LAGOS — World Bank ranked Nigeria’s revenue to Gross Domestic Product (GDP) ratio as the lowest in the world.
The organisation also said Nigeria ranks sixth from the bottom in terms of the human capital index produced every year.
World Bank country director for Nigeria, Shubham Chaudhuri disclosed this on Monday during a panel session at a virtual public sector seminar organised by the Lagos Business School (LBS).
The director emphasized the importance of diversifying the country’s economy and utilizing the potentials of the private sector.
“Nigeria is a country with tremendous potential. If you look at the synopsis for this panel, it suggests that Nigeria is at a critical juncture – almost at the moment of crisis.
“Despite all of that, Nigeria is still the largest economy in Africa. So, just think about the potential that Nigeria has because of its natural resources, but more than that, because of its dynamism and all of its population. Nigerians are more entrepreneurial by nature.
“No country has become prosperous and realised its potential, eliminated poverty without doing two simple things: investing in its people, and unleashing the power of the private sector in creating jobs by investing and growing business. And then, of course, the basic function of the state is to provide security and law and order,” Chaudhuri said.
He also advised that more funds should be directed towards investing in the citizens to enable the country attain its full potential.
Investing in people entails the provision of basic services, basic education, primary healthcare, nutrition, among others.
“On this, Nigeria at the moment ranks sixth from the bottom in terms of the human capital index that we produce every year.
“So, obviously, there is a huge agenda in terms of investing in human capital. Nigeria spends more on premium motor spirit ( PMS) subsidy than it does on primary healthcare in a year, and we know who the PMS subsidy is benefitting.
“So, we see as priorities investments in human capital. But for that, one needs revenues. And there again, Nigeria, unfortunately, has the distinction of having about the lowest revenue-to-GDP ratio in the world.
“The standard rule of thumb is that for the government to provide the basic services and law and order, it needs between 15 to 20 percent of GDP as being revenue, and this will be both at the federal and state levels combined.
“In Nigeria, it was eight percent in 2019. In 2020, in the middle of the COVID-19 crisis and with the fall in oil prices, that went down to about between five and six percent.
“So, domestic revenue mobilisation is huge. And then the third is enabling the space for private investment. You have to fix the power problem. Power is like the oxygen of an economy. In Nigeria, the private sector is struggling to breathe,” he added.
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