The World Bank has pledged $8.5 billion to Nigeria to fund critical issues ranging from agriculture to education.
Shubham Chaudhuri, the World Bank’s country director for Nigeria, made the announcement in Abuja on Thursday at a summit hosted by the Emergency Coordination Center.
He noted that it was still infinitesimally small compared to Nigeria’s needs, but emphasized that about $2.5 billion to $3 billion of the fund had been channeled into education.
“Half of the population of Nigeria itself is under 17 years old. This means investing in human capital development,” he said.
He noted that Nigeria’s future depends on the young people’s ability to go to school, and stressed the importance of making schools safe to ensure fewer children are out of school.
He went on to say that it was Nigeria’s call to determine how it would mobilize its financial resources to send young Nigerians to school, or whether its scarce resources would be used to subsidize gasoline at more than N6.5 trillion.
Africa’s most populous country is mobilizing £6.7 trillion in petrol subsidies at the expense of education and health. About 10.1 million children are out of school, according to the Ministry of Education, but a report suggests the number could rise to 18.5 million.
Analysts have described Nigeria’s insistence on subsidies as financial indiscipline, noting that it would adversely affect the Nigerian economy.
For Professor Jonathan Aremu, former deputy director of CBN and associate professor at Covenant University, subsidy disrupted the market, making it difficult for products to find their true value.
“In the economy, subsidy is always bad. Yes, a lot of people depend on fuel, that’s why they have continued to subsidize petrol, but we don’t know how much is actually being spent on subsidy.”
He explained that the next government should not only abolish subsidies but also provide incentives to alleviate the suffering of Nigerians.
Professor of energy economics at Nnamdi Azikiwe University, Uche Nwogwugwu, said withdrawing the grant would be a step in the right direction.
However, he said abolishing the petrol subsidy at this point would cause untold hardship and social unrest for Nigerians, suggesting Nigeria could take an alternative route.
“It is absolutely true that the burden weighs and will continue to weigh on the economy. Some discreet facts are here to help save the country.
“The PIA has turned NNPC into a public limited company that can pursue profit. This is a good basis for solving the subsidy. It is recognized that the nation has subsidized consumption and now it wants to channel into production. Expanding the marketplace to neighboring Cameroon, Ghana, Niger, Mali and Sudan, where it is sold for about N300-N400 equivalent per liter, will recoup all the monies and also bring a profit.
“It will also completely eradicate the activities of smugglers. Under Africa’s free trade charter, NNPC can sell to neighboring countries while giving the nation a breather to resolve domestic imbalances,” he suggested, noting that this could allow the country to resolve the subsidy imbroglio.