New Telegraph

Inflation pushed 7m Nigerians into poverty –World Bank

 

…drops to 17.9% as economy tilts towards recovery

 

Surging inflation is affecting Nigeria’s economic recovery, pushing seven million of the country’s citizens into poverty in 2020 alone and fuelling crime, the World  Bank has said.

 

The bank, which stated this in its Nigeria Development Update (NDU) report titled, “Resilience through Reforms,” released yesterday, noted that although it projected that more favorable external environment would lead to the country’s economy growing by 1.8 per cent this year, without deep reforms to tackle inflation and ensure a transparent foreign exchange management system, the economy  would continue to grow slower than the pace of population expansion of about 2.6per cent a year.

 

According to a press release issued by the Bretton Woods Institution, “the Nigerian economy experienced a shallower contraction of -1.8 per cent than had been projected at the beginning of the pandemic (-3.2%). “Although the economy started to grow again, prices are increasing rapidly, severely impacting Nigerian households. As of April 2021, the inflation rate was the highest in four years. Food prices accounted for over 60 per cent of the total increase in inflation.

 

Rising prices have pushed an estimated seven million Nigerians below the poverty line in 2020 alone.”

 

While the report acknowledges that Nigerian authorities have introduced several policy reforms aimed at mitigating the impact of the Covid-19 crisis and supporting recovery, it stated that not sustaining and deepening the reforms “would threaten both macroeconomic sustainability and policy credibility, thereby limiting the government’s ability to address gaps in human and physical capital which is needed to attract private investment.”

 

According to the report, the lack of a credible monetary anchor is keeping inflation on the uptrend, with the Central Bank of Nigeria (CBN) trying to achieve too many goals, such as controlling price increases, promoting economic growth and keeping a stable exchange rate. It said that although the CBN took the right step in unifying the official exchange rate with the Investors and Exporters’ (I&E) rate, the exchange rate is not yet reflective of market forces.

 

The World Bank said that the CBN should aim for greater flexibility by reestablishing a dollar interbank market, effectively allowing deposit money banks to trade currency on their own behalf to increase liquidity and move toward a single rate.

 

Commenting on the report, the World Bank Lead Economist for Nigeria and co-author of the report, Marco Hernandez, said: “Given the urgency to reduce inflation amidst the pandemic, a policy consensus and expedite reform implementation on exchange-rate management, monetary policy, trade policy, fiscal policy, and social protection would help save lives, protect livelihoods, and ensure a faster and sustained recovery.”

 

Similarly, World Bank Country Director for Nigeria, Shubham Chaudhuri, said: “Nigeria faces interlinked challenges in relation to inflation, limited job opportunities, and insecurity.

 

While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have to be sustained and deepened for Nigeria to realize its development potential.”

 

In an interview with Bloomberg, Chaudhuri stated that sluggish growth, coupled with rising unemployment and inflation, is pushing more Nigerians into criminal enterprises.

Read Previous

Tax to GDP: Rewane, FIRS chair chart path to growth

Read Next

UFC champion shares unforgettable CSR experience, feeds 100p children

Leave a Reply

Your email address will not be published. Required fields are marked *