The World Bank has advised the Federal Government to prioritise providing jobs for the Nigerian youths
The World Bank’s Country Director for Nigeria, Ndiame Diop gave the advice in the wake of critical reforms made by the Bola Tinubu’s administration, which had thrown the country into skyrocketing inflation and increase in costs of living.
Tinubu in May 2023 declared an end to fuel subsidies, a move that has increased prices of Premium Motor Spirit (PMS) from N175 per litre to officially N1,025 per lire in Lagos state at the Nigerian National Petroleum Company Limited (NNPCL) stations.
Following the development, the world’s apex bank in its Nigeria Development Update Report, titled “Staying the Course: Progress Amid Pressing Challenges,” said going forward, it is most crucial for the government to provide jobs for its citizens, youths especially, to help them cope with the hardship.
“Nigeria took the bold and courageous move to undertake difficult but critical reforms. This against the backdrop of an already fragile economic position, high food and transport inflation, and other heightened uncertainties. If these reforms were not done, Nigeria would have fallen into a serious fiscal crisis that would have made it difficult for government to meet its obligations to citizens.
“It will be important to consolidate the improving fiscal outlook and scale up the support for the poorest households to cope with purchasing power losses and hardships, while expanding opportunities for growth and productive jobs, especially for young Nigerians is most urgent and crucial”.
Stop Ad-Hoc FX Auctions
It urged the Central Bank of Nigeria to refrain from intervening in the foreign exchange market through forex auctions.
It was also advised to continuously reaffirm the commitment to exchange rate flexibility by adopting a comprehensive, systematic, and transparent framework for foreign exchange interventions.
The advice followed the auction of $876.26m to end users via a retail Dutch auction on August 26, 2024, by the CBN.
The major move was away from its traditional sales of foreign exchange to Bureau De Change operators.
This auction marked one of the most significant FX interventions by the CBN under the leadership of Governor Yemi Cardoso, who has been actively working to stabilise the naira and address the ongoing volatility in the FX market.
The apex bank said the auction process was to enhance foreign exchange liquidity in the market, alleviate demand pressure, and support price discovery in alignment with its objectives.
According to the sales report, 3,347 firms got access to the dollars via the 26 banks, which qualified at the rate of N1,495 per dollar cut-off rate.
But the Bretton Woods Institution in its latest report noted that permitting market participants to trade FX with more flexibility across time would also contribute to deepening the FX market
The report read, “Exchange rate policy should continue to be geared towards maintaining a unified, market reflective exchange rate, whilst deepening the FX market. The CBN should continue efforts towards deepening the official FX market, including by facilitating formal remittances inflows, allowing international oil companies to fully concentrate their FX sales in the official market, restoring intermediated market access to bureaux de change, and refraining from ad-hoc FX auctions.
“Allowing market participants to trade FX with more flexibility across time would also contribute to deepening the FX market.”
