The World Bank has said in its latest ‘Nigeria Development Update’ (NDU) report that rising food costs pushed about seven million Nigerians below the poverty line in 2020.
The report entitled “Resilience through Reforms”, noted that in 2020 the Nigerian economy experienced a shallower contraction of -1.8 per cent than had been projected at the beginning of the pandemic (-3.2 per cent).
It stated that the economy started to grow again prices are increasing rapidly, severely impacting Nigerian households.
It recalled that as of April 2021, the inflation rate was the highest in four years pointing out that food prices accounted for over 60 per cent of the total increase in inflation.
“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,” said the World bank Country director for Nigeria, Shubham Chaudhuri said in the report.
Also quoted was the World Bank lead economist for Nigeria and co-author of the NDU, Marco Hernandez, who also gave a recommendation.
“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,” he said.
The report acknowledged notable government’s policy reforms aimed at mitigating the impact of the crisis and supporting the recovery; including steps taken towards reducing fuel subsidies and adjusting electricity tariffs towards more cost-reflective levels, both aimed at expanding the fiscal space for pro-poor spending.
The World Bank therefore proposed near-term policy option organised around three priority objectives namely reducing inflation by implementing policies that support macroeconomic stability, inclusive growth, and job creation; protecting poor households from the impacts of inflation; and facilitating access to financing for small and medium enterprises in key sectors to mitigate the effects of inflation and accelerate the recovery.
