Nigeria’s population running faster than economic growth

In spite of the slowing inflation rate as announced by the National Bureau of Statistics (NBS), the World Bank said seven million Nigerians have slipped from the poverty line to under the poverty line.

The global bank attributed the worsening situation to an economy that is growing far slower than the rate at which its population is growing. While the population is growing at 2.6 per cent, economic growth was just 0.51 per cent in the first quarter of 2021.

The result is that, the country has more people venturing into the informal sector and hustling. It said, in most cases, criminal activities have become one of the preferred options.

The World Bank in its Nigeria Development Update report warned that without deep reforms, the economy will continue to grow slower; than the pace of population expansion of about 2.6 per cent a year.

According to the World Bank’s Country Director for Nigeria, Shubham Chaudhuri, “While you have many people going into the informal sector; and hustling; criminal activity has become one of the options to get by.

“In the context of rising inflation, that means a further deterioration; of the purchasing power and livelihood of many Nigerians.”

A surge in insecurity over the past two years has further slowed economic activity; and left more people unemployed; fueling a vicious cycle of violence and criminality, the lender said.

The World Bank official reiterated that the government must develop a sustainable economic-recovery plan; before the bank can release a $1.5 billion loan initially discussed more than a year ago.

While inflation eased slightly for the second straight month to 17.9 per cent in May, it remains at near four-year highs with food-price growth at more than 20 per cent year-on-year.

The World Bank sees inflation at an average of 16.5 per cent this year and remaining above the nine per cent top of the target band until at least 2023.

The World Bank challenged the central bank’s position that high inflation stems primarily from supply constraints, citing tight exchange-rate controls and expansive monetary policy as key drivers of price growth.

“Policy decisions related to exchange rate, trade, and monetary and fiscal factors are driving inflation, especially during 2021, more so than exogenous factors related to conflict and weather shocks,”Marco Hernandez, the World Bank’s chief economist for Nigeria said.