The World Bank will give Nigeria $4.5 billion in funding through 2021 to help the power industry, health sector, and governance projects.
The institution, which lends money to countries for economic development, has invested an estimated $10 billion in the country, and is currently funding 30 projects in it.
Hafez Ghanem, the World Bank’s new vice president for Africa, said he wants the business to finance more power sector and social protection developments, and predicts it will start $2.5 billion worth of tasks in the next 18 months.
“Non-oil tax collection in Nigeria is presently very weak and well below the levels of structural and regional peer countries,” he told Bloomberg. “Nigeria needs to increase its non-oil revenue collected at both the federal and state level across the main type of taxes; income, VAT, excises and customs, and states’ internally generated revenues.”
Ghanem said that this would be possible with tax reforms and an increase in compliance rates, as well as higher rates on alcohol and tobacco. He’d also like to see changes to policies regarding the oil industry, a key element of the Nigerian economy.
“The near doubling of gasoline prices on the world market since early 2016 has put pressure on a number of countries that subsidize petrol, including Nigeria,” he said. “It’s very important that as these policies are phased out, social protection measures are phased in to help those who will be hit hardest by the rise in prices.”
Nigeria’s President Muhammadu Buhari signed the country’s largest budget in June, at NGN 9.1 trillion ($25 billion). The budgets will increase infrastructure projects and economic recovery. The International Monetary Fund predicts Nigeria’s economy to grow 2.1% this year. Budget documents obtained by Bloomberg show that Nigeria’s deficit is slightly more than the budget itself, at NGN 2 trillion. The news outlet reports that the country will borrow more than half of the shortfall to help fix the issue.
In addition, Nigeria has general elections coming up in February. Buhari is eyeing reelection, and election spending is something that concerns the World Bank’s new Africa vice president, even though he thinks it will not spur the nation’s growth.
“We are concerned about potential delays in implementation of government programs due to the focus on elections,” Ghanem said. “We urge the government to remain focused on implementing the Economic Recovery and Growth Plan, which includes the power-sector recovery plan.”
The World Bank had $61.8 billion in assets under management as of December 2017.