Contrary to the recent claim by the Federal Government of Nigeria that it has successfully lifted about 10.5 million Nigerians out of extreme poverty, a new report from the World Bank has ironically shown that an additional seven (7) million Nigerians were pushed into extreme poverty during the aforementioned period.
According to the recent World Bank Nigeria Development Update titled ‘’Resilience through Reforms,’’ the obnoxious situation was aided by an excruciating surge in inflationary pressure, primarily driven by an uncontrolled rise in food prices. This is empirically consistent as available data showed that Nigeria’s rate of inflation rose steadily throughout 2020 and reached a four-year high in March 2021.
Recall that naijabusiness.com.ng had earlier reported that Nigeria’s inflation rate as at May 2021 stands at 17.93%. Food inflation in the aforementioned period stood at a double figure of 22.28%.
Additionally, the World Bank report showed that due to a host of policy reforms initiated by the FG such as : the harmonization of exchange rates, adjustment of electricity tariffs, elimination of gasoline subsidies, etc., the Nigerian economy experienced a smaller contraction (-1.8%) than had been projected when the pandemic began (-3.2%).
Despite the recovery of the Nigerian economy from the recession witnessed in 2020, the recent report showed that food inflation has been a major scourge to most households, as prices of essential food items keep skyrocketing.
The World Bank acknowledged commended the key reforms initiated by the Federal Government of Nigeria, and urged it to sustain some of these key measures as a panacea of mitigating the hard-biting impact of the COVID-19 pandemic. Affirming this, the 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.’’
The report further warned that although the Nigerian banking sector avoided a credit crunch, it is still showing signs of stress.
In conclusion, the World Bank highlighted some key reforms that would aid the reduction of inflation, protect the poor and support recovery. The policy proposals are;
- Reduce inflation by adopting policies to support macroeconomic stability, inclusive growth, and job creation.
- Protect poor households from the impacts of inflation.
- Facilitate access to sustainable financing for small and medium enterprises in key sectors to mitigate the effects of inflation and accelerate the recovery.
