CPPE disagrees with World Bank over fuel, food imports

Nigeria stands at a critical economic crossroads as a fundamental disagreement between the Centre for the Promotion of Private Enterprise (CPPE) and the World Bank over trade policy threatens to reshape the continent's largest economy—and the investment landscape for European stakeholders.

The World Bank's advocacy for liberalised imports of petroleum products and food represents orthodox macroeconomic thinking: reduce domestic production costs through cheaper imports, stabilise consumer prices, and free capital for other sectors. On the surface, this appeals to fiscal hawks and international lenders. However, the CPPE's pushback reflects a deeper structural reality that European investors operating in Nigeria cannot afford to ignore: premature import liberalisation in a context of weak domestic manufacturing infrastructure and governance deficits creates dependency rather than efficiency.

Nigeria's fuel import burden alone cost the nation approximately $10 billion annually before recent subsidy reforms. While the government has removed subsidies—a World Bank priority—the underlying issue persists: Nigeria possesses four refineries with a combined capacity exceeding 450,000 barrels per day, yet they operate at roughly 25-35% capacity due to chronic underinvestment and maintenance backlogs. A World Bank-style import-first approach perpetuates this vicious cycle. Rather than incentivising domestic refinery rehabilitation (which would create jobs, reduce import bills, and stabilise foreign exchange), it rewards dependence on external suppliers.

For food security, the prescription is similarly problematic. Nigeria's agricultural sector employs over 30 million people and contributes 20-25% of GDP. Yet productivity remains low due to inadequate infrastructure, limited credit access, and fragmented supply chains—not because of insufficient imports. Flooding Nigerian markets with cheap subsidised foreign grain doesn't solve these structural problems; it collapses local farming incomes and deepens rural poverty, ultimately driving rural-to-urban migration and social instability.

The second source document—on governance accountability—provides essential context. Nigeria's budgetary dysfunction means that even well-intentioned infrastructure spending rarely delivers. Between 2015 and 2023, Nigeria allocated over $180 billion to infrastructure yet saw minimal capacity additions. This governance gap means that import liberalisation without concurrent improvements in regulatory oversight, customs efficiency, and anti-corruption enforcement becomes a transfer mechanism from the public purse to private importers' balance sheets.

For European investors, this policy dispute carries three major implications:

**Manufacturing Risk**: Companies invested in Nigerian food processing, petrochemicals, or light manufacturing face margin compression if import walls fall. A European packaging firm supplying local breweries or a German machinery distributor serving agricultural processors both face headwinds if their clients pivot to cheaper imports.

**Currency Volatility**: Unmanaged import surges worsen Nigeria's external account, pressuring the naira. The Central Bank's foreign exchange reserves (currently ~$34 billion, equivalent to 8-9 months of imports) would deplete faster, risking currency crises and capital controls that trap investor returns.

**Governance Premium**: The CPPE's resistance signals that Nigeria's private sector still believes in domestic-led growth and institutional reform. This contrasts sharply with pure import-dependent models that assume governance will remain static. Investors backing local manufacturing, agritech, and refinery modernisation bet on this reform trajectory.

The World Bank's prescription reflects global best practices in low-income contexts. Nigeria, however, is a $477 billion economy with substantial latent capacity. Unlocking that capacity requires not imports but institutional discipline—exactly what the governance accountability debate emphasises.