By John Ile, Abuja
The World Bank has said that inefficiencies in public spending are costing developing nations a significant portion of their investments. Nigeria is among the developing nations of the world.
The global bank disclosed this in its report titled “How Can Developing Countries Power Up Public Investment?,” published on December 16, 2024.
The report found that more than a third of public investment in emerging markets and developing economies is lost to inefficiencies, undermining potential economic growth and development.
It explained that inefficient spending occurs when one dollar of public investment does not result in an equivalent increase in productive public capital
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 maximizing 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.
In response, the World Bank urged governments in low- and middle-income countries to focus on improving the efficiency of public spending.