World Bank affirms that Tinubu’s economic reforms could save Nigeria N3.9 trillion ($5.10 billion) this year

• Nigeria’s removal of gasoline subsidies and foreign currency market changes may result in savings of up to N3.9 trillion ($5.10 billion) this year, according to the World Bank. 
• The central bank’s harmonization of exchange rates is seen as a significant step towards addressing longstanding economic challenges in Africa’s largest economy. 
• Despite the potential savings, Nigeria still faces rising inflation and increased poverty rates, putting pressure on the government to address concerns through measures like increasing the minimum wage.

Following changes to its foreign currency market and the elimination of a gasoline subsidy, Nigeria might save up to N3.9 trillion ($5.10 billion) this year alone, the World Bank said on Tuesday.

President Bola Tinubu of Nigeria eliminated the well-liked but pricey gas subsidy when he took office last month. Tinubu is launching the nation’s most extensive reforms in decades to address challenges like a heavy debt burden.

Following Tinubu’s criticism of a currency system that has impeded Africa’s largest economy for years, the central bank harmonized the nation’s exchange rates.

Alex Sienaert, the head economist for Nigeria at the World Bank, stated at a presentation in the capital Abuja that while the savings did not amount to a fiscal windfall, they did put the most populous country in Africa on the road to improvement.

“They stop Nigeria from going over what you might call the fiscal cliff. They really set the stage for a new and an upward trajectory in terms of Nigeria’s development path,” Sienaert said.

Nigeria has long been urged by the World Bank and International Monetary Fund to end its $10 billion-per-year fuel subsidy and free its exchange rate.

Siernaet recommended that Nigeria lift currency restrictions on a list of 43 products, including sugar and flour, that the central bank claims cannot be supported via official dollar sales, in order to further foreign exchange reforms.

According to Siernaet, the first five months of this year may have seen four million more Nigerians fall into poverty as a result of inflation, which peaked in May at 22.41%.

The administration of Tinubu is under pressure from labor organizations to increase the monthly minimum wage by a factor of more than six in order to protect employees from the effects of the loss of gasoline subsidies.

According to the World Bank, Nigeria is one of the least developed nations in the world and has the second-largest number of impoverished people in the world after two decades of unequal progress.