The World Bank said on Wednesday that the Nigerian National Petroleum Corporation (NNPC), widely accused of being the most opaque oil company globally, needs to be transparent as the government drives reforms to achieve its renewed hope agenda.
It said such transparency should help ensure accuracy in the profits and oil revenues to be remitted to the federation account.
The bank also asked Nigeria to curb inflation, boost revenues and drive economic growth as part of urgent reforms that are now needed to return the economy to a sustainable path.
These recommendations are contained in the World bank’s latest Nigeria Development Update (NDU) themed “Turning The Corner, From Reforms and Renewed Hope to Results” launched in Abuja on Wednesday.
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Though the bank acknowledged the reforms that had been carried out so far, including fuel subsidy removal, liberalization of the foreign exchange market, removal of 43 items from FX restrictions and commencing the tightening of monetary policy, it still believes that more still needs to be done to revive the weak economy.
As measures to curb inflation and stabilize the FX market, the World Bank advised the Central Bank of Nigeria (CBN) to tighten monetary policy further and phase out ways and means – which the National Assembly even raised to a record 15 per cent of the previous year’s revenue at the twilight of exit of President Buhari’s administration. The new rate is against 5 percent legally allowed by law before the adjustment.
The World Bank believes that it would be critical to also phase out the CBN’s development finance schemes, which aligns with Yemi Cardoso, the current CBN governor policy direction of stepping down such interventions going forward.
It would also be critical to continue to build market confidence around free FX pricing and publish full information on net reserves to build confidence as well.
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To boost revenue, the World Bank advised the government to publish information which explains fuel pump prices regularly.
It also advised that the government ensure transparency at its own oil company – the NNPC, “with regards to profits and oil revenues to be remitted to the Federation Account.”
In the report, the World Bank reiterated the urgent need to raise non-oil revenues by increasing Value Added Tax (VAT) rate while allowing for input tax credits, improving tax administration, adopting a data-driven approach to tax audit, as well as introduce a simpler turnover tax on Small and Medium scale Enterprises (SMEs) at state level rather than various existing fees and levies.
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On how to boost growth, the Bretton Woods Institution urged the government to develop detailed plans to improve power and transport infrastructure, public service delivery, security, and business environment.
There is equally the need for trade restrictions by adopting measures like reviewing tariffs. The World Bank states this would help reduce the costs of key inputs for producers and simplify and harmonise import and export producers while addressing current bottlenecks such as logistics and congestion at the ports.
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