World Bank Predicts More Hardship For Nigerians Over Rising Inflation, Power Cut, Fuel, Food Shortage
The World Bank has predicted more hardship of Nigerians and the citizens of Angola over the rising inflation, increased power outages as well as a shortage in fuel and food.
This is in spite of the steady rise in crude oil prices reaching over $120 per barrel expected to benefit these countries which are two of Africa’s largest oil producers.
According to a global economic report contained in a newsletter, the World Bank issued at the weekend, “In many SSA countries, increasing living costs have also tempered gains from looser social restrictions and higher commodity export prices.
“Growth in the three largest SSA economies—Angola, Nigeria, and South Africa—was an estimated 3.8 per cent in 2021 supported by the 4.9% rebound in South Africa. Growth momentum carried on in Angola and Nigeria, where high oil prices, the stabilisation of oil production, and recovery in non-resource sectors supported activity in the first half of this year.
“Nevertheless, persistently high domestic inflation, power cuts, and shortages of food and fuel have been weighing on recoveries,” the international bank emphasised.
Inflation for April clearly seen in the consumer price index rose by 16.82%, which was 0.9% points higher than the 15.92% recorded in March 2022, mostly occasioned by a rise in the prices of foodstuff, according to the National Bureau of Statistics (NBS).
Economic Confidential also observed that petrol queues have persisted with many a petroleum marketer blaming the high cost of diesel at N850 per litre on the inability of tanker owners to sustain massive loading of petrol from the depots mostly in the coastal areas of Lagos and Warri to hinterlands including Abuja, the nation’s capital.
There is also a toll on household income as residents across several states decry the rising cost of cooking gas at over N750 per kilogramme; the 12.5kg capacity is sold for over N9,000 in Abuja.
Generally, on growth projection for the Sub-Saharan Africa (SSA), the World Bank said in spite of a rebound of 4.2% in 2021, growth has weakened this year as domestic price pressures, partly induced by supply disruptions owing to the war in Ukraine, are reducing food affordability and real incomes, especially in low-income countries (LICs).
It noted that the sharp deceleration of global growth and war-related shortages of food and fuel are creating substantial headwinds for the region, even more so in countries reliant on wheat imports from Russia and Ukraine (Democratic Republic of Congo, Ethiopia, Madagascar, Tanzania).
In South Africa, growth has moderated substantially amid policy tightening, high and rising unemployment, and recurring power shortages. Infrastructure damage to the country’s main port following severe floods has also contributed to the supply chain disruptions related to the war in Ukraine and lockdowns in China.
Lower Growth Outlook For Nigeria, Others
For the outlook in the Sub-Saharan African region, the projected growth is an expected 3.7% this year and 3.8% in 2023, showing a 0.4% downgrade from the bank’s earlier projection in January 2021.
For Nigeria, the growth rate will drop to 3.4% this year and a further drop to 3.2% in 2023 and in 2024. The 2022 growth outlook declined by 0.9% while those for 2023 and 2024, declined by 0.45, the economic report indicated.
Although elevated commodity prices would underpin recoveries in extractive sectors, in many countries rising inflation would erode real incomes, depress demand, and deepen poverty.
The growth slowdown in SSA could also intensify pandemic-induced losses in per capita incomes. The region is now expected to remain the only Emerging Market and Developing Economy (EMDE) region where per capita incomes will not return to their 2019 levels even in 2023.
Surging food and fuel import bills could also reverse recent progress in poverty alleviation across the region, especially in countries where vulnerable populations are sizable (Democratic Republic of Congo, Nigeria), and dependence on imported food is high (Benin, Comoros, The Gambia, Mozambique).
The bank also dismissed any instant remediation saying the fiscal space of Nigeria and these other countries have already been constrained by high levels of public debt and could narrow further. However, it noted that the persistent domestic inflation could speed up monetary policy tightening, escalating stagflation risks in Sub-Saharan Africa.