The World Bank has pointed out that poor management of public funds is causing big problems for developing countries, including Nigeria. In a report called “How Can Developing Countries Power Up Public Investment?” released on December 16, 2024, the bank explained that more than one-third of the money spent on public projects in these countries is wasted because of inefficiency. This waste is holding back economic growth and development.
The report said that inefficient spending happens when government investments don’t lead to a similar increase in useful public assets. In the worst cases, it results in “white elephant” projects—large-scale initiatives that incur high costs but deliver minimal economic returns. These inefficiencies not only undermine economic growth but also contribute to higher sovereign risk and threaten debt sustainability.
According to the World Bank, institutional weaknesses such as regulatory bottlenecks and corruption often lead to lower-quality projects, further exacerbating the problem. The report stressed that making government spending more effective is key to getting the most out of public investments, especially in poorer and middle-income countries.
To tackle these issues, the World Bank advised governments in these countries to work on making public spending more efficient. It suggested steps like using clear and open processes for buying goods and services, setting up strong systems to track and assess projects, and making sure infrastructure is well-maintained so it lasts longer.
The World Bank also suggested that countries should focus on increasing their own income, cutting down on wasteful subsidies, and managing debt wisely. These steps, the bank explained, would help governments spend more on important areas like education, healthcare, and infrastructure.
The report also pointed out the value of partnerships between the public and private sectors. These partnerships can use private money to fund infrastructure projects. However, the bank mentioned that while these partnerships have had mixed results, they still offer a way to make public investments more effective.
In some cases, technology has allowed governments to step away from direct provision of services, as seen in the telecommunications sector, where effective regulation has enabled efficient service delivery.
