BUSINESS DAY
The World Bank says Nigeria’s government lost N13.2 trillion because of how it managed foreign exchange between 2021 and 2023.
The losses broke down like this: N2 trillion in 2021, N6.2 trillion in 2022, and N5 trillion in 2023.
This huge loss happened because the government kept two different exchange rates: an official rate (where they controlled the price) and a parallel market rate (where the price was decided by supply and demand). The difference between these rates costs the government a lot of money.
This policy was meant to keep the naira stable and help certain parts of the economy, but it became a huge expense.
Last Thursday, the Finance Minister, Wale Edun, announced that Nigeria would stop subsidising both fuel and foreign exchange. He said this at an event where the World Bank released a new report about Nigeria’s development.
“Fuel and FX subsidies are extinguished,” Edun said, explaining that these policies had been hurting Nigeria’s economy and would no longer continue.
Nigeria had been subsidising petrol and foreign exchange for many years, spending a lot of money to keep prices low, though the full effects weren’t clear.
In their new report, the World Bank says Nigeria lost N13.2 trillion which could have helped everyone in the country but only helped certain groups. Of this amount, N3.9 trillion was lost from non-oil sector taxes.
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