Despite Federal Government’s resolve to grow the economy and lift about 100 million Nigerians out of poverty in ten years, the World Bank has in its recent report indicated that inflationary pressure in the country pushed about seven million Nigerians below the poverty line in 2020. The global bank’s report contradicts the claim by President Muhammadu Buhari during this year’s Democracy Day broadcast that the administration had lifted over 10 million Nigerians out of poverty in the last two years.
The damning report came at a time the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) is not so good. Nigeria’s headline inflation has reportedly retreated for the second time in May, dropping from 18.12 per cent reported in April to 17.93 per cent. However, the surging inflation has pushed Nigerians deeper into poverty, driven primarily by rising food prices. Even as the government is thumbing its chest that inflation is on the downward trend, the latest inflation rate of 17.93 per cent is still among the highest in four years.
Moreover, it should be noted that a slowdown in inflation does not necessarily imply that prices are falling.What it simply means is that commodity prices are increasing, albeit at a slower pace. Therefore,the government should not joke with the World Bank’s timely warning because it raises concerns about the impact of rising cost of goods on many households in the country. Clearly, the management of the economy has not been producing durable outcomes in all key sectors that should stimulate growth. Indeed, from a month-on-month perspective, inflation has been rising, and this underscores the fact that inflation remains a major problem to investors and the citizens.
Available statistics show that inflation has not abated since October 2019 when the government shutdown Nigeria’s porous borders in a move to spur massive food production and curb smuggling. However, attacks on farmers by herders, foreign exchange scarcity and naira devaluation have contributed to local food demand outweighing production. This has also led to a steady rise in food prices.
On account of rising inflation, insecurity, unemployment, forex scarcity, among other fiscal and macroeconomic challenges, we enjoin the government to engage more experts in the management of the economy. So far, the inputs of experts have not reflected on the economy.
We agree with the World Bank report that, “Nigeria faces interlinked challenges in relation to inflation, limited job opportunities and insecurity.” Government must embark on policy reforms to realise our development objectives. Let government pay attention to exchange-rate management, monetary policy, trade and fiscal policy, and social protection. As the World Bank and other experts have said, the government should implement concrete policy measures that will address the multiple challenges facing the country. Among priority areas of focus should be inflation, poverty, job creation, exchange rate regime and stability and insecurity.
The growing hunger in the land is driven by poverty, making Nigeria the poverty capital of the world. Despite the interventions of the government through the CBN, about 18 million additional Nigerians were reportedly dragged below the poverty line. An individual is classified as poor if the person earns below $1.90, equivalent of N782 per day. The World Bank report estimated that about 25 million Nigerian households did not eat for an entire day in 2020.
With the population growing at 2.6 percent annually, and per capita income fast declining, government must create sufficient opportunities for the citizens. In the last one year alone, food inflation has accounted for about 70 percent of the inflation rate.
Since 2017 when Nigeria emerged from its first economic recession, the economy has been growing very sluggishly, worsened by the COVID-19 pandemic that hit global economy last year, making unemployment rate in the country to rise to over 33.3 percent in the fourth quarter of 2020. This translates to 23.2 million unemployed people. The unemployment rate is expected to rise to about 40 percent at the end of this year if no concrete efforts are made to create jobs, contain insecurity and diversify the economy.
For six years, the economy has recorded a negative per capita Gross Domestic Product (GDP) growth rate. Also, at 4 percent, Nigeria has the lowest tax-to- GDP ratio. In simple terms, Nigerians have grown poorer during the present administration than ever before. Coupled with the depreciating value of the naira against other major foreign currencies, the economy is in serious trouble unless urgent measures are put in place to revamp it. While the government has mapped out some measures to boost the economy, it should do more to stimulate economic growth.