Inflation Must Fall To Halt Rising Poverty, Says World Bank

The World Bank Country Director for Nigeria, Mathew Verghis, says reducing inflation remains the most critical step for stabilising the economy, restoring purchasing power and reversing rising poverty.

Speaking during an interview with ARISE News on Thursday, Verghis explained that poverty is projected to keep rising in 2025 and possibly into 2026 because inflation remains high enough to erode household incomes, especially among the poor, with food inflation still around 20 percent.

He advised that monetary and fiscal authorities must remain cautious in loosening policy, stressing that Nigeria is still grappling with one of the highest inflation rates globally.

“Bringing inflation down should be a very high priority. There’s still a long way to go, and that’s arguably the most urgent task of the stabilisation process,” he said.

On long-term structural drivers of inflation, he listed high transport costs caused by poor infrastructure and multiple checkpoints, inadequate energy supply and lack of irrigation, adding that the World Bank is supporting government efforts to address these constraints.

He said one quick way of lowering inflation is by reviewing trade restrictions saying such measures were also consistent with ECOWAS commitments.

“Nigeria has high tariffs and, in some cases, import bans on goods consumed by the poor. One way of lowering inflation quickly is to reduce some of these tariffs and take away some of these import bans,” he noted.

Turning to reforms, Verghis emphasised that stabilisation requires continuous policy evolution rather than one-off decisions, citing countries like India and China that pursued reforms over decades.

He backed the Central Bank’s decision to keep the benchmark interest rate unchanged at 27 percent and said the priority with the exchange rate should be maintaining alignment with market fundamentals.

“The best way to keep the Naira stable is to make sure that your exports are increasing and your foreign direct investment is increasing as a stable exchange rate that allows businesses to plan will contribute to that,” he said, insisting that stability is not an end in itself.

Verghis further praised Nigeria’s progress in revenue diversification, stating that the country is now less dependent on oil revenues than in previous years.

He attributed the shift to a more realistic exchange rate and the removal of petrol subsidies, arguing that rising non-oil revenues would enable greater investment in infrastructure and human capital.

On borrowing, he said the debt outlook was improving, noting a decline in the debt-to-GDP ratio to what he described as a moderately comfortable level.

He added that the debt-to-revenue ratio was falling for the first time in years, but warned that borrowing only makes sense when funds are well-utilised.

“If you keep borrowing and the money gets wasted, then eventually you’ll have a debt problem. The key is that the debt is borrowed and spent wisely,” he said.

On inclusive growth, Verghis said public spending must be deliberately targeted at the poor. He pointed to the federal government’s cash transfer programme, noting that the president had announced a plan to reach 15 million poor households through a digital social registry and digital transfers to improve targeting.

He added that investments in children, clean water, nutrition, education and health were essential for long-term productivity, stressing that such pro-poor spending could significantly boost inclusive growth.

Furthermore, he advised that Nigeria must pair short-term inflation-control measures with broader long-term reforms for a better economic outlook.

“It’s a combination of immediate measures to bring inflation down and structural measures to encourage investment so that the economy grows at a faster rate than it is now,” he said.