rate that reflects the currency’s true value based on economic fundamentals.
The World Bank director emphasised that stability shouldn’t be the end goal in itself. Rather, the focus should be on creating conditions for economic growth, with a stable exchange rate serving as a tool that allows businesses to plan effectively.
“The best way to keep the Naira stable is to make sure that your exports are increasing and your foreign direct investment is increasing,” Verghis explained. “Stability is not the end goal; the primary objective is to get growth going, and a stable exchange rate that allows businesses to plan will contribute to that.”
Progress on Reducing Oil Revenue Dependence
Despite the grim inflation outlook, Verghis acknowledged Nigeria has made meaningful progress in diversifying its revenue sources. The country is now less reliant on oil revenues than in previous years, thanks largely to a more realistic exchange rate and the removal of petrol subsidies.
These structural changes have opened the door to increased non-oil revenues, which are essential for funding infrastructure projects and social services. However, the World Bank maintains that without addressing the immediate inflation crisis through trade policy adjustments, these longer-term reforms may not deliver benefits quickly enough to prevent further deterioration in living standards.
The challenge facing Nigerian policymakers is balancing the need for immediate relief with the imperative of maintaining economic reforms that will pay dividends in the future. The World Bank’s position is that reducing trade barriers represents a way to achieve both objectives simultaneously, providing quick wins on inflation while supporting broader economic liberalization.
