In spite of the fact that oil prices continue to rise on a global scale, World Bank has stated that Nigeria, which is the largest oil producer in Africa, is not benefiting from it because of her subsidy payments.
It would be recalled that on Sunday, March 6, 2022, Brent crude, which is the global benchmark, soared to a near 14-year high of $140, as traders fretted over the Russian invasion of Ukraine. Althrough, as of Tuesday, August 10, 2022, the price nosedived to $97.40 a barrel.
However, the Senior Public Sector Specialist, Domestic Resource Mobilisation, World Bank, Rajul Awasthi expressed an opinion that Nigeria may have gained a lot as far as more revenue is concerned considering her status as Africa’s largest oil producer, but the huge amount spent on fuel subsidy disallowed such.
His words: “Nigeria has the largest economy in Africa and the largest country in Africa by population, so it is critical to Africa’s progress. There is no doubt about that. But the government of Nigeria, from the public finance perspective, is really facing an existential threat. Let’s not downplay the situation. That is the actual reality.
“Nigeria is 115th out of 115 countries in terms of the average revenue to Gross Domestic Product ratio. Despite the oil prices rising the way they have been, net oil and gas revenues have been coming down because of the tremendous impact of the subsidy.
“So, what is going to happen in 2022? The federation’s revenues are going to be significantly lower. They are already very low, and Nigeria is already the lowest in the world out of 115 large countries and this year, it’s really going to be lower than what it was in 2020 because of the debilitating impact of fuel subsidy.”
The World Bank chief, however, sought the exploration of the non-oil sector, Value Added Tax (VAT) compliance gaps, as well as rationalise tax expenditures, to give a boost to Nigeria’s crawling revenue.
