At least an additional one million Nigerians will be pushed into poverty this year by the country’s high inflation rate, the World Bank has said. This will raise to seven million, the number of Nigerians who will slip into abject poverty this year, it explained.
Writing in a report, Nigeria Development Update, released in Abuja on Tuesday, the Bank said that inflation in Nigeria, already one of the highest in the world before the war in Ukraine, is likely to increase further due to the rise in global fuel and food prices caused by the war.
“The added inflationary pressure from the war in Ukraine could push as many as one million additional Nigerians into poverty in 2022,’ the report said.
The one million that will fall into poverty this year is in addition to six million Nigerians who were already projected to fall into poverty this year due to the rise in prices, particularly food prices, the Bank explained. That means that altogether, about seven million Nigerians are expected to fall into poverty before the end of the year, the Bank explained.
“With the war, the higher rate of inflation—projected at 15.5 percent—could push approximately seven million Nigerians into poverty, an additional one million people,” it said.
This latest edition of the NDU also said that the inflationary pressures will be compounded by the fiscal pressures that Nigeria will face this year because of the ballooning cost of gasoline subsidies at a time when oil production continues to decline.
The report noted that the war in Ukraine added to Nigeria’s woes, as inflationary pressures have increased, with inflation projected to reach 15.5 percent by the end of 2022.
“Increased inflationary pressures following the Ukraine war are expected to push even more Nigerians into poverty.
“Before the war, higher inflation pushed an estimated eight million more Nigerians into poverty between 2020 and 2021. In 2021, inflation averaged 17 per cent, undermining Nigeria’s economic recovery by eroding the purchasing power of the most vulnerable households,” it noted.
“We project that the added inflationary pressure emanating from the war in Ukraine could push as many as one million more Nigerians into poverty, on top of the six million already projected before the war.
“Overall, the ‘inflation shock’ is estimated to result in about 15 million more Nigerians living in poverty between 2020 and 2022.
“The added inflationary pressure from the war in Ukraine could push as many as one million additional Nigerians into poverty in 2022. Even before the war, inflation in 2022-then projected at 13.5 percent was predicted to push around six million Nigerians into poverty in 2022.
“With the war, the higher rate of inflation-projected at 15.5 percent-could push approximately seven million Nigerians into poverty, an additional one million people. The CBN’s inflation target of 6-9 percent, which was not achieved in previous years, remains unlikely to be met in 2022.
“The increase in May 2022 in the policy rate by the CBN is an adequate measure. Still, it has occurred in a context in which FX management and development finance at subsidized rates have reduced the effectiveness of the monetary policy.
“Moreover, financing of the fiscal deficit and trade restrictions by the Central Bank continue fuelling inflationary pressures. Inflation in Nigeria will thus remain among the highest in Sub-Saharan Africa in 2022,” the World Bank added.
The Bank noted that with the pressures coming from the war in Ukraine, “timely and consistent monetary policy in 2022 is becoming a pressing priority”.
“Nigeria was the only emerging market economy not to change its policy rate between the second half of 2020 and May 2022,” the Bank said. It added that higher food, fuel, and fertilizer prices arising from the Ukraine war started impacting early in the year, and Nigeria’s inflation rate started trending upwards in February 2022, reaching 16.8 percent in April, up from 15.6 percent in January, “and is likely to increase further if the war persists”.
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