The World Bank has said Nigeria’s economy is in its worst situation in performance as inflation has pushed five million Nigerians below the poverty line in 2022.
Newsonline reports that World Bank said between 2020 to 2021, about eight million Nigerians were pushed below the poverty line due to high prices of staple foods.
The World Bank stated this in its report, ‘Nigeria Development Update’, which was launched in Abuja on Thursday alongside the Nigeria Country Economic Memorandum.
The NDU report noted, “Nigeria is in a challenging and deteriorating economic situation. Nigeria’s economic performance has weakened since the previous Nigeria Development Update was published in June 2022 under the title of ‘The Continuing Urgency of Business Unusual’.”
The report read, “Nigeria’s economic output growth has slowed and the World Bank is lowering its growth projections. Real gross domestic product at market prices growth in the third quarter of 2022 was 2.4 percent year-on-year, on the back of a continued contraction in oil output (-22.7 percent y-o-y) and slowing non-oil growth (4.3 percent y-o-y, down from 4.8 percent y-o-y in Q2 2022). The World Bank now projects that real GDP will grow by 3.1 percent in 2022 and 2.9 percent in 2023–24, 0.3 of a percentage point lower than the previous projections at the time of the June 2022 NDU.”
During his presentation of the reports, the World Bank Lead Economist for Nigeria, Alex Sienaert, The report said the minimum wage of N30,000 passed into law in 2019 has gone down in value to N19,355 in 2022 as a result of inflation.
This according to Sienaert means a loss of 35.48 percent value between 2019 and 2022 as inflation erodes Nigerians purchasing power. “The cumulative inflation between 2019 and 2022 was 55 per cent,” he said.
World bank noted that since 2019 food price inflation has grown substantially and is one of the highest in the world.
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The report read, “The rate of consumer price inflation has surged and is currently one of the highest globally. The consumer price index, already increasing at a high rate, accelerated in 2022 through October, to be up 21.1 percent y-o-y, a 17-year high.
“High inflation has been persistent in Nigeria for the past two decades, but since 2019 inflation has increased substantially, driven by the multiple exchange rates and exchange rate depreciation in the parallel market, intensified trade restrictions, and the monetization of the public deficit by the Central Bank of Nigeria.”
In breakdown, the report disclosed that “In 2022, this has been exacerbated by the spike in global food and energy prices due to the war in Ukraine and global supply disruptions. Since May 2020, the CBN has responded by tightening monetary policy, increasing the policy rate by 500 basis points and increasing the cash reserve requirement by 500 bps. However, the disinflationary impact of these measures has been weakened by continuing monetization of the fiscal deficit, sector-specific subsidized credit provisions, and imported food and energy cost increases.
“As many as 5 million Nigerians have been pushed into poverty as a result of inflation in 2022. The World Bank estimates that between 2020 and 2021, inflation pushed about eight million more Nigerians below the poverty line, increasing the total number of poor people to about 90 million. Higher inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly through higher prices of local staples, such as rice, bread, yam, and wheat, especially in non-rural areas.”
The Nigeria Development Update report forecasted that the economy of Nigeria will remain highly vulnerable unless policies for urgent reforms are put in place by the Federal government.
The report read, “Nigeria’s economy will remain highly vulnerable to both external and domestic shocks, and shocks will be exacerbated in the absence of urgently needed policy reforms to reduce inflation, increase fiscal revenues, and shift toward a market-responsive exchange rate.”
“If inflation and unemployment remain high, this will exacerbate domestic security risks, which in turn could further reduce economic growth,” World Bank warned.
The report further added, “Nigeria’s chronic, high inflation has worsened since 2020, eroding the purchasing power of Nigerians and increasing poverty. Since October 2019, Nigeria’s inflation has been persistently high. Inflation accelerated after the closure of Nigeria’s land borders in October 2019, and increased steadily throughout 2020 due to domestic supply constraints related to the COVID-19 pandemic. In 2021, at an average of 17 percent, inflation was above that of the previous four years and among the highest rates in the world.
“During the course of 2020 and 2021, inflation was mainly driven by higher food prices, especially for staples such as bread and cereals, potatoes, yams, and other tubers, meat, fish, fruits, and oils and fats. The pace of price increases eased somewhat in 2021 as the economy reopened and domestic manufacturing and agricultural production increased, but inflation remained high at an average of 17 percent y-o-y.”
