The World Bank has cautioned the Federal Government against embarking on flamboyant spending as Nigeria reaps bountifully from higher oil prices driven by the ongoing war in the Middle East.

With the shortage of petroleum products due to Iran’s closure of the Strait of Hormuz, Africa’s richest man, Aliko Dangote, has said his refinery can supply products to Nigeria and across Africa.

In the report, ‘Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development’, unveiled in Abuja yesterday, the Bretton Woods institution said Nigeria must balance the gains and pressure that the war engenders.

The report noted that while higher oil prices provide temporary fiscal and external relief, they are accompanied by inflationary pressure, tighter external financing conditions and increased uncertainty.

“In this context, policy should aim to preserve recent macroeconomic stabilisation gains while mitigating the impact on households. This requires prudently managing the oil windfall, avoiding pro-cyclical policies and channelling part of the gains to cushion the most vulnerable. At the same time, maintaining credible macro-fiscal policies will be essential to sustain investors’ confidence and navigate a more volatile global environment,” it stated.

It went on to recommend adoption of a counter-cyclical fiscal approach to manage the temporary oil windfall, avoidance of price controls and blanket subsidies while protecting households through targeted transfers, reopening the Premium Motor Spirit (PMS) market to competition, maintaining a tight monetary policy stance, allowing exchange rate flexibility while using reserves prudently and strengthening communication to anchor expectations.

Citing the peculiarity of the Nigerian situation, the report noted that higher global energy, fertiliser and shipping costs are beginning to pass through to domestic prices, adding pressure to inflation and poverty, including on food prices.

It, therefore, projected growth to pick up gradually to 4.2 per cent over 2026 to 2028, supported by continued macroeconomic stabilisation, ongoing structural reforms, and increased investment.

In his remarks at the unveiling, the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, said the government was counting on private-sector investment to drive job creation and lift millions out of poverty, even as global energy shocks reshape fiscal expectations.

Edun disclosed that the government was also tightening revenue collection through new policy measures aimed at plugging leakages.

The Deputy Governor for Economic Policy at the Central Bank of Nigeria (CBN), Dr Muhammad Abdullahi, noted the crowding-out of private sector credit, as commercial banks increase exposure to government and central bank instruments while scaling back lending to businesses.

“You cannot administratively direct credit,” he explained.

Abdullahi said the bank was prioritising price stability, warning that inflation remains the “biggest tax on the poor.”
DURING a tour of the refinery in Lagos, Dangote noted that the facility was already ramping up exports to cushion the impact of supply shocks triggered by the Iran war.

“What I can do is assure Nigerians and most of West Africa, Central Africa and East Africa that we have the capacity to supply them,” he said.

According to him, the Dangote Refinery, which is operating at its full capacity of 650,000 barrels per day, has played a key role in mitigating the effects of the crisis both within Nigeria and across the continent.

He disclosed that the refinery had already shipped about 17 cargoes of gasoline to African countries facing supply shortages, while exports of urea fertiliser also increased in response to rising demand.