A new World Bank report highlights the significant losses developing nations, including Nigeria, face due to inefficiencies in public spending. The report urges governments to prioritize transparent procurement and project monitoring to maximize the benefits of public investments.
The Washington-based World Bank has revealed that inefficiencies in public spending are costing Nigeria and other developing nations a significant portion of their investments. The global bank disclosed this in its recent report titled “How Can Developing Countries Power Up Public Investment?” According to the report, more than a third of public investment in emerging markets and developing economies is lost to inefficiencies, undermining potential economic growth and development.
In extreme cases, it leads to “white elephant” projects with limited economic returns but high costs and, as a result, undermines sovereign risk and debt sustainability. 'Improvements in government spending efficiency are essential for maximising the benefits of public investment. 'Estimates suggest over one-third of public investment in EMDEs may be lost to inefficiency, much more than in advanced economies. Institutional weaknesses, such as regulatory bottlenecks and corruption, often result in lower-quality projects,' the report stated. As a solution, the World Bank urged developing nations to focus on improving public spending through a transparent procurement process and adequate project monitoring. This comes as Nigeria's finance minister, Wale Edun, recently stated that Nigeria needs $20 billion yearly investment to achieve its $1 trillion economy target by 2030
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