World Bank’s advice on oil windfall

The World Bank’s latest advice to the Federal Government to save the current oil windfall for the “rainy days” is a timely one that should be heeded. The advice was contained in the World Bank’s April 2026 Nigeria’s Development Update released last week, in Abuja, titled, “Nigeria’s tomorrow must start today: The case for early Childhood Development.”

According to the World Bank Group, the oil windfall should be used by the government to rebuild fiscal buffers, strengthen infrastructure and improve living conditions of the citizens, especially the vulnerable. Specifically, the global financial institution warned against the misuse of the oil windfall, especially ahead of the 2027 general election. Instead, it advised that the oil windfall and revenue from fuel subsidy removal should be used for time-bound cash transfers, reduce Nigeria’s debts and manage inflation impacts. It also urged the Central Bank of Nigeria (CBN) to keep tight monetary policy, while managing pressure from foreign exchange (FX) flexibility that can handle current external shocks.

We align with the World Bank observation that higher revenue should not be regarded as ‘free money,’ but as a temporary windfall that must be used for stabilisation, with such funds targeted at supporting valuable households amid soaring inflation, poverty, food insecurity and declining income. Nigeria has a long history of not saving oil windfalls for the rainy days, with numerous periods of oil booms, resulting in depleted foreign reserves, rather than sustained fiscal buffers.

Key periods of mismanagement include the 1990-1991 Gulf war when Nigeria made oil windfall in excess of $12billion, the 2011-2015 period, with net revenue of $61.76billion in Excess Crude Account (ECA) that eventually dropped to about $2billion by the time ex-President Goodluck Jonathan left office. There was also the 2021-2022 COVID-19 era when the Excess Crude Account depleted to around $376,665.

Very often, prudent management of revenues for the greater good of the people has been in short supply by successive administrations in the country.

As of 2024 and early 2025, data from the CBN and the Ministry of Finance, indicated that the federal government had realised cumulative savings and increased revenues of N14 trillion (or over $20 billion) by end of 2025. Yet the impact has not translated into meaningful improvement in the living standards of millions of Nigerians. More than 133 million Nigerians or 63 per cent of the population are still in multidimensional poverty, according to the 2022 national survey conducted by the National Bureau of Statistics (NBS).

At present, global oil prices, elevated by geopolitical tension in the Middle East, have increased above $100 per barrel threshold, almost $40 more than the 2026 budget benchmark of $64.85 per barrel. However, while revenue increases, millions of Nigerians are still living below poverty level. Inflation is projected to rise to 4.8 per cent this year, further eroding household purchasing power and raising the cost of doing business. Inflationary pressures are intensifying more than ever, fuelled by higher energy and food prices.

Last year, the World Bank expressed concerns over rising poverty in Nigeria, despite huge savings from subsidy removal on petroleum products. As the World Bank Report says, though inflation appears to be easing household incomes, millions of Nigerians are struggling with high cost of living. This calls for urgent concrete policy initiatives that will stabilise the economy and make life better for the people.

The World Bank Group’s latest advice on the need to stabilise the economy, expand economic opportunities as well as create jobs, is spot-on. Its concerns must be addressed immediately. Government should heed the World Bank’s advice. Let the government come up with pragmatic and decisive reforms to curb the prevailing economic hardship. We call for impactful programmes that will lift millions of Nigerians out of poverty.

With good governance and transparent leadership, Nigeria has human and material resources to be a great nation. The oil windfall offers a rare opportunity to rebuild fiscal buffers and drastically reduce the nation’s mounting debts, budget deficits and raise the living standards of the people.