World Bank warns that Nigeria, others are losing investments to inefficient spending

The World Bank has warned that developing countries, including Nigeria, are wasting a large amount of their public money through inefficient spending. This was revealed in their report “How Can Developing Countries Power Up Public Investment?” published on 16th December 2024.

The report found that developing countries lose more than a third of their public investment through poor spending practices, which hurts their economic growth. This happens when government spending doesn’t create equal value in return.
In the worst cases, this leads to expensive projects (called “white elephant” projects) that cost a lot but don’t help the economy much. This can make it harder for countries to manage their debts.

The World Bank stated: “Improvements in government spending efficiency are essential for maximizing the benefits of public investment. Estimates suggest over one-third of public investment in EMDEs may be lost to inefficiency, much more than in advanced economies. Institutional weaknesses, such as regulatory bottlenecks and corruption, often result in lower-quality projects.”

Read Also: Over 50% of Nigerians, sub-Saharan Africans are multidimensionally poor – World Bank

To fix these problems, the World Bank suggests that developing countries should make their purchasing processes more open and clear, set up better ways to check and evaluate projects and take better care of infrastructure so it lasts longer. They also recommend collecting taxes more effectively, stopping spending on things that don’t work well, managing debts better, and investing more in important areas like education, health and infrastructure.

The report mentions that countries can use World Bank guidelines to check how well they manage public money. It also suggests that governments could work with private companies, though this hasn’t always been successful in the past.

The World Bank added that new technology means governments don’t need to provide everything themselves anymore – like with mobile phone networks – but should instead focus on making sure these services work well through proper regulation.

Finally, the World Bank called for more international help for poorer countries, especially for big projects related to climate change. As they put it: “The international community must step up, particularly on climate-related infrastructure projects, to ensure that developing nations have the resources to make lasting progress.”