World Bank Country Director for Nigeria Mathew Verghis said on Thursday that reducing inflation remains the most critical step to stabilize the economy, restore purchasing power and reverse rising poverty.
In an interview on ARISE News on Thursday, Verghis warned that “the most immediate thing that can be done to reduce poverty is for the inflation rate to fall,” and emphasized that high food inflation continues to erode incomes, especially among the poor.
He explained: “The reason we project that poverty will continue to rise in 2025, and possibly even 2026, is because inflation remains high enough to undermine the incomes of households, especially the poor, because food inflation remains at around 20%.”
Verghis said monetary and fiscal authorities should remain cautious about easing policy as inflation remains “one of the highest in the world.”
He noted: “Lowering inflation should be a very high priority. There is still a long way to go, and that is arguably the most urgent task of the stabilization process.”
Regarding the long-term structural factors of inflation, he highlighted high transportation costs caused by poor infrastructure and multiple checkpoints, inadequate energy supply and lack of irrigation. He added that the World Bank is supporting governments’ efforts to address these limitations.
However, he said some measures could give faster results. “Nigeria has high tariffs and, in some cases, import bans on goods consumed by the poor.
One way to reduce inflation quickly is to reduce some of these tariffs and remove some of these import bans,” he said, highlighting their consistency with ECOWAS commitments.
Regarding economic reforms, Verghis highlighted that stabilization requires a sustained effort.
“When you undertake a reform program and a stabilization process like this, it is very important that policies continue to evolve. It cannot just be an isolated change,” he said, adding that India and China are examples of reforms that have lasted decades.
He supported the Central Bank’s decision to keep the benchmark rate unchanged at 27%, saying: “Monetary policy has to play a very careful role in ensuring that they don’t ease too soon.”
Regarding exchange rate management, Verghis said the priority should be maintaining alignment with market fundamentals.
“The best way to keep the Naira stable is to ensure that your exports increase and your foreign direct investment increases,” he said.
He added that stability is not the end goal: “The main goal is to drive growth, and a stable exchange rate that allows companies to plan will contribute to this.”
Verghis also praised progress in revenue diversification. “Nigeria is now much less dependent on oil revenues than before,” he said, attributing this to a more realistic exchange rate and the removal of oil subsidies. He argued that greater non-oil income will allow greater investment in infrastructure and human capital.
On Nigeria’s debt, he said the outlook is improving. “The debt-to-GDP ratio is now at levels that we consider reasonably moderate,” he said. With incomes rising, “the debt-to-income ratio is falling for the first time in a long time.”
Still, he cautioned that how borrowed funds are used remains crucial: “If you keep borrowing… and the money is wasted, you will eventually have a debt problem. The key is that debt is borrowed and spent wisely.”
Regarding inclusive growth, Verghis said public spending must consciously target the poor. He highlighted the federal government’s cash transfer program, saying, “The president announced a goal to reach 15 million poor households… using a digital social registry and digital transfers to improve targeting.”
He said investments in children, clean water, nutrition, schooling and health are essential for long-term productivity. “Targeting these pro-poor investments can have a big impact on inclusive growth,” he said.
Verghis concluded that Nigeria must combine short-term anti-inflation measures with long-term reforms: “It is a combination of immediate measures to reduce inflation and structural measures to encourage investment so that the economy grows at a faster rate than now.”