World Bank Urges Nigeria to Cut Import Tariffs to Tackle Soaring Inflation

World Bank Urges Nigeria to Cut Import Tariffs to Tackle Soaring Inflation

The World Bank has advised the Federal Government to urgently reduce steep import tariffs and lift select import bans as part of swift measures to slow Nigeria’s surging inflation and rising poverty levels.

The recommendation was made by the World Bank Country Director for Nigeria, Mathew Verghis, during an interview on Arise TV on Thursday. Verghis warned that inflation—particularly food inflation—remains at levels that continue to erode the purchasing power of millions of households.

According to him, the Bank’s latest projections show that poverty in Nigeria may continue rising through 2025 and potentially into 2026 unless decisive action is taken to stabilise prices.

“Inflation remains high enough that it’s undermining household incomes, especially for the poor, because food inflation is still around 20%,” Verghis noted.

Tariff Cuts Could Provide Faster Relief

The World Bank chief stressed that while long-term structural reforms are essential—and must be sustained—Nigeria can achieve quicker, more visible relief by revisiting its tariff regime.

Nigeria, he said, maintains some of the highest import tariffs in West Africa, alongside bans on goods frequently consumed by low-income households.

“One way of lowering inflation quickly is to reduce some of these tariffs and remove certain import bans,” he said, adding that such changes would align with ECOWAS trade obligations.

This, he argued, would not only ease price pressures but also reduce the burden on poor households already struggling under record-high living costs.

Exchange Rate Stability Tied to Exports, Investment

On Nigeria’s volatile exchange rate, Verghis cautioned against attempts to artificially stabilise the naira. Instead, he emphasised that sustainable stability must come from higher export earnings and increased foreign direct investment.

“The best way to keep the naira stable is to ensure your exports and foreign direct investment are increasing,” he said.
“The primary goal is growth, and a predictable exchange rate environment helps businesses plan.”

Nigeria Now Less Dependent on Oil Revenue

Verghis acknowledged improvements in Nigeria’s revenue diversification efforts, stating that non-oil revenue has risen significantly due to exchange-rate reforms and the removal of petrol subsidies.

According to him, the country is “far less dependent on oil revenues” than before — a shift that enables the government to invest more in infrastructure, health, and education.

Debt Outlook Improving—But Spending Quality Is Key

On Nigeria’s borrowing profile, Verghis said debt-to-GDP levels now appear more sustainable, while the debt-to-revenue ratio is falling for the first time in years — driven by stronger revenue mobilisation.

Still, he cautioned that the real risk lies in how borrowed funds are spent.

“If you keep borrowing and the money gets wasted, then you eventually have a debt problem,” he warned.
“The key is to borrow responsibly and spend wisely.”

World Bank Flags Gaps in Nigeria’s Social Safety Net

The remarks come shortly after the World Bank criticised Nigeria’s social support programmes in its report, “The State of Social Safety Nets in Nigeria.”

Despite 56% of beneficiaries being poor, only 44% of total support actually reaches the country’s poor population, suggesting significant gaps in coverage and delivery.

About Author