The World Bank, established in 1944 at the Bretton Woods Conference alongside the International Monetary Fund (IMF), had an initial focus on the reconstruction of post-World War II Europe.
Over time, the bank’s mission evolved to centre on poverty reduction and sustainable development across the globe.
The World Bank comprises two main institutions– the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
The IBRD provides loans and advice to middle-income and creditworthy low-income countries, while IDA offers interest-free loans and grants to the world’s poorest countries; together, they are commonly referred to as the World Bank.
The overarching mission of the World Bank is to end extreme poverty and promote shared prosperity on a livable planet.
The World Bank has a long-standing partnership with Nigeria, supporting various development initiatives across different sectors.
It has been a significant partner in Nigeria’s economic development since 1958, providing loans, credits, and grants through the IDA and the IBRD.
The institution’s primary goals in Nigeria include poverty reduction, human capital development, revenue diversification and overall economic management.
The World Bank has actively supported Nigeria’s recent efforts to restore macroeconomic stability; this includes the unification of the multiple exchange rates to create a market-reflective official rate and the removal of fuel subsidy.
Experts say the reforms aim to improve fiscal space, reduce debt risks, and attract both domestic and foreign investment.
World Bank policies have also encouraged the Nigerian Government to focus on increasing non-oil revenues through better tax policies and administration, cutting government waste, and directing spending towards targeted poverty programmes.
Stakeholders say the measures have contributed to a narrowing of the fiscal deficit.
At the recently concluded Spring Meetings of the IMF/World Bank Group, the Director of the African Department at the IMF, Abebe Selassie, commended Nigeria’s bold economic reforms and called for continued support for vulnerable citizens.
Abebe highlighted the reforms, including the removal of the fuel subsidy and the unification of the foreign exchange market, as essential measures to address unsustainable macroeconomic conditions.
While acknowledging the short-term hardships the reforms had caused, Selassie emphasised that addressing them was key.
Selassie said that strengthening the country’s economy required maintaining macroeconomic stability, restoring market confidence, and ensuring well-coordinated monetary and fiscal policies.
He stressed the importance of open communication with the public to build trust and garner support for the ongoing reforms.
The director added that with sustained effort and careful policy calibration, Nigeria could achieve more inclusive and sustainable growth.
The Deputy Director at the IMF’s Fiscal Affairs Department, Era Dabla-Norris, urged African countries like Nigeria to prioritise strengthening financial buffers and maintaining fiscal discipline.
She advocated broadening the tax base and curbing tax evasion through technology.
Dabla-Norris said that although fuel subsidy removal had immediate impact on incomes, its long-term benefits, such as energy efficiency and better use of fiscal savings, took time.
She urged the Nigerian Government to adopt a comprehensive strategy to ensure subsidy reforms yield positive outcomes and highlighted the importance of increased tax revenue in boosting economic resilience.
Dabla-Norris called for compensatory mechanisms like cash transfers or more targeted transfers, for the needy.
“Where the public does not trust the government, increasing support for social programmes makes it very tangible to the public,” she said.
However, some Nigerians have consistently raised concern about the negative impact of policies of the Bretton Woods institutions on the Nigerian populace.
Such critics cite the conditionality of loans, saying that the stringent economic reforms attached to World Bank loans, such as fiscal austerity, currency devaluation, and privatisation, have sometimes led to negative social consequences like increased poverty and unemployment.
Concerns also centre on perceived lack of accountability, impact on social services, and potential for increased debt burdens and the perceived failure of World Bank projects to demonstrably improve the lives of ordinary Nigerians.
According to a former President of the Chartered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, the Federal Government should be circumspect before adopting recommendations by World Bank.
According to Unegbu, historically, such recommendations have ended up worsening economic conditions of ordinary Nigerians.
He said that certain liberalisation policies promoted by international financial institutions could undermine local industries and create trade imbalances.
The Nigerian Labour Congress (NLC) warned that blindly following advice from the World Bank and the IMF could spell disaster for Nigeria.
The Head of Public Relations of NLC, Benson Upah, said that the World Bank did not have Nigeria’s best interests at heart.
While the World Bank has funded numerous projects, evaluations have sometimes indicated that the outcomes in areas like social service delivery and non-oil growth have been unsatisfactory, suggesting challenges in effective implementation and achieving desired results.
The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, however, said that the economic prescriptions by the World Bank were gradually having a positive impact on the Nigerian economy.
Edun said that the government had resolved to drive down inflation and implement structural reforms to support economic resilience and sustainable growth.
He said that the country was targeting seven per cent economic growth, which represented a strong growth projection, under which poverty would be substantially reduced and lives of Nigerians significantly improved.
“We are focusing on agriculture, increasing productivity, as well as making food more available to the people.
“We are also building more infrastructure, particularly in the digital economy area that will benefit young people, and we are supporting businesses through improved access to finance,” he said.
The minister agreed that tariff hikes were impacting real wages and disruption of global supply chains disproportionately affecting Emerging Market Developing Economies (EMD’s) due to the limited diversification of their economies and greater dependence on imported goods.
He said that domestic policy re-strategising should be the first line of defence
“Fiscal policies should safeguard sustainability and rebuild buffers; remain investment friendly to create job opportunities and enhance resilient growth.
“Policy calibration should be toward further restoring confidence and stability, reduce imbalances and improve productivity to drive sustainable growth.
“Regional and cross regional economic integration and cooperation is critical,” Edun said.
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, said that inflation remained the most disruptive force to the economic welfare of Nigerians.
“Our policy stance is firmly focused on bringing inflation down to single digits in a sustainable manner over the medium term.
“Our goal is to restore price stability, protect household purchasing power, and lay the foundation for long-term investment,” Cardoso said.
As the government continues in its efforts to grow the economy and improve the standard of living of average citizens, policy analysts say certain national peculiarities should be considered before Bretton Woods economic policies are adopted.
In all, experts hold the view that wholesale adoption of World Bank/IMF policies like sale of government businesses through privatisation, removal of subsidies on essential consumables and tax increases could be counterproductive.
By Nana Musa and Kadiri Abdulrahman, News Agency of Nigeria (NAN)