Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has faulted the high cost of borrowing by developing economies.
He said they pay an estimated $500 billion more than they should compared with developed countries.
Oyedele urged the International Monetary Fund (IMF) and the World Bank Group to make concessional financing more affordable.
He believes that developing countries should not respond to mounting fiscal pressures by imposing additional taxes on vulnerable citizens and productive sectors.
Oyedele, who chairs the Intergovernmental Group of Twenty-Four (G-24), spoke at the ongoing World Bank/IMF Annual Meetings in Bangkok, Thailand, where he also defended Nigeria’s economic reforms, including the sequencing of fuel subsidy removal and foreign exchange liberalisation. NigerianCulture Magazine
He said developing economies needed to mobilise domestic revenue, eliminate waste and attract private capital while ensuring that borrowing translated into jobs, inclusive growth and improved living standards.
“We call on both the IMF and the World Bank to find means of making particularly short-term, more affordable concessional borrowing available to particularly the vulnerable countries,” he said.
He also urged the institutions to develop frameworks and policies for mobilising private capital so that scarce public funds could be directed towards essential services.
Oyedele acknowledged that borrowing was necessary for economic development but said debt financing must generate positive outcomes, particularly employment and inclusive growth.
He noted that developing countries faced not only high debt levels but also increasingly expensive borrowing, which constrained their capacity to finance infrastructure and social services.
The minister urged international financial institutions to support reforms that protect social spending and investment, taking account of the political and distributional consequences of economic adjustments.
He also called for predictable and coordinated sovereign debt treatment, greater transparency and improved credit-rating assessments to address debt vulnerabilities.
‘Wrong time to impose new taxes’
Oyedele warned that increasing taxes or placing additional burdens on vulnerable households and productive businesses would be inappropriate when many citizens were already struggling with economic pressures.
He advised governments to look inward for savings and improve revenue mobilisation rather than depend solely on additional taxation.
His position comes amid efforts by developing economies to balance fiscal stability with the need to protect citizens and stimulate productive activity.
The minister said macroeconomic stability was essential to sustainable growth but should not be treated as an alternative to employment creation and economic transformation.
G-24 Secretariat head Iyabo Masha said macroeconomic stability provided the foundation for structural policies, infrastructure investment and job creation.
Oyedele agreed, stressing that stability and job-rich growth were complementary objectives.
He cautioned, however, that emerging technologies, particularly artificial intelligence, could generate economic growth without corresponding employment gains if governments failed to regulate and adopt them deliberately.
He also cited geopolitical conflicts, shifting trade policies, monetary policy uncertainties, volatile commodity prices and climate shocks as factors threatening global growth.
The minister called for reforms to the international financial system, including quota realignments at the IMF to reflect changing global economic realities and protect the representation of emerging and vulnerable economies.
He further urged the World Bank Group, regional development banks and other stakeholders to deliver on the target of at least $300 billion in annual climate finance by 2035, as established at COP29.
Why Nigeria removed fuel subsidy before FX reforms
Defending Nigeria’s economic reform programme, Oyedele said the government raised petrol prices before introducing foreign exchange reforms to improve the chances of success.
Speaking at an Africa’s Golden Future session, he explained that the foreign exchange component constituted a substantial part of the fuel subsidy burden.
“Many people had not paid attention to the fact that the biggest component of that subsidy wasn’t the fuel product itself; it was the delay in FX flotation. So, if we had done FX flotation before fuel subsidy removal, it would have been impossible,” he said.
According to him, petrol prices initially rose by about 100 per cent following subsidy removal before increasing further after the foreign exchange reform was introduced about two weeks later.
The government subsequently retained some subsidy for a few months through a price cap as part of the transition.
Oyedele said the experience demonstrated why governments must carefully plan and sequence major policy changes, particularly when several reforms affect prices and household purchasing power simultaneously.
“If you start your reforms and you do it halfway, you deliver the pain, and the gains are not guaranteed,” he said.
He cited fuel subsidy removal, foreign exchange liberalisation and tax reform as examples of policies whose outcomes depended partly on how they were designed and implemented.
The minister said Nigeria’s tax reforms were intended to improve the tax system and provide relief rather than impose additional hardship on citizens. NigerianCulture Magazine
He acknowledged that public confidence was low and the proposals had generated controversy, but insisted that the government needed to continue explaining the rationale for its decisions.
“Trust is not something you can legislate. You have to earn it, and policy is not just what you say; it’s also what you do,” he said.
Oyedele stressed that vulnerable citizens needed support to withstand the immediate difficulties associated with reforms before they could benefit from improvements in the economy.
He cited the cash transfer programme, which he said had reached more than 10 million households, and education support reaching more than 1.5 million students as measures designed to cushion the effects of economic changes.
He added that reforms should be embedded in laws and institutions to ensure continuity beyond changes in government.
Predictable policies, he said, were essential to attracting investment because businesses needed confidence in the direction of government decisions.
“Capital follows trust before it follows returns,” he said.
AfCFTA requires fewer trade barriers
Oyedele also called on African governments to align their trade, fiscal and monetary policies to strengthen regional integration and maximise the benefits of the African Continental Free Trade Area (AfCFTA).
He said the agreement offered an opportunity to turn 54 African countries into a single market, allowing businesses to expand production and reach larger customer bases.
However, he warned that regulatory differences, administrative procedures and restrictions on the movement of goods, services, capital and people could prevent the agreement from delivering its full benefits.
“We have a lot of small countries, and what AfCFTA is trying to do is to turn 54 countries into one market, so that way it’s easy for us to scale,” he said.
He disclosed that Nigeria was developing a National Single Window to simplify border procedures and improve trade documentation through technology. NigerianCulture Magazine
The minister also called for greater investment in electricity, transport, logistics, agricultural processing and storage facilities to improve the competitiveness of African businesses.
He urged governments to protect strategic industries through tariffs only where necessary, with clear objectives and plans for withdrawing protection when it was no longer required.
Speaking at the meetings, IMF Deputy Managing Director Bo Li said Africa needed faster economic growth to improve living standards, warning that the region’s current growth rate meant income per person could take about 50 years to double.
He identified high debt, expensive borrowing and declining foreign aid as constraints, urging governments to improve governance, regulations and market access to attract private investment.
Li said closing half the gap between Sub-Saharan Africa and emerging markets in these areas could increase the region’s economic output by as much as 20 per cent over five to 10 years.
Nedbank’s Daniel Mminele said macroeconomic stability was essential but insufficient to attract long-term investment, stressing the importance of predictable policies, reliable infrastructure and effective contract enforcement.
African Development Bank President Sidi Ould Tah urged governments to move beyond announcing reforms to delivering measurable results.
He cited Mission 300, an initiative involving the AfDB, World Bank and other partners, which aims to provide electricity access to 300 million Africans by 2030.
The discussions underscored the need for developing economies to secure more affordable financing, maintain credible reforms and attract private investment without undermining the welfare of vulnerable citizens.
