The World Bank says an estimated 7 million Nigerians may have been pushed into poverty in 2020 due to rising prices alone — without considering the direct impacts of COVID-19.
In its latest report, “Nigeria Development Update: Resilience through Reforms,” released on Tuesday, the bank noted that high inflation rate is worsening poverty and depressing business activities in Nigeria.
The report came few days after President Muhammadu Buhari said his government had lifted 10.5 million people out of poverty in the last two years.
“In the last two years, we lifted 10.5 million people out of poverty – farmers, small-scale traders, artisans, market women and the like,” Buhari said during a speech to commemorate the June 12 Democracy Day.
He said his administration is strongly committed to lifting 100 million Nigerians out of poverty in 10 years.
According to the report, high inflation will frustrate economic recovery and erode households’ purchasing power, which will increase both the poverty rate and the number of people living below the poverty line.
The World Bank said the inflationary pressure is tied to unfavourable weather, insecurity and conflict in food-producing areas, COVID-19 pandemic, trade restrictions and border closure, foreign currency restrictions, and Nigeria’s exchange rate management.
“The impact of higher inflation is severe. In 2020, rising prices alone — even without incorporating the direct impacts of COVID-19 on welfare — may have pushed an estimated 7 million Nigerians into poverty,” the report said.
“In 2020, Nigeria’s inflation rate was the seventh highest in Sub-Saharan Africa, but by the end of 2021, it is expected to rise to fifth highest, behind only Zimbabwe, Zambia, South Sudan, and Angola.
“Inflationary pressures are expected to persist for the next six months, and for 2021, inflation is expected to exceed 16 percent.
“In 2021 elevated inflation rates are expected to further exacerbate poverty and dampen growth. High inflation is expected to frustrate Nigeria’s economic recovery and erode the purchasing power of households, which will increase both the poverty rate and the number of people living below the poverty line.”
Macro Hernandez, World Bank’s lead economist for Nigeria, during a presentation of the report in Abuja, said over 11 million more Nigerians are expected to lose their jobs due to the high inflation rate.
On economic growth, the Bank projected that Nigeria’s performance in 2021 would be below the averages for Sub-Saharan Africa and oil-producing countries.
It said by the end of 2021, Nigeria’s gross domestic product (GDP) is likely to approach its 2010 level, thereby reversing a full decade of economic growth.
The World Bank further said if the federal government fails to sustain recent macroeconomic and structural reforms, the pace of economic recovery will slow, and GDP growth could be just 1.1 percent in 2021.
In May, the consumer price index (CPI), which measures the rate of change in prices of goods and services, dropped to 17.93 percent from 18.12 in April.
According to the ‘Consumer Price Index Report’, released by the National Bureau of Statistics (NBS), on Tuesday, food inflation also reduced to 22.28 percent in May from 22.72 in April.
Despite the drop, the inflation rate is still above the band of 6% to 9% set by the Central Bank of Nigeria (CBN).